Instead of listening to people on the ground, authorities made decisions from their offices, calculating coldly and incorrectly. The result: the peak tourist season failed to materialize, revenues are declining, yet the state collects more — mainly from those barely surviving. Taxes and fees have destroyed competitiveness, and institutional behavior is far from responsible. What we see is not professionalism, but a collapse — said Žarko Radulović, president of the Montenegrin Tourism Association.
Radulović explains that Montenegro is paying the price for ignorance, arrogance, and ignoring expert advice. Decisions were made based on numbers alone, without understanding real-life conditions, resulting in lost key markets and an unsustainable business environment. Similar problems are seen across the Mediterranean, worsened by geopolitical conflicts and regional instability.
He points out that fiscal policies like increased VAT, doubled beach lease prices, and rising costs for permits have further burdened the tourism sector. Although tourist numbers in June were roughly the same as last year, VAT revenue fell by around 9% despite the VAT rate increase. This indicates a decline in overall spending and competitiveness.
Radulović warns that post-season revenues cannot compensate for losses during peak months. The perception that Montenegro is crowded and poorly organized in July and August has been reinforced by influencers and tourists across Europe, deterring visitors with bigger budgets. Instead, tourists who came were mostly curious but spent less.
He stresses that the high state-imposed costs make Montenegro uncompetitive compared to destinations like the French Riviera or northern Italy. The government’s policies are driving businesses to the brink, leaving no room for price reductions or new commercial strategies.
Additionally, Radulović highlights a 14% drop in social contributions in June, suggesting widespread informal employment with many seasonal workers paid “under the table.” Despite millions lost, authorities focus on minor issues like high VAT on small purchases rather than tackling systemic problems.
He calls for a return to expertise and consultation with industry professionals to develop sustainable policies. Radulović urges lowering VAT in tourism and addressing the real issues to avoid further decline, emphasizing that current trends are neither sustainable nor productive.
