Adri Nurellari
The Albanian Tax Administration just gave us, unintentionally, the clearest evidence yet that Albanian tourism is more of a propaganda balloon than a gold mine as it is being trumpeted.
By announcing that it has access to Booking.com data to threaten owners who have let their properties out for tourist rentals, the tax authorities revealed a painful mathematical reality. In fact, they accompanied this announcement with an infographic showing that 17,225 properties had a turnover of 80,122,524 euros in reservations in nine months, of which 12,858,004 euros went to commissions for the Booking platform.
So, ironically, this announcement by the General Directorate of Taxes of Albania, more than a denunciation of tax evasion by those who provide short-term tourist rentals, involuntarily turns into a denunciation of government propaganda for a "tourist boom."
Thanks to the government and the media, influenced by the main developers in the country, a strong belief has been created in Albania that Albanian tourism has become a goose that lays golden eggs. This myth has also "infected" our compatriots from Kosovo who, according to Pristina's banking data, have taken out over half a billion euros in loans in recent years just to buy property in Albania.
But when we look at the real mathematics of this market, we clearly diagnose a bubble, because we have as symptoms too much dispersed capital, too much similar supply, and a yield that decreases as competition increases.
So, let's do a simple calculation of the exposed data. In the first nine months of last year, 80.1 million euros in bookings were made, of which about 12.86 million euros, approximately 16 percent, went directly to commissions for the platform. So, the real income for the owners comes down to about 67.26 million euros.
If we remove a minimum operating cost of about 20 percent (cleaning, laundry; maintenance, energy, water, basic depreciation), then the effective income drops to about 51.24 million. In the best case, it falls to approximately 68.32 million as an annual figure, although it is known that the remaining three months of the year are on average worse for tourism than the January-September average.
This is the figure to be calculated which, divided among about 17,225 properties, results in a property generating an average of about 3,966 euros per year of net operating income. Given that the properties are mainly in Tirana and on the coast, a conservative average value of about 120,000 euros per unit is the least that can be taken as an example for our analysis. This translates into a real return of about 3.3 percent per year, in tax evasion conditions and this in a good tourist year. If a 15 percent profit tax is applied, then the return falls to about 2.8 percent.
That is, after all the “boom”, the result is a yield that barely competes with inflation and is almost as high as treasury bills which are risk-free and do not work at all. When we consider the latest auctions of the Bank of Albania, we see that seven-year bonds give up to 4.7 percent annual return. So, the state pays more for its debt than an investor earns from his property used for tourism.
Meanwhile, in this entire analysis, only one actor emerges as a clear winner, and he does not speak Albanian. It is the online booking.com platform that mediates reservations, receiving about 16 percent of total revenue - all this without investing in property, without having maintenance costs and without facing the risk of seasonal vacancies. In other words, the only one who benefits is the intermediary who earns more, more safely and without investing anything from his own pocket.
This simple calculation highlights the essence of the illusion. We see low-cost tourists and assume profit; we see volume, so we assume prosperity and make new investments in real estate.
It is precisely this fever of the Albanian tourism el dorado that has exploded the supply on the market, bringing construction in Albania to peak proportions. Recently, it has been reported about 1.9 million square meters of new permits and about 14.5 percent of the gross domestic product (taking the largest share in Europe in proportion to the economy, while the EU average is 5.5 percent of GDP).
On the other hand, the growth in demand is by no means moving at the same pace. From around 7.5 million visitors in 2022, we went to 10.1 million in 2023 (plus 35 percent), to 11.7 million in 2024 (plus 15 percent) and around 12 million in 2025 (plus 2-3 percent). In short, tourism in Albania continues to grow, but at a pace that is slowing down significantly, signaling the transition from momentum to market maturity.
Let's be clear: for the sake of clarity, this article serves as a rough model that gives a general picture and not a "pharmacy bill" for each apartment, as complete data on annual occupancy and average daily rate (ADR) are missing. We are only talking about Booking (which accounts for the lion's share of bookings); even if we add here reservations from Airbnb, whether offline or through agencies, the panorama does not change much, because the profit still remains low.
If a bank loan for real estate in Albania or Kosovo fluctuates at 5-7 percent, any yield below eight percent fails to justify the risk taken, transforming the investment from a productive asset into a financial burden.
So, if it doesn't exceed this percentage, which in finance is called the hurdle rate, you are effectively paying the bank more than the property is paying you. In practice, you are losing money every month, hoping only for the property's value to increase in the future (capital appreciation), which is gambling, not business.
On the surface, Albania is experiencing a collective intoxication from the cacophonous figures of Rinas triumphantly "like a granite rock in the Adriatic", and government statistics cooked up at will for electoral consumption. But, in reality, the latest tax figures puncture the great balloon of tourist success, showing that we are not dealing with a "thriving industry", but with the transformation of our coast and cities into giant dormitories for low-budget tourists.
There is no doubt that if your profit after all that investment in expensive properties and the effort to host tourists is lower than the interest on a government bond (where the risk is zero and the work consists only of a signature), then you are not doing business, but financing an illusion.
Editorial
