Montenegro’s tourism sector is facing a sharp downturn, with the peak summer season failing to deliver expected results. Žarko Radulović, President of the Montenegrin Tourism Association, blames government mismanagement, rising taxes, and a lack of consultation with industry professionals.
Radulović criticized policymakers for making decisions from behind desks without input from people on the ground. He pointed to misguided fiscal policies—such as a hike in VAT and higher beach rental fees—that have burdened struggling businesses and weakened the country’s competitiveness.
Despite similar seasonal challenges across the Mediterranean, Montenegro’s problems are deeper and more structural. The country has lost key markets like Israel due to geopolitical instability, and visitor numbers from Serbia and Republika Srpska have also dropped amid regional tensions.
According to Radulović, fixed business costs are now so high that companies cannot reduce prices or launch promotions, which has pushed Montenegro out of the competitive range. He warned that even if post-season tourism improves, it won’t be enough to recover from the disappointing July and August figures.
Official data already shows a drop in VAT revenue, despite the tax hike—a sign that fewer tourists are spending money. In his own company, Radulović said he paid over double the VAT in June 2025 compared to the same month last year, even with a similar number of guests.
He also highlighted another major issue: widespread undeclared work. Around 50,000–60,000 seasonal workers are believed to be working off the books, leading to a 14% drop in social contribution revenues in June.
Radulović’s message is clear: without urgent reforms, lower taxes, and a return to professional management, Montenegro risks further damage to its key economic sector. He urges authorities to listen to tourism experts and rethink policies that are “neither sustainable nor productive.”
