CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES

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CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Technical Assistance Consultant’s Report

Project Number: 45415
June 2014

Armenia: Urban Development in Secondary Cities
(Financed by the Urban Environmental Infrastructure Fund under
the Urban Financing Partnership Facility)

                   CITY DEVELOPMENT PLAN
                           DILIJAN

                        VOLUME II - ANNEXES

Prepared by Fernando de Marcos
Yerevan, Armenia; 03-06-2014

For: Internal document for Consultants team
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 2

               CURRENCY EQUIVALENTS
                  (as of 03 June 2014)

        Currency Unit     –      Dram (AMD)
            AMD1.00       =      $0.00242
               $1.00      =      AMD 413,308

                   ABBREVIATIONS

ADB        -     Asian Development Bank
ARDEP      -     Armenia Regional Development Project
ARRM       -     Armenian Resident Mission,
CDP        -     City development/investment plan
CBS        -     Cost breakdown structure
CMS        -     Consultant Management System
COE        -     Council of Europe
CoP              Communities of Practice
DMC        -     ADB Developing member country
DFID       -     Department for International Development (UK)
LSG        -     Local Self-Government Bodies
MOE        -     Ministry of Economy
MOU        -     Memorandum of understanding
MTA        -     Ministry of Territorial Administration
MTEF       -     Medium-term expenditure framework
MOUD       -     Ministry of Urban Development
NGO        -     Nongovernment organization
NSS        -     National Statistical Service
PATA             Policy and Advisory Technical Assistance
PPP        -     Private Public Projects
PPTA       -     Project preparatory technical assistance
OSCE       -     Organization for security and co-operation in Europe
UNDP       -     United Nations Development Programme
UOP        -     Urban Operational Plan
USS        -     Urban Sector Strategy
Q          -     Quarter
REDAM      -     Regional Development in Armenia
SWOT       -     strengths, weaknesses, opportunities, and threats
TA         -     technical assistance
TACIS      -     Technical Assistance for the CIS and Mongolia
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 3

Staff (according Terms of reference)
 Fernando de Marco          FDM    –       Senior urban planner and team leader (intl.)
 Robert Romo                 RR    –       Senior urban infrastructure engineer (intl.)
 James Jessamine             JJ    –       Cultural heritage and tourism specialist (intl.)
 Mónica Batán Zamora        MBZ    –       Economic development specialist (intl.)
 François Moulin             FM    –       Urban finance specialist and economist (intl.))
 Jörg Fischer                JF    –       Geographic information system specialist and Urban
                                           planner (intl.)
 Armen Keshishyan              AK      –   Urban infrastructure, transport, tourism, and
                                           institutional support consultant (national)
 Samvel Bareyan                SB      –   Urban Finance and Economic Support Consultant
                                           (national)
 Hayk Yeritsian                HY      –   Urban Planner and GIS Support (national)

In preparing any country program or strategy, financing any project, or by making any
designation of or reference to a particular territory or geographic area in this document, the
Asian Development Bank does not intend to make any judgments as to the legal or other
status of any territory or area.
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 4

                                     CONTENTS
                                                                          Page
I.    APPENDIX 1: ENVIRONMENTAL CONDITIONS                                          7
      A.    Geographical situation,                                                 7
      B.    Climate                                                                 8
      C.    Geology,                                                                9
         1.        Geo-resources/Mining,                                            9
      D.    Hydrology                                                              10
      E.    Soils                                                                  10
      F.    Vegetation                                                             11
      G.    Fauna                                                                  13
      H.    Natural risks and hazards                                              13
      I.    Protected Areas                                                        15
II.   APPENDIX 2: TOURIST ASSESSMENT                                               17
      A.   Introduction                                                            17
       1.         Background                                                       17
       2.         Definitions                                                      18
      B.   Current Situation                                                       19
       1.         Attractions                                                      19
           a.     Dilijan National Park                                            20
           b.     Dilijan Museum of Local History and Art Gallery                  21
           c.     Dilijan Mineral Springs                                          23
           d.     Theatres                                                         23
           e.     Dilijan Music Academy and Dilijan Art Academy                    23
           f.     Dilijan Library                                                  23
           g.     Domestic Architecture                                            24
       2.         Accommodation                                                    24
       3.         Tourism Infrastructure                                           26
           a.     Tourist Information                                              26
           b.     Tourism Signage                                                  26
           c.     Transport Issues                                                 27
           d.     Institutional Framework                                          27
           e.     Telecoms and Internet                                            27
           f.     Banking Services                                                 28
      C.   Strengths and Weaknesses of the Tourism Sector                          29
       1.         Key Strengths                                                    29
           a.     Natural Assets                                                   29
           b.     Market Assets                                                    29
           c.     Built Assets                                                     29
           d.     Cultural Assets                                                  29
       2.         Key Opportunities                                                29
       3.         Key Weaknesses                                                   29
           a.     Support infrastructure                                           29
           b.     Planning                                                         29
           c.     Product                                                          30
           d.     Human resources                                                  30
           e.     Marketing                                                        30
           f.     Community involvement                                            30
       4.         Key Threats                                                      30
           a.     Natural Assets                                                   30
           b.     Support Infrastructure                                           30
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 5

              c.      Human Resources                                                       30
              d.      Marketing                                                             31
              e.      Community Development                                                 31
       D.     Tourism Market Assessment                                                     32
        1.            National Strategy                                                     32
        2.            Visitor by Origin and Purpose                                         34
        3.            Visitors by Destination and Purpose                                   38
        4.            Visitor Expenditure                                                   41
        5.            Domestic Visitors                                                     43
        6.            Visitor Arrival Estimates                                             44
       E.     . Economic Development                                                        45
        1.            The role of tourism in economic development                           45
        2.            Economic Impacts                                                      45
        3.            The role of tourism in investment positioning                         46
       F.     Dilijan Draft Tourism Business Strategy                                       47
        1.            Objectives                                                            47
        1.            Bird Watching Infrastructure                                          48
       G.     Potential Tourism Projects                                                    52
        1.            General                                                               52
        2.            Sustainable tourism development                                       52
        3.            Ecotourism                                                            52
        4.            Potential Tourism-related Development Projects                        53
        5.            Potential projects                                                    53
              a.      Area Access                                                           53
              b.      Local Access                                                          53
              c.      Extend Tourism Season                                                 54
              d.      Future Tourism Development                                            54
              e.      Streetscape and Urban Design                                          54
              f.      Transport Information                                                 55
              g.      Human Resource Development                                            55
       H.     Draft Project Evaluation Matrix                                               56
        1.            The Evaluation Process                                                56
        2.            Desirable Criteria                                                    56
        3.            Draft Evaluation Matrix Sheet                                         56
III.   APPENDIX 3: COMMUNICATION MATERIAL                                                   58
       A.     GIS-Mapping                                                                   58
        1.            General information - maps and graphics                               58
        2.            Detailed strategic information – maps and graphics                    58
       B.     Desk study to provide examples of cities in Europe and Asia with similar
       development issues,                                                                  59
        1.            The Bilbao Effect                                                     59
        2.            Glasgow City of Culture                                               60
        3.            Tourism Observatory of Avila, Spain.                                  61
              a.      Categories of effects:                                                61
        4.            Other innovative and ambitious transportation practices in Europe.
        Project collection                                                                  62
       C.     Organization of a public consultation to share the objectives and main
       components, and finalize the CDP based on the feedback from all stakeholders.        62
IV.    APPENDIX 4: LIST OF TABLES AND FIGURES                                               63
       A.   List of tables                                                                  63
       B.   List of figures                                                                 63
       C.   List of maps                                                                    63
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 6
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 7

                  I.      APPENDIX 1: ENVIRONMENTAL CONDITIONS

A.     Geographical situation,

1.      Situated in the Aghstev valley, Dilijan is covered with dense forests and situated in
mountainous landscape. The elevation varies between1100-1510m above the sea-level. The
total area within administrative boundaries of the urban community is 4301.5 hectares. The
DilijanNational Park, which is a forest area, is located within the community with a total area
of 1786.4 hectares. Aghstev River with its numerous tributaries flows across the community.

                                Map 1: Topographical map

2.      Embedded in the South Caucasian mountain range, different locations of slopes and
severe complicated relief in a relatively small area, create unique diversity of natural
conditions. Besides foothill and alpine zones, vertical alteration landscapes are well
expressed here. Especially average mountain zone is well expressed at altitudes of 1200-
1800m.

3.     Due to mountainous relieves slopes are generally very steep.
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 8

                                           Map 2: Slopes

B.     Climate

4.       Dilijan is characterized by temperate warm and humid climatewith relatively cool
summers, which is characteristic of a mountainous and forested area.. An average annual
temperature fluctuation doesn’t exceed 24°C. In low-mountain section of the community,
annual average air temperature is 9.2°C to 10.5°C degrees, in January -0.6ºC to -1.3°C, July
+19.9ºC to +21.1ºC.Absolute maximum temperature is +37°C and absolute minimum is -
26°C.. The time period without frosts varies from 200 to 210 days. Snow cover thickness
ranges from 5 to 50cm, and on northern slopes sometimes it exceeds 70 cm, making those
areas inaccessible during winter time. Average annual precipitations vary from 537mm
(foothill zone) to 850-860 mm (highland zone). Maximum rainfall is observed in spring (about
35% of annual norm), and minimum quantity of rainfall in winter (about 12%).

                                    Table 1: Dilijan climate

                               J       F     M    A    M    J    J    A    S    O    N    D    Total
Max. Temperature ºC             2      2      6   12   17   22   25   24   21   16    9    3   13.3
Min. Temperature               -8     -7     -4    1    5    9   11   11    7    3   -1   -5    1.8
Hours of Sunshine (daily)       4      4      5    6    7    9   11   10    9    6    5    3   2403
Monthly rainfall               18     25     38   61   96   87   54   44   37   42   32   20    554
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 9

C.        Geology,

5.      Dilijan is located in young folded mountain chains with very high instability of slopes.
Rocks are mainly Eocene sedimentary (marine sedimentary rocks, brown colours on the
map), Jurassic volcanogenic (marine volcano sedimentary rocks, blue colours on the
map)and Cretaceous (marine sedimentary rocks, limestones, green colours on the map)
substrates, alternating with intrusive rocks and quaternary volcanoes (red and black
colours) 1.Relief of the territory is complicated, River Aghstev channel and terraces are
smooth but slopes aresteep with cut off ravines. Urban and adjacent areas are characterized
by high power alluvial-terraces (10-30m) clays, clay-sand, and gravel.Geological structure is
complicated and diverse. Hydrogeological conditions and hazardous geological processes
(landslides) require that specific building codes applied during construction of residential and
large scale commercial buildings.

                                            Map 3: Geology

          1.      Geo-resources/Mining,

6.     There are many and various metal and non-metal mines in the territory. From metals,
antimony,copper and other non-ferrous and precious elements, iron and manganese mines
are met in theterritory, as for non-metallic minerals: limestone, sand, dolomite, macadam,
boulder, clay,proliferate, sandstone and other construction materials mines. No metal mines
are being exploited. Most important mining resources have been detected near to
Margahovit with several gold and silver deposits (Au, Ag). However, it should be noted, that

1
    Geological Map of Republic of Armenia Ministry of Nature Protection of Republic of Armenia, Geological
    Agency, Scale 1:500 000,Author Ed.KharzyaN
CITY DEVELOPMENT PLAN DILIJAN VOLUME II - ANNEXES
Appendix 1 10

these deposits have not been proved as economically feasible and are not exploited by any
company. Environmental protection regulations of National park would impose important
limitations for any mining industry.

D.     Hydrology

7.       Due to relatively high rainfall the hydrological network is well developed and the area
is rich in surface waters. The main drainage course, called Aghstevriver, flow through the
city of Dilijan showing a marked mountainous hydrological run-off regime.The main
tributaries of Aghstev River are Hovvajur, Shtoghanajur, Haghartsin, Bldan and Getik. Main
highway, roads and other construction buildings along Aghstevriver are protected by
embankments from flooding events that may occur during heavy rainfall events and snow
melt in the end of spring and early summer.

8.      There are two major mineral water springs in Dilijan, -calcium-magnesium mineral
composition water spring near Fioletovo and sodium mineral water spring in Dilijan. Spring
“Bldan” located in N-W of Dilijan is distinguished by its industrial significance and is marked
as “Dilijan” mineral water. It is one of the most valuable springs in the Republic and is used
for healing purposes.

                                      Map 4: Hydrology

E.     Soils

9.      Land cover of Dilijan Community and National park is represented by a mosaic of
mainly two types of soils: forest andmountain-meadow. Forest belt is dominated by Brown
forest soils, which are remarkable by powerand good differentiation of horizons and coexist
with Brown steppe soils. This carbonate-humus soils are developed on maternal rocks rich in
carbonates. Mountain-meadow soils are developed in sub-alpine zone. In areas protected
Appendix 1 11

from erosion, these soils developed are up to 40cm thick, powerful humus layer. Alluvial
fertile lands arewidespread in relatively large areas ofvalleys, which are mostly turned to
cultivated lands.

F.     Vegetation

10.   The forests mainly are of natural origin. The Vegetation of the National Park is
dominated by forest. It is mainly dominated by deciduousspecies, such as oriental beech
(Fagusorientalis), Georgian oak (Quercusiberica), Q. macranthera,common and oriental
hornbeam (Carpinusbetulus, C. orientalis).

11.     Stands with predominance of tree species forming main forest are represented either
by homogeneous oak, beech and hornbeams trees, or mixed forests with different
combinations of thespecies. Forest ecosystems, are showing certain prevalence of Georgian
oak (Q. iberica) forests, generally on the southern slopes ofthe middle forest zone and
orientalbeech forests on the northern slopes. The upper zone forest (above 1500 meters) is
represented byQ. macranthera. Hornbeam occurs mainly in mixed forests. Oriental
hombeam reaches up to 1500mabove sea level in the sub-forest of lower forest zone, while
Caucasian hombeam spreading all overthe forest zone up to 2000m. National Park forest
ecosystems are characterized by Coniferousforests. Pine (Pinussosnovskyi) often forms
dense forests and located slopes of the Areguni andPambak ranges in the vicinity of
serpentine Dilijan highway. There are lots of pine trees in Dilijanand on nearby slopes.
Juniper sparse forests are of great interest in the territory, which spread in thevalley of Getik
River, as well as on dry slopes of Ijevan Mountains.

12.    Cultivated areas are located in lower areas of the valleys and near to urban
settlements.

                                       Map 5: Land use
Appendix 1 12

13.      Land use classification of Postel 2 Globcover 3 project is shown in the table below

2
  POSTEL is a thematic centre associating R&D and services to describe the soil and vegetation from Earth
   Observation satellite data, at regional and global scales. It is supported by several national public institutions.
3
  The objective of the GLOBCOVER / ESA initiative is to develop a service to produce a global land-cover map for
   the year 2005-2006, using the fine resolution (300 m) mode data acquired over the full year 2005 by the
   MERIS sensor on-board the ENVISAT satellite.
Appendix 1 13

                                     Table 2: Land use classification

Value        Label
    14       Rainfedcroplands
    20       Mosaic cropland (50-70%) / vegetation (grassland/shrubland/forest) (20-50%)
    30       Mosaic vegetation (grassland/shrubland/forest) (50-70%) / cropland (20-50%)
    40       Closed to open (>15%) broadleaved evergreen or semi-deciduous forest (>5m)
    50       Closed (>40%) broadleaved deciduous forest (>5m)
    60       Open (15-40%) broadleaved deciduous forest/woodland (>5m)
    70       Closed (>40%) needleleaved evergreen forest (>5m)
    90       Open (15-40%) needleleaved deciduous or evergreen forest (>5m)
   100       Closed to open (>15%) mixed broadleaved and needleleaved forest (>5m)
   110       Mosaic forest or shrub-land (50-70%) / grassland (20-50%)
   120       Mosaic grassland (50-70%) / forest or shrubland (20-50%)
   130       Closed to open (>15%) (broadleaved or needleleaved, evergreen or deciduous) shrubland (15%) herbaceous vegetation (grassland, savannas or lichens/mosses)
   150       Sparse (15%) grassland or woody vegetation on regularly flooded or waterlogged soil -
             Fresh, brackish or saline water
       190   Artificial surfaces and associated areas (Urban areas >50%)
       200   Bareareas
       210   Waterbodies
       220   Permanentsnow and ice
       230   No data (burnt areas, clouds,…)
                                                                                  4
Source: PostelGlobcover, http://postel.obs-mip.fr/?-Biogeophysical-Products,52-

G.           Fauna

14.       There is a wide variety of rich fauna around Dilijan and the National Park. There a lot
of Invertebrates species, mussels and arthropods, and vertebrates including fish,
amphibians, reptiles, birds and mammals, including several species included within the Red
list of International Unionfor Conservation of Nature.

H.           Natural risks and hazards

15.      The area suffers numerous landslides in the case of saturation of water in the ground
surface. During the winter season, the ground turns into mud due to abundant rains, which
erode the soils and increase the risks of landslides. This geological instability of numerous
areas rise very important problems for road and railway infrastructure. Several urban districts
of Dilijan are also affected by landslides endangering urban infrastructure and residence
areas.

4
    The Version 2 of bi-monthly composites of GLOBCOVER surface reflactances at 300m resolution is available for
     downloading: 10 mossaïcs cover the period from May 2005 to April 2006 (example below).
Appendix 1 14

                                         Map 6: Natural hazards

16.     There are active landslide processes developed on the slopes. Slopes with western
orientation, in some places are distinguished by denudation of maternal rocks. Orography
major units formed by Aghstev and its tributaries created deep erosion lines and valleys.
They are narrow, mostly V-shaped, extending in some places and create small inter-
mountain concavities. Tectonic movements have great impact on valleys morphology.
Structural and accumulative heights are preserved in river valleys. Slope processes are quite
active in the territory of Dilijan community. There are many active landslides. Major
landslides are Dilijan, Hagharstin, Parz Lake, Fioletovo and etc. Among slope processes,
defluxion (in forest areas), stone fall and other phenomena are widespread.

17.      Armenia is situated in a seismically active zone. Earthquake magnitudes reach M=
7.1 (according to historical and paleoseismic estimations). Since the hazard has been
considerably underestimated, the seismic resistance of buildings and structures is well below
the level required for this high magnitude of seismic risk. The absence of state policy in the
field of seismic risk reduction led to the dis aster in Spitak in 1988. In 1999, the Government
of Armenia adopted the strategy of seismic risk reduction. Several institutions under the
coordination of the National Survey for Seismic Protection (NSSP) developed a uniquely
structured program. 5 Seismic Hazard Assessment (SHA) involves long-term and current
seismic hazard assessment. Current seismic hazard assessment is essential for population
seismic safety and elaborating counter-measures by the central and local governments.

18.     Flooding events are frequent to major river beds. Aghstev riverbanks frequently
suffer from flooding events. In urban areas of Dilijan Aghstev river course is canalized to
prevent dangerous flooding events produced by heavy rainfall events and snow melt in the

5
    Mikayel Melkumyan (Seismic Risk Assessment and Mitigation Strategy in Armenia
Appendix 1 15

end of spring and early summer. During recent floods 6Aghstev river flooded arable land,
orchards and greenhousescausing important economic a losses

I.          Protected Areas

19.     “Dilijan” National Park, as a State Nature Reserve, was established on the basis of
the decisionN341 of the Board of Ministers of Armenian SSR in 1958. The aim of the Dilijan
State Reserveestablishment was to provide preservation of oak and beech (mezophile)
forests, a relic species ofthird era, as berry-yew and Rhododendron Caucasian. The state
reserve became known as Dilijan National Park later in 2002. The park contains some forty
varieties of tree species, mainly oak, beech, maple and elm in forests which cover 94% of
the park territory.The National Park, which now occupies around 24,000 hectares, is well
known for its forest landscapes, rich biodiversity, medicinal mineral water springs, natural
and cultural monuments. In addition to the National Park the forests of Dilijan cover an area
of more than 34000 hectares. Rich in its fauna species to be found in the park include brown
bear, wolf, marten, otter, lynx, sylvan cat, Persian squirrel, sylvan dormouse, hedgehog,
chamois, European red deer, wild hog, pheasant, quail, partridge, Caspian turkey, culver,
bald eagle, bearded vulture, pygmy eagles, golden eagle, hawk and others.

20.      The National Park, which is administered by the Ministry of Nature Protection, is
divided into three zones; protected area, recreational zone and economic zone. All activities
with the park must conform to a set of criteria so as not to impact on the ecosystem’s
equilibrium or put at risk the cultural or scientific assets of the protected area. Human
activities are generally confined to scientific research and tourism within the Protected Zone.
In the other zones, the recreational and economic zones, activities must be in full conformity
with park protection.

21.      The park, which is widely used for walking, trekking and cycling, has its own
information and interpretative centre and a small number of trails. The most developed of the
trails is the Jukhtavank to Shamakhyan Nature Trail which extends around some 10
kilometres to the west of Dilijan. This trail is relatively well developed, is signposted, and
contains a number of thematic areas for wildlife and flora as well as three picnic spots. The
majority of the park area is not as well presented and there is considerable scope for
developing additional trails and improving access from Dilijan and other points. Additionally
the tourism offer of the attraction could be diversified by the development of additional
activities, particularly in the area of eco and adventure tourism by exploiting the river and
mountain area.

22.     However, spatial distribution of 5 settlementslocated in administrative boundaries of
National Park and town Dilijan, as well as agricultural land use patterns, have not been taken
into account while implementingorganization of the state reserve. Subsequently, active
economic exploitation appeared in the territory ofthe reserve, violating the protection
regulations.

6                        3              3                                  th    th
     Discharges of 21.4 m /s and 26,7 m /s have been registered on April 24 , 29 ,and May 3th. to 15th of 2006
     respectively. Probability of discharge of these floods was estimated to be two years according Geocom Tld..
Appendix 1 16

Map 7: Protected areas
Appendix 2 17

                       II.     APPENDIX 2: TOURIST ASSESSMENT

A.     Introduction

       1.      Background

23.      Lying some kilometres to the northeast of Yerevan Dilijan is reputed to be one of the
most attractive towns in Armenia by virtue of its natural setting in a heavily forested mountain
valley and its distinctive ‘alpine’ architectural vocabulary, indeed Dilijan is often referred to as
‘Little Switzerland’. Dilijan and Tavush Marz are one of the major tourism destinations in
Armenia. Focussing primarily on serving the domestic market this forested resort, which is
surrounded by the Dilijan National Park, has been home to many Armenian artists,
composers and filmmakers. As a resort Dilijan reached its zenith during the Soviet era when
it functioned largely as a health spa which offered its visitors pure mountain air.

                                Figure 1. Provinces of Armenia

24.    Since the dissolution of the Soviet Union Dilijan in common with other health resorts
has had to adjust from a planned to a market economy and the loss of union and enterprise
funded tourists to the resort. As a result of this, and a series of economic crisis that Armenia
has undergone tourist numbers were greatly reduced. Like many Armenian towns it’s
population is steadily declining from the 23,700 reported in the 1989 census, to 14,846 in the
2001 census, with an estimated population of 15,600 by 2009.Today the mayor’s office
reports that the population has fallen further to around 8,000, a fall of 66% since 1989. This
population fall has been principally driven by a massive reduction in economic activity in the
town leading to outward migration.

25.    Recent initiatives by both the Government andprivate foundations aim to redress the
town’s decline through investments in both the tourism and education sectors. The
Tufenkian Foundation for Cultural Heritage has financed and developed the ‘Old Dilijan
Appendix 2 18

Complex in the centre of town, integrated tourist attraction. Executed in the local
architectural vocabulary the complex contains a hotel, restaurant, shops, craft workshops
and an information centre. On the educational front the RVVZ Foundation has sponsored the
development of the Dilijan United World College an international boarding school on an 88
hectare site with up to 650 students opening in 2014. A second key educational
development is the proposed cooperation between the American University of Armenia and
the Central Bank of Armenia at the bank’s new Dilijan Training Centre. This initiative will
create a tertiary establishment offering both undergraduate and post graduate courses in
economics and business studies.

26.    These ongoing investments will further strengthen Dilijan ‘s position as a tourism
centre and diversify economic activity into the educational sectorthis has led to a general
appreciate of the town’s future role as a ‘tourism and educational hub’.

27.      In spite of the ongoing flagship developments Dilijan is confronted by a number of
issues which may impede its continuing development. These issues, which are the focus of
the current programme include; the absence of an integrated planning framework, weak
institutional structures and coordination, insufficient municipal financial resources, and
substandard infrastructure. This report examines the development potential for the tourism
and cultural sector and the key issues to be resolved. Finally a number of potential
interventions are identified for financing by the Asian Development Bank within the context of
the current programme.

       2.      Definitions

28.      The definitions of terms used28.        in this report are United Nations World Tourism
Organisation and are based on Standard International Classification of Tourism Activities
(SICTA) and conform to the third revision of the International Standard Industrial
Classification of all Economic Activities (ISIC). These are as described below:
29.      Tourism: Tourism is defined as the activities of persons travelling to and staying in
places outside their usual environment for not more than one consecutive year for leisure,
business and other purposes not related to the exercise of an activity remunerated from
within the place visited. The use of this broad concept makes it possible to identify tourism
between countries as well as tourism within a country. "Tourism" refers to all activities of
visitors, including both "tourists (overnight visitors)" and "same-day visitors".
30.      Arrivals:Arrivals cannot be assumed to be equal to the number of persons travelling.
When a person visits the same country several times a year, an equal number of arrivals is
recorded. Likewise, if a person visits several countries during the course of a single trip,
his/her arrival in each country is recorded separately. Arrivals associated with inbound
tourism correspond to those arrivals by international visitors within the economic territory of
the country of reference and include both tourists and same-day non-resident visitors.
31.      Overnight stays and length of stay: Figures on overnight stays refer to the number
of nights spent by non-resident tourists in hotels and similar establishments, or in all types of
2.4 Infrastructure
32.      Expenditure in the country of origin: Tourism expenditure data are obtained from
the item "travel receipts" of the balance of payments of each country and correspond to the
"expenditure of non-resident visitors (tourists and same-day visitors)" within the economic
activity of the country of reference.
33.      Domestic Tourism: Overnight stays can also be referred to as the number of nights
by resident tourists in hotels and similar establishments, or in all types of tourism
accommodation establishments.
Appendix 2 19

B.     Current Situation

34.    Dilijan and the surrounding area is one of the leading tourist destinations in Armenia
outside of the capital, Yerevan. Anecdotal evidence suggests that tourism is one of the
leading, if not the leading, source of economic activity in the city. Set amid the Dilijan
National Park in a dramatic and attractive mountain setting the town and the surrounding
region have a wide range of existing tourism attractions and an extensive and varied range
of accommodation stock.

35.    This section broadly examines the nature and range of existing tourist attractions as
well as available accommodation in the city. Tourism infrastructure, and in particular
transport –related infrastructure, is examined and a range of key issues impacting on the
development of the tourism and cultural sector in the city are identified. Finally a SWOT
analysis setting out the strengths, weaknesses, opportunities and threats to the present
tourism offer has been prepared.

       1.     Attractions

36.     Dilijan and the surrounding area have a wide variety of tourist attractions including
historic sites, cultural attractions, scenic areas, wildlife and health spas. The principle
attractions have been broadly assessed and are set out in this section.

                         Figure 2. Attractions, Regional Context

23.     Within the study area land use and tourism resources have been fully mapped on the
project GIS data base for reference, an illustration of central area mapping is set out below
in Figure 2.2.
Appendix 2 20

                    Figure 3. Land Use and Tourism Inventory Mapping

               a.     Dilijan National Park

37.     Perhaps more than any other attraction the Dilijan National Park, or the Dilijan
Reserve, does more to set the context and backdrop to the tourism sector in the city.To
safeguard the natural environment around Dilijan the state forest reserve was founded in
1958 to become known as Dilijan National Park later in 2002. The park contains some forty
varieties of tree species, mainly oak, beech, maple and elm in forests which cover 94% of
the park territory.The National Park, which now occupies around 24,000 hectares, is well
known for its forest landscapes, rich biodiversity, medicinal mineral water springs, natural
and cultural monuments. In addition to the National Park the forests of Dilijan cover an area
of more than 34000 hectares. Rich in its fauna species to be found in the park include brown
bear, wolf, marten, otter, lynx, sylvan cat, Persian squirrel, sylvan dormouse, hedgehog,
chamois, European red deer, wild hog, pheasant, quail, partridge, Caspian turkey, culver,
bald eagle, bearded vulture, pygmy eagles, golden eagle, hawk and others.

38.      The National Park, which is administered by the Ministry of Nature Protection, is
divided into three zones; protected area, recreational zone and economic zone. All activities
with the park must conform to a set of criteria so as not to impact on the ecosystem’s
equilibrium or put at risk the cultural or scientific assets of the protected area. Human
activities are generally confined to scientific research and tourism within the Protected Zone.
In the other zones, the recreational and economic zones, activities must be in full conformity
with park protection.

39.      The park, which is widely used for walking, trekking and cycling, has its own
information and interpretative centre and a small number of trails. The most developed of the
trails is the Jukhtavank to Shamakhyan Nature Trail which extends around some 10
kilometres to the west of Dilijan. This trail is relatively well developed, is signposted, and
contains a number of thematic areas for wildlife and flora as well as three picnic spots. The
majority of the park area is not as well presented and there is considerable scope for
developing additional trails and improving access from Dilijan and other points. Additionally
the tourism offer of the attraction could be diversified by the development of additional
activities, particularly in the area of eco and adventure tourism by exploiting the river and
mountain area.
Appendix 2 21

               b.      Dilijan Museum of Local History and Art Gallery

40.     Dilijan has an exceptionally rich history and cultural heritage which is reflected in the
Dilijan Museum of Local History and Art Gallery which was founded in 1950 by a local school
teacher. The gallery houses a collection of classic and modern Armenian art as well as a fine
collection of international paintings and sculpture. In addition there is a collection Armenian
carpets, jewellery and objects. In the historic collection there are numerous artefacts from
the late Bronze Age and early Iron Age recovered from excavations of prehistoric cemeteries
at Golovino and Paganini near Dilijan. These include a number of relics, including armour,
weapons and jewellery. Many of the finest artefacts recovered from excavations were
transferred to the State Hermitage Museum in St. Petersburg where they can still be viewed.

                                  Figure 4: Dilijan Museum

41.    The Museum and Gallery, which are substantial for what is a small town,are
generally in an excellent condition and easily accessible on Myasnikyan Street above the
Aghstev River in the centre of the town.. The exhibits well displayed with interpretative
materials in Armenian, Russian and English.

42.     Haghartsin Monastery:Haghartsin Monastery is a 13th century complex which
contains three separate churches as well as a refectory and was built by the architect Minas
around 1248. The most dominant element of the ensemble is the Church of Saint St.
Astvatsatsin. The church provided the focal point of the monastery in the form of a sixteen-
faced domewhich is carried on an arched tower. Other major elements of the complex
include the church of Saint Gregory, the Church of Saint Stepanos and the refectory
building.

43.     The Haghartsin Monastery, like that of Goshavank, is located within the Dilijan
National Park, which affords it a high degree of protection. Exceptionally Haghartsin which is
a thirty minute drive from Dilijan is one of the most popular and visited monasteries in
Armenia. The monastery, which has a resident priest, is currently undergoing restoration
funded by Sultan of Sharjah in the United Arab Emirates. There has been some discussion
regarding the inclusion of this site in the UNESCO World Heritage List.
Appendix 2 22

44.     As yet Haghartsin has not been included in the ‘tentative’ UNESCO list and will have
to compete with a number of other candidate sites in Armenia. The country currently has
three sites on the UNESCO list; the Cathedral Church of Echmiadzin at Zvartnots, the
Monasteries of Haghpat and Sanahin and the Monastery of Tatev.. Haghpat and Sanahin
are in northern Lori Marz close to Alaverdi which Tatev is in the southern Syunik Marz. The
notion of ‘monastery tours’ has long been identified and is already incorporated into a
number of programmes including those of USAid and the World Bank

                              Figure 5: Haghartsin Monastery

45.       In addition, four sites have been assessed and placed on the tentative schedule for
full listing. They are; the site of the City of Dvin, the Basilica of Yeveruk, the Monastery of
Noravank and the Monastery of Tatev. It is worth noting that a number of these sites are
encountering difficulty in the listing process due to the nature of renovations works they have
carried out and that World Heritage Site listing is a rigorous and lengthy assessment
process.

46.    Goshavank Monastery: The monastery of Goshavank, which dates from the twelfth
century, is located in the village of Gosh around 15 kilometres to the east of Dilijan on the
Getuk River. The monastery, which is no longer in use, is one of the few such buildings in
the country which entry is not free. The complex consists of a number of buildings
comprising; the churches of Saint Astavatsatsin, Saint Gregory, and Grigor Lusavorich as
well as an imposing bell tower and book depository. The book depository is considered the
best among the constructions of the same type in Armenia

47.   Of particular note are the khachkars, or carved stone crosses, many of which are
esteemed to be the best examples in the world. The most famous of the khachkars is the
Aseghnagorts, or lacework, khachkar which is exhibited in the main doorway of the complex.
Appendix 2 23

Like the Haghartsin Monastery there has been some discussion regarding the possible
inclusion of this monastery on the UNESCO World Heritage List.

48.    Jukhtavank Monastery: This monastery complex, which translates as ‘two
churches’, is located three kilometres to the west of Dilijan on a tributary of the Aghstev
River and close to Dilijan mineral springs. The complex dates from the 12th century and
consists of two churches as well as a small churchyard. This is a small and not particularly
impressive site which has less of the drama of the better known monasteries in the area.
Access to the site is difficult as the motorable path has been washed away.Roadway is
mentioned as a possible ADB intervention.

49.    Matosavank Monastery - Matosavank is situated in front of JukhtakVank, at a
distance of 3.5 km to the West from Dilijan, at the right bank of the Bldan river. The
monastery complex consists of 3 low constructions. There is a medieval churchyard to the
south-east of the church. The Blessed Virgin church has been built in 1205.

               c.      Dilijan Mineral Springs

50.     Dilijan is known for its curative mineral waters which have attracted visitors to its
spas since the late nineteenth century. Today the waters are best known in the form of
bottled mineral water produced by the Dilijan Water Company at the town’s mineral springs.
The “Dilijan" mineral water factory was established in 1947 and was one of the first and best
known companies producing mineral water not only in Armenia, but also in the former
USSR. The factory produces over 8 million bottles of medicinal mineral water a year from the
spring source.

               d.      Theatres

51.     The theatre in Dilijan dates from the end of the 19th century whenamateur dramatic
groups were organised. These clubs were supplemented bt the construction of the Rotonda
this open air theatre became a centre for intellectuals throughout the Caucuses from 1900
until 1936 when it ceased to function. In 1932 the State Theatre was founded in Dilijan and
the city still maintains a strong position in the dramatic arts. Although cultural activities have
fallen away in recent years the city government has identified the renovation of Dilijan
Culture Palace as one of its development priorities.

               e.      Dilijan Music Academy and Dilijan Art Academy

52.    The musical school which was founded in 1946 plays an important role in cultural life
of the town, although its total enrolment is only around 40 students. The Yerevan State
Academy of Fine Arts has a substantial branch campus in Dilijan offering a wide range of
diploma courses and also organising summer school activities.

               f.      Dilijan Library

53.     The first library in Dilijan was opened in 1908 and was at the end of the 19th
something of a centre for cultural activity in Dilijan. The library which was subsequently
named after its founder, Aghayan, is still believed to be functioning, but with a limited role in
the cultural life of the city.
Appendix 2 24

              g.      Domestic Architecture

54.     Dilijan has a number of fine examples of domestic architecture from the late 19th and
early 20th centuries. Sadly however many fine examples of these timber buildings, as well as
the Rotunda, have been lost to landslides. The distinction ‘Dilijan Style’ which developed in
the town is believed to be a fusion of Russian and Caucasian architectural elements typified
by tiles and gabled roofs, oriole windows and whitewashed timber walling. A number of
these fine buildings still remain giving the city much of its unique character.

55.     Unfortunately many more recent construction, amongst which is the new Central
Bank complex do not respect the architectural heritage of the city nor its National Park
setting. Many of these new constructions are perhaps more suited to the faceless
environment of some anonymous conurbation. If the character of Dilijan is to be maintained,
and enhanced, then urgent steps require to be taken to develop and enforce a set of
architectural design guidelines for the city.

                               Figure 6. Dilijan Architecture

       2.      Accommodation

56.     There is no formal registration process in Armenia to register tourist accommodation
and estimated of the total volume of accommodation vary wildly. Most estimates for the total
number of available bedspaces are around 10,000, with around 90% of bed spaces being
located in Yerevan. Average room occupancy rates through the year are reported to be as
low as 20% and demand shows evidence of extreme seasonality, with a very short summer
peak season. While visitor numbers for international arrivals are a relatively healthy 843,000
a very high proportion of visitors are from the Armenian Diaspora and lodge with friends and
relatives and do not generate high levels of demand for hotel accommodation.

57.     Locally estimates of available bed spaces also vary wildly. In the case of Dilijan the
local government has reported that there are up to 3,000 bed spaces available in the town of
Dilijan alone. This would account for around 30% of national bed stock in a town of 8,000
inhabitants, clearly a highly questionable statistics. This high estimate may, in part, be
Appendix 2 25

accounted for by the practice in established resorts such as Dilijan and Jermuk of local
homeowner renting out rooms informally over the peak tourist summer period. Bus stop
shelters and the like in both destinations bear evidence of advertising for such low cost
informal accommodation.

58.     Visual surveys of the town, backed up by internet research have revealed a more
limited supply of formal accommodation, which is set out in the table below. For statistical
purposes we have calculated available bed spaces as being 2 per room, a generally
accepted planning norm.

                  Table 3. Capacity of accommodation establishments

Name                                      Category         Rooms             Bed Spaces
Best Western Dilijan                      Hotel                50                 100
Tufenkian Old Dilijan Complex             Hotel                12                  24
Hotel Dilijan Resort                      Hotel                71                 142
Impuls Health Resort                      Hotel                46                  92
Casanova Inn                              Hotel                11                  22
Dil Hill Hotel                            Hotel                19                  38
Haghartsin        Hotel     Restaurant    Hotel                24*                 48
Entertainment Complex Dilijan
Green Park                                Hotel                   9                 18
Dili Villa Guesthouse                     B&B                     7                 14
Toon Armeni                               B&B                    10*                20
Yeva Santrossyan                          B&B                     4                 8
Sotia                                     B&B                     1                 2
RoubenyatsTun                             B&B                     5                 10
Nunufar Ghazoumyan                        B&B                     3                 6
Nina’s                                    B&B                     5                 10
Magnit Guesthouse                         B&B                     12                27
Heghineh Alikkhanyan                      B&B                     4                 8
Hasmit Barseghyan                         B&B                     3                 6
Frangulyan Guest House                    B&B                     2                 4
Benik Babiyan                             B&B                     4                 8
Seno Guest House                          B&B                     4                 8
Ashot Margaryan                           B&B                     4                 8
Arus Davatyan                             B&B                     2                 4
Artsive                                   B&B                     5                 10
Armans                                    B&B                     6                 12
Anahit Hovespyan                          B&B                     3                 6
Ararat Guesthouse                         B&B                     4                 8
Getap Inn                                 B&B                    15*                30
Red Hotel                                 B&B                     7                 14
DghyakPansion                             B&B                     21                42
TOTAL                                                            369               738

59.      From research some 30 accommodation establishment have been identified with a
total of 369 rooms, 738 bed spaces. The website of the Dilijan National Park estimates that
the average daily tourist frequentation of the resort area is 500 guests, which is within the
room/bed capacity identified. With the proposed establishment of a new NTO there is a
clear need to formalise the registration of tourism accommodation in order to develop a clear
understanding of the supply side situation.
*estimated
Appendix 2 26

       3.      Tourism Infrastructure

               a.      Tourist Information

60.     Dilijan is fortunate in that it possesses two tourist information centres, which are
located in the Old Dilijan Complex with a second opposite the Central Bus Station. It should
be noted that even the capital, Yerevan, does not have a formal tourist information centre.
The Dilijan Bus Station centre, which was developed with the assistance of USAid in
collaboration with the mayor’s office and the Dilijan Tourist Association (DTA) is a purposed
built facility is open every day, with the exception of Mondays between 10h and 19h. The
centre, which also rents bicycles, has a full range of visitor information and booking services
and should serve as a model for similar destinations.

                      Figure 7. Old Dilijan Tourist Information Centre

               b.      Tourism Signage

61.      Tourism signs are an essential component of the visitors experience and are, more
often than not, the visitors initial introduction to a destination or product. Commencing at the
airport or land border tourism signage is a fundamental element in providing a welcome to
visitors. Throughout the city area, and in common with all other areas in the region visited,
directional road signage is a problem. Local road signs are inconsistent in design and
appearance, often poorly sited and frequently compete for attention with a miasma of
advertising billboards. This confusing situation is often exacerbated at night when poor levels
of illumination render many signs all but invisible until the driver is almost upon them.

62.      Directional signage on the main highways, although more consistent in design and
appearance, fares little better in our evaluation. Signage is often confusing and fails to direct
the visitor to attractions in the most direct and logical route.
Appendix 2 27

63.     Consideration should be given to the implantation of a comprehensive signage
programme for the area, covering both directional and information signage designed and
installed to international standards. In considering signage and information systems attention
should also be paid to new and fast emerging technologies and their ability to provide
detailed and real-time information through satellite navigation systems, smart phone apps
and QR coding panels. Such new media is fast establishing a role for itself as an effective
and relatively low cost option for information provision, particularly in less frequented areas
where traditional physical signage may not be cost effective as a communication medium.

               c.     Transport Issues

64.    Road capacityto the area generally seems to be adequate but should be carefully
evaluated following future visitor arrival surveys and the preparation of statistically accurate
demand projections

65.     Within the area a number of roads are in particularly poor condition, unpaved and
poorly maintained the access road to Parz Lake in particular is in need of urgent action to
ensure access to the lake as well as a number of existing resort hotels. Pedestrian footpaths
and cycles paths are generally of a low quality and underprovided. Footpaths are often in
poor condition or absent while there are no segregate cycles lanes. Moreover connectivity to
the surrounding countryside is limited.

66.     Parking, particularly in central areas and around the National Park, is an issue
particularly during the summer peak period. Careful consideration should be given to the
provision of adequate managed parking space for private vehicles and tour buses, as well as
resolving wider traffic management conflicts in congested locations.

               d.     Institutional Framework

67.     At a national level Armenia has been greatly hampered by the absence of a National
Tourism Organisation (NTO) to promote, regulate and coordinate the development of the
sector. This has a particular impact on the planning and marketing of the industry, which is
recognised by the Government to be a key potential growth sector. Detailed proposals for
the establishment of an NTO are now being considered by the Government of Armenia.
When established the NTO should furnish much needed tourism statistics to enable the
logical planning and administration of the sector at a national level.

68.     At local level there is generally a very poor understanding of the nature of the tourism
industry and a deficit of the requisite skills to plan and manage the development of the
sector. Dilijan is the exception to this situation as it has received international technical
support which led to the establishment of the Dilijan Tourism Associate, chaired by the
mayor and the establishment of the Tourism Information Centre. Much work however still
needs to be done, statistic database for the sector is very weak and detailed surveys require
to be executed in order to determine visitor numbers, mode of transport, origins and
motivations as well as completing a definitive accommodation inventory.

               e.     Telecoms and Internet

69.    There is believed to be mobile phone coverage for most of the area although we are
informed that this is generally limited to a single network, potentially leaving many visitors
without coverage. The provision of mobile phone services and, increasingly, of internet
access has become essential to the modern traveller who is coming to increasingly rely on
Appendix 2 28

mobile and wireless-based information services. This is particularly true of relatively remote
areas such as Tatev where in activities such as trekking it is the sole way of communicating
with the emergency and information services. The availability of 3G and 4G mobile
telephone networks covering the area will facilitate visitor internet access and open up the
possibility of designing area specific smartphone apps which could provide more time
sensitive visitor information as well as mapping and interpretative information throughout the
area.

70.    A detailed assessment of mobile and internet coverage for the area should be
prepared and, in cooperation with service providers, an outline programme development for
the upgrading of telecoms infrastructure throughout the study area prepared. In installing
new networks to the area efforts should be made to minimize the environmental impact of
transmitter masts.

               f.      Banking Services

71.      The availability of modern banking services and in particular credit card or bank debit
ATM and charging facilities have become essential to the modern traveler. The lack of credit
card payment facilities and an international ATM withdrawal facility is a major impediment to
tourism development. The banking sector should therefore be encouraged to expedite the
installation of ATM machines in all four identified tourism service centres; this service should
be extended to major hotels in order to facilitate hotel bill settlement. Smaller hotels as well
as bed and breakfast establishments may be able to receive payments indirectly through a
central booking portal doing away with the present situation where visitor are required to
travel with relatively large sums in cash in order to expedite the payment of accommodation
bills.
Appendix 2 29

C.          Strengths and Weaknesses of the Tourism Sector

72.      This section summarises the key strengths of the tourism offer in Dilijan as well as
identifying its principle deficiencies, or weaknesses in a SWOT analysis. This analysis also
identifies opportunities that the tourism sector could exploit and the principle threats to the
further development of the sector.

            1.     Key Strengths

                   a.      Natural Assets

     i.     Iconic Mountain Scenery
     ii.    National Park
     iii.   Birdlife and Wildlife
     iv.    Clean Mountain Air and Water

                   b.      Market Assets

     i. Strong Established Resort Destination
     ii. Strong Historic and Cultural Associations

                   c.      Built Assets

     i. Existing Accommodation Stock
     ii. Distinctive Local Architectural Style

                   d.      Cultural Assets

     i. Strong Cultural Base and Associations
     ii. Good Local Museum and Theatre
     iii. Strong Local Handicrafts

            2.     Key Opportunities

     i. Development of the Business and MICE segments through the educational sector
     ii. Development of Ecotourism products
     iii. Diversification of products in to areas such as adventure tourism and niche markets
          such as bird watching, speleology, and fishing.
     iv. Reinforcement of the retail offer

            3.     Key Weaknesses

                   a.      Support infrastructure

     i.     Poor quality and design of many hotels
     ii.    Poor signage around most tourist attractions
     iii.   Poor roads and public transport services, in particular to tourism sites
     iv.    Poor pedestrian access and street landscape
     v.     Weak internet access and mobile phone connectivity

                   b.      Planning

     i.     Shortage of tourism expertise among local government planners
Appendix 2 30

      ii. Lack of current city physical master plan
      iii. Poor protection for historic buildings and cultural heritage sites

                    c.      Product

      i.     Narrow product diversity, over-reliance on Scenic aspects
      ii.    Limited tourism activities and infrastructure in National Park
      iii.   Poor interpretation of cultural heritage product
      iv.    Shortage of major events
      v.     Poor range of quality craft and souvenir products

                    d.      Human resources

      i. Poor tourism skills, especially at hotel management level
      ii. Shortage of tourism management and marketing skills in government agencies
      iii. Shortage of quality tourism training capacity

                    e.      Marketing

      i. Lack of sustained destination marketing in key source markets
      ii. Lack of National Tourism Organisation (NTO) to coordinate marketing activities
      iii. Lack of niche marketing capacity (conferences, birding etc.)
      iv. Overdependence on the key Diaspora segment
      v. Very weak brand image in key international markets
      vi. Shortage of up-to-date online information, booking and payment facilities
      vii. Lack of visitor information provision
      viii. High prices - uncompetitive international airfares, high regional airfares

                    f.      Community involvement

      i. Limited awareness of tourism benefits among communities
      ii. Prohibitive financing costs for SME start ups

             4.     Key Threats

73.          The following items are identified as being key threats to the tourism sector in Dilijan

                    a.      Natural Assets

      i.     Degradation of the natural setting of the resort area by unplanned, uncontrolled or
             inappropriate development my negatively impact upon the appeal of the destination

                    b.      Support Infrastructure

      i.     Further development and increasing visitor arrivals will place an increasing strain on
             already under–resourced municipal services and infrastructure including road
             access, parking provision, waste collection, sewage treatment and water supply

                    c.      Human Resources

      i.  Further development of the tourism sector will place increasing demands on the
          limited local labour pool
      ii. Poor HRD will impact upon the quality of both product and service diminishing the
          attractiveness of the destination.
Appendix 2 31

            d.     Marketing

i.   Competing Destinations may emerge and draw custom away from Dilijan

            e.     Community Development

i.   The emergence of poorly trained and resourced community-based tourism
     development initiatives may discourage subsequent development as well as bringing
     to the market substandard products that do not meet visitor expectations.
Appendix 2 32

D.     Tourism Market Assessment

       1.      National Strategy

74.    The development of the tourism sector is one of the Armenian governments priority
development areas and currently a number of on-going studies by a range of international
agencies is assisting is this development process. At the outset it would be fair to state that
although the sector has considerable potential it is largely underdeveloped at the moment
and requires both institutional reform and increased levels of investment to realise its full
potential.

75.       The ArmenianTourism Strategy for Armenia 2007– 2030 which was prepared for the
Ministry of Trade and Economic Development, Government of Armenia, identified tourism as
a pillar of the economy and set the country ambitious targets for tourism development,
namely:
    ii. Armenia will welcome 3 million international tourists.
    iii. Tourism arrivals growth will have been sustained at an annual CAGR of 9%.
    iv. Armenia will increase its market share of European arrivals.
    v. International visitors will contribute an estimated US$3 billion to the Armenian
          economy.
    vi. Tourism will contribute 12% of the Gross Domestic Product and represent 23.8% of
          Merchandise Exports.
    vii. 22,300 people will be directly employed by the tourism industry – 2.0% of the total
          workforce.
    viii. Government tourism promotional spending - US$ 49 million.
    ix. Armenia will rank within the top 50 countries in the World Economic Forum Travel &
          Tourism Competitiveness Index.

76.     In 2012 Armenia received 843,000 international visitors. Although some progress has
been made the tourism sector in Armenia still faces a number of significant challenges and
has yet to take off as a major international destination. A report commissioned by EDMC is
2012 examine the development of the tourism sector in the country and examined the
evolution of tourist arrivals as well as forecast future growth. The report found that while was
strong the trend line as shown in Figure 3.1 was lagging slightly behind the forecast growth
rate

77.    All the predictions made in 2008 on the growth of tourism inflows to Armenia have
been followed thoroughly, as the following graph depicts.
Appendix 2 33

      Figure 8: Foreseen evolution of total tourism inflows to Armenia. 2010-2020

               1800
               1600
               1400
               1200
               1000
                800
                600
                400
                200
                  0
                            2010            2012*            2015          2020
                                          Min       Max          Reality

Source: EDMC Report, NSS and Armenian tourism sector 2009-2020 development strategy

78.     These 2007-08 predictions showed that Armenia would be receiving between 1.4 and
1.6 million international arrivals in 2020. Given that conditions have only improved for
Armenia over the last years, it seems wise to assume that even the most optimistic
predictions in terms of arrivals for 2020 will be met (around 1.5M international visitors).

79.     The great challenge comes when looking at the composition of these foreseen
inflows. Thus, out of these numbers, the proportion of leisure travellers was set to record a
significant growth, from around 15% in 2010 to almost 40% in 2020 (around 600,000 leisure
travellers by that year), while Diaspora would decrease from over 50% to around 30-35%.
The forecast segmentation of tourist arrivals up to 2020 is set out below in Table 3.2.

                  Table 4: Forecast arrivals segmentation 2010 - 2020

                            2010                          2015                     2020

                   Min             Max          Min              Max        Min           Max

TOTAL                 600          700          900              1.100     1.400          1.600

Leisure            15%             20%          25%              30%       35%            40%

Diaspora           50%             55%          40%              45%       30%            35%

Business           20%             25%          20%              20%       20%            25%

Subtotal           85%             100%         85%              95%       85%            100%

Others             15%             0%           15%               5%       15%             0%

Source: Armenian tourism sector 2009-2020 development strategy

80.     While forecasts for tourist arrivals have been prepared these we based on patchy
and often inconsistent statistical returns from point of entry visa application forms. The
recent Visitors Arrivals sample survey, which is still on-going, provides the only more
detailed and statistically reliable overview of the current pattern of tourism in Armenia.
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