Impacts of the Euro on the Slovenian
Tourism Industry
Helena Nemec Rudež
Štefan Bojnec
This paper examines the impacts of the Euro adoption in Slovenia on
its tourism. For this purpose, the empirical research among foreign
tourists in Slovenia was conducted on their perceptions of the Euro
adoption in Slovenia during the second half of 2007. The multivari-
ate factor analysis was performed, which confirmed the four common
dimensions of the Euro impacts on Slovenian tourism: attractiveness,
costs, expensiveness, and comparison. The mean values of the ana-
lyzed items indicate the most positive impacts of the Euro on the direct
price comparison and the easiness of comparison among tourist des-
tinations in the Euro zone. The empirical results suggest that the Euro
adoption has had the greatest impacts on better comparisons among
tourist destinations in the Euro zone, followed by a significant decline
in travel-operational costs. The increase in the expensiveness of the des-
tination among foreign tourists is confirmed, whereas no significant
improvement in the attractiveness of Slovenia as a tourist destination
was proved after the Euro adoption.
Key Words: the Euro adoption, European Union, Slovenian tourism,
multivariate factor analysis
jEL Classification: C42, E42, F36, L83
Introduction
The literature about tourism suffers from a lack of studies concerning the
effects of the Euro adoption on the attractiveness and competitiveness of
tourist destinations. The tourist sector has failed to attract research about
the Euro impacts on tourism (Gil-Pareja et al. 2007). Notwithstanding,
this open question is a very crucial research topic with policy implica-
tions, since the Euro as a national currency will be also adopted in some
Dr Helena Nemec Rudež is an Assistant Professor at the Faculty
of Tourism Studies Portorož - Turistica, University of Primorska,
Slovenia.
Dr Štefan Bojnec is an Associate Professor at the Faculty
of Management Koper, University of Primorska, Slovenia.
Managing Global Transitions 6 (4): 445-460
other, particularly Central and Eastern European, countries in the fu-
ture. This might explain why studies about the Euro impacts on tourism
are focusing especially towards these non-Euro zone countries and their
tourism industry (e. g. Bieger and Laesser (1999) for Swiss tourism; Jenk-
ins (2001) for the uk hospitality industry; Ratz and Hinek (2006) for
Hungarian tourism).
At the time when the European Union (eu) was founded in the late
1950s with the Treaty of Rome, the modern tourism in Europe was be-
ginning to develop. The phase of the modern tourism development has
been characterized by a strong tourism development and a steady growth
of tourists' arrivals and tourism expenditures, but there has also been
emerging a strong competition among existing and new tourist destina-
tions.
Since the 1990s the Single European currency (Euro) has been intro-
duced in fifteen eu countries.3 The eu drafted the Treaty of Maastricht in
December 1991, and signed it in February 1992, which provided a basis for
the Euro. Five economic and monetary conditions (called the Maastricht
convergence criteria) that have to be fulfilled before a state is allowed to
join the European Monetary Union (emu) were decided in the Treaty
of Maastricht.4 To become a member of the Euro zone, Slovenia had to
satisfy the set Maastricht convergence criteria. On 27 June 2004 Slove-
nia entered the Exchange Rate Mechanism erm2. The aim of the erm2
entry was to ensure the stability of the Slovenian Tolar/Euro exchange
rate in agreement with the competent European institutions. Finally, on
1 January 2007 Slovenia adopted the Euro as the 13th country to enter
into the Euro zone. Now, since Slovenia has entered the Euro zone, we
can evaluate the concrete effects of the Euro adoption on the Slovenian
inbound tourism. For this purpose, research was undertaken on effects
of the Euro adoption among the foreign tourists visiting Slovenia.
The goal of the research is to analyse possible effects of the Euro adop-
tion in Slovenia from the foreign tourists' point of view and, thus, to ex-
amine the consequences of the Euro for the Slovenian inbound tourism.
It is presumed that the adoption of the Euro in Slovenia has had impacts
on the attractiveness and competitiveness of the Slovenian tourism in-
dustry. The results can foresee and anticipate the possible effects of the
Euro adoption on tourism in countries that will adopt the Euro in the
future. The field research work with the written questionnaire (table 1)
was conducted in 2007. Consequently, the short-term pre- and post-Euro
adoption effects are reflected in the research.
Impacts of the Euro on the Slovenian Tourism Industry 447
table 1 Questionnaire on Euro impacts on Slovenian tourism
Please, give your personal opinion on the statements below, where 1 means 'I strongly
disagree', 2 means 'I somewhat disagree', 3 means 'I neither agree nor disagree', 4 means
'I somewhat agree', and 5 means 'I completely agree'.
ai The Euro allows me to directly compare prices in Slovenia with prices in other Euro zone countries.	1	2	3	4	5
A2 The Euro makes me feel that I get greater value for money in Slove- nia than in my country.	1	2	3	4	5
A3 Not having to exchange currencies for travel to Slovenia represents an important reduction in travel costs for me.	1	2	3	4	5
A4 The fact that the Euro is used in Slovenia reduces the time I need for travel preparation.	1	2	3	4	5
A5 Slovenia is now a more expensive destination than it was before it adopted the Euro.	1	2	3	4	5
a6 Travelling in Slovenia is now more expensive than travelling to destinations outside the Euro zone (for example Croatia, Bulgaria, Hungary).	1	2	3	4	5
A7 Travelling in Slovenia is now as expensive as travelling to other destinations within the Euro zone (for example Austria, Italy).	1	2	3	4	5
bi Travelling in Slovenia is now easier for me because of the Euro.	1	2	3	4	5
B2 When I made my travel decisions, I chose Slovenia because the Euro is used as the national currency.	1	2	3	4	5
B3 I will probably travel to Slovenia more often than I would other- wise because the Euro is used as the national currency.	1	2	3	4	5
B4 Slovenia has become better known as a destination than it was before the Euro was introduced.	1	2	3	4	5
B5 Slovenia has become a more attractive destination than it was before the Euro was introduced.	1	2	3	4	5
b6 Slovenia has a better image now than it had before it introduced the Euro.	1	2	3	4	5
B7 It is easier to compare prices in Slovenia to other destinations inside the Euro zone (for example Austria, Italy) since Slovenia adopted the Euro.	1	2	3	4	5
•	Please, indicate your age group: (a) 19 or below, (b) 20 to 29, (c) 30 to 39, (d) 40 to 49,
(e) 50 to 59, (f) 60 or over.
•What country are you from?_
•	Gender: (a) male, (b) female.
The paper proceeds as follows. The next section provides a review of
the literature. After that the research design is explained. Following this,
data sources, methods and empirical results are discussed. The conclud-
ing remarks are presented in the last section.
Review of Related Literature
More than 300 million people use the Euro as their own national cur-
rency, and the number will increase with the further Euro adoption par-
ticularly in some new member states of the eu. Prior to the Euro com-
ing into physical circulation, Torres Marques (1998) argued that the Euro
currency is potentially a major instrument for decisively improving the
present overall trends in the European tourism industry.
According to the European Commission (2007), positive impacts or
benefits of the Euro adoption can be classified into several categories:
easier travel for people (no need for currency exchange, and better com-
pared prices), impacts of the single market (no exchange rate fluctua-
tions and transaction costs, price transparency, enhances competition
by allowing for easier price comparison, better investment decisions
and more investment opportunities), impacts on the financial market,
macroeconomic impacts on the economy as a whole (for example price
stability, sound public finances, and lower interest rates), impacts on
the international role of Europe, and impacts on political integration.
Indeed, there are many impacts of the Euro on tourism.
It is clear that the Euro creates a more transparent economic envi-
ronment by eliminating exchange rate risk and uncertainties in tourism
inside the Euro zone (wto 1998). Additionally, within the Euro zone, the
exchange rate is no longer a factor of relative price competition, since it
is not possible through real exchange rate depreciation to take possible
advantages to lower the relative price of tourism products vis-a-vis com-
petitors in the Euro zone. Altogether, inside the Euro zone, exchange rate
costs have been eliminated.
The stability of the economic environment in the emu was confirmed
also by the limited effect of the Euro adoption on prices. The statisti-
cal analysis by Eurostat showed that price increase linked to the Euro
changeover in the Euro zone in 2002 ranged within 0.12% to 0.29% com-
pared to the 2.3% of inflation (measured by hicp), but the most signif-
icant part of the total effect of the Euro changeover took place between
December 2001 and January 2002 within the range of 0.09% and 0.28%
(Eurostat 2003,5). However, Eurostat indicated that the Euro changeover
had led to some price increases in specific sectors, such as restaurants,
cafes and hairdressers, recreational and sporting services. Some of these
are internationally non-tradable services that are targeting not only visi-
tors and tourists, but particularly domestic consumers. According to the
European Commission (2007), because of the regular purchases of these
kinds of services, the effect on public opinion may have been notable.
The first analyses in Slovenia, undertaken by the Institute of Macroeco-
nomic Analysis and Development (imad) have shown that: firstly, the
contribution to price rises that can be linked to the adoption of the Euro
in Slovenia is comparable to a corresponding contribution in the Euro
zone in 2002; secondly, the price increase of services in the hospitality
sector can be largely associated with the Euro adoption and explained by
corrections and rounding-up of prices; thirdly, the price increases due
to the Euro adoption were estimated at 1.8% in December 2006, and at
1.4% in January 2007 when the price increase was taking place (as in other
emu countries) in two months, i. e. in the month prior to the Euro adop-
tion and in the subsequent month (imad 2007, 9).
The Euro may be seen as an important tool for the attractiveness and
competitiveness of tourist destinations in the Euro zone countries as it
can bring many advantages to the tourism industry, as was already dis-
cussed in the 1990s' (Leu 1998; Keller 1998; Raffling 1998; Shackleford
1998). Keller (1998) divided the impacts of the Euro on tourism into
two categories: macroeconomic impacts and structural impacts (such as
price transparency). Following Keller, macroeconomic impacts include
reinforcement of the European economic and political integration and
growth within the Euro zone that causes lower interest rates and thus less
expensive investments in tourism, which enhances competitiveness. On
the other hand, according to Leu (1998,8), the Euro contributes to the ex-
pansion of freedom of travel since its use reduces the costs and time spent
on currency exchange, as well as mitigating administrative problems and
even possible cheating on the currency exchange. In addition, Shackle-
ford (1998,11) lists three benefits of the Euro for the consumers. They are:
firstly, simplicity of transactions since tourists have to carry only one, a
single currency; secondly, transparency in use, represented by a greater
familiarity with the purchasing-power of the Euro, which enables better
comparison of prices; and, thirdly, elimination of costs and time in the
economy regarding exchange of currencies.
Raffling (1998) also argues for several benefits of the Euro, such as: eas-
ier price calculation, no foreign exchange risk and costs, fewer currencies
- thus making daily life easier, image corrections through price trans-
parency and, consequently, higher travel budgets. In fact, price trans-
parency enables price comparability inside the Euro zone and, as such,
increases price competition among the tourist destinations inside the
Euro zone. Therefore, it reduces prices in the long-run and leads to the
improvement in price-to-value ratio. However, contrary to the theoret-
ical expectations, Ratz and Hinek (2006, 594) found a lack of increased
competition in the Hungarian tourism industry vis-a-vis the other Eu-
ropean tourist destinations as a result of the Euro introduction. This
suggests that not only monetary, exchange rate factors, but particularly
structural and real economy factors are important for competition in the
enlarged Euro zone tourist markets.
Furthermore, Gil-Pareja et al. (2007) argue that the Euro has induced
effects also on the expansion of business tourism as a consequence of
the positive impact of the emu on trade creation. Indeed, several pa-
pers found a positive impact of the Euro on merchandise trade devel-
opments. Therefore, this implies that international tourism in the Euro
zone is fully affected by several impacts that the Euro has brought to this
area. Moreover, shifts in international tourism flows were predicted and
thus expected because of the removal of the exchange rate (Smeral and
Weber 2000, 997). However, so far we have not found any study, made
after the Euro adoption, to confirm or reject these predictions and ex-
pectations of the Euro adoption on tourism.
So far, most of the literature on the Euro effects on tourism dates from
the period before the Euro adoption in 2002 (e. g. wto 1998; Keller 1998;
Leu 1998; Raffling 1998; Shackleford 1998; Bieger and Laesser 1999; Socher
1999; Smeral and Weber 2000; Jenkins 2001) or refers to data prior to
the Euro adoption (Mazanec 2002; Kanada 2003), or else it relies on in-
vestigation into Euro impacts outside the Euro zone. For example, Ratz
and Hinek (2006) examined the Euro impacts in Hungary. Similarly, Ba-
har and Kozak (2006) investigated on the Euro impacts on tourism in
Turkey in 2004, irrespective of whether the respondents were from the
Euro zone or not. Nevertheless, according to the findings of Gil-Pareja et
al. (2007), the impact of the Euro on tourism is greater when the Euro is
effectively circulating in the economy rather than when it was simply a
unit of account (before the year 2002). Thus, the research regarding the
Euro impacts on tourism in the Euro zone after the Euro adoption might
be crucial for understanding the attractiveness and competitiveness of
tourist destinations within the Euro zone as well as externally. Unfortu-
nately, it has received relatively little attention in the literature with the
exception of the study by Gil-Pareja et al. (2007).
Kanada (2003) studied the Euro effects on tourism in Tenerife (Spain)
and found that tourism flows to the Tenerife tourist destination declined
after joining the emu. He explained this fact by a price increase in Tener-
ife due to a price convergence across the emu (since Spain was treated
as a low-price country) that outweighs any increase in demand due to
reductions in transaction costs and currency risks. Furthermore, Kanada
states that tourism flows to Germany increased after joining the emu
because of a price convergence (since Germany was treated as a high-
price country). Smeral and Weber (2000,1000) forecasted the changes
in international tourism that are induced by the Euro adoption, which
raises tourism export in the hard-currency countries (for instance in
Germany or Austria) by improving price competitiveness, while it lowers
tourism export in the soft-currency countries (for instance in Italy). In
addition, Jenkins (2001,228-9) argued that there will be downward pres-
sures on prices in the Euro area, especially where prices are high, because
tourists seek better value-for-money, which may easily be identified by
better comparison of prices in the Euro as a single currency. Similarly,
Bahar and Kozak (2006, 241) found that Turkey has a higher competi-
tive power in prices than its counterparts in the Euro zone (for instance
France, Spain, and Greece). However, Gil-Pareja et al. (2007) investigated
the Euro effects on tourism in 2004 in the emu-12 members and found
that the emu boosts tourism flows by having a positive and significant
effect on tourism, which is quite widespread across tourist destination
countries of the emu.
Research Design
The Euro contributes to the profile and positioning of 'Destination Eu-
rope' in world tourism (Leu 1998, 7). Moreover, according to the afore-
mentioned literature review, we can derive an assumption that the adop-
tion of the Euro results in more attractive and competitive tourism in the
Euro zone. In addition, the question on the importance of the Euro for
competitiveness vis-a-vis the non-Euro zone using cross-exchange rates
is estimated in different models of destination competitiveness.5 The ef-
fects of the Euro adoption can be found in several factors of tourism des-
tination competitiveness. For instance, real exchange rate (De Keyser and
Vanhove 1994), awareness/image/brand and cost to value ratio (Ritchie
and Crouch 2000), and price competitiveness (Gooroochurn and Sugi-
yarto 2005) that are found as factors of tourism destination competi-
tiveness. Nevertheless, there is a lack of studies in the field of tourism
competitiveness research to investigate and assess the Euro impacts on
the attractiveness and competitiveness of tourism destinations inside the
Euro zone. Hence, we argue and set a hypothesis that the Euro adoption
has made the Slovenian tourist destination more attractive and compet-
itive. Based on the literature review, we try to explore foreign tourists'
perceptions of the Euro adoption in Slovenia.
Data Sources and Methods
A written questionnaire for the current study was designed (see table 1 for
more detail) to estimate the perception of the foreign tourists that visited
Slovenia during the second half of 2007 on price and non-price impacts
of the Euro adoption on Slovenian tourism attractiveness and competi-
tiveness. The written questionnaire is divided into two main parts. The
first part of the questionnaire comprised 14 five-point Likert-type scales
in order to investigate how respondents perceive the effects of the Euro
adoption, where 1 indicated 'I strongly disagree', 2 indicated 'I disagree',
3 indicated 'I neither agree nor disagree', 4 indicated 'I somewhat agree'
and 5 indicated 'I strongly agree'. The second part of the questionnaire
comprised three questions and examined basic questions on the demo-
graphic characteristics of respondents in order to classify them by age,
country of origin and gender. The questionnaire was translated from
Slovenian into English, German and Italian for the purpose of the sur-
vey. A pilot test was conducted with 21 foreign tourists to ensure clarity
and comprehensibility of the written questionnaire.
The survey was conducted among foreign tourists. For this purpose
the foreign guests of 7 Slovenian hotels were asked to complete the ques-
tionnaire. The hotels were randomly selected. The important factor for
choosing the hotel was the willingness of hotel managers to ask their
guests to participate in the survey. The data were collected in the second
half of 2007. The written questionnaires were given to the hotel guests at
the hotel reception desk when they checked into the hotel, asking them
to complete and return the questionnaire at the reception desk. A to-
tal of 139 usable questionnaires from the foreign tourists were collected
from the survey. We are aware that among possible limitations is the size
of the sample, since there were 1,751,332 foreign tourist arrivals in Slove-
nia in 2007 (see http://www.stat.si). However, we believe that our sam-
ple is representative as it was conduced in the most important Slovenian
tourist destinations and within them in the hotels that are important by
the number of foreign tourist arrivals and overnight tourist stays.
The collected data were analysed using multivariate methods of anal-
ysis and employing the Statistical Package for Social Sciences (spss) ver-
sion 14.0. Firstly, descriptive statistical analysis is used for the demo-
graphic data of respondents and for each of the Likert-type scale ques-
tions. Secondly, exploratory factor analysis (e. g., Kachigan 1991; Kline
1999; Hutcheson and Sofroniou 1999) was conducted to identify under-
lying dimensions of the Euro impacts on the Slovenian tourism industry.
Results
Descriptive statistical analysis (table 2) shows the collected demographic
characteristics of the respondents in order to reveal their age, country of
origin and gender characteristics. The respondents were by gender 49.6%
male and 50.4% female. The largest age group was older than 60 years of
age, represented by 33.8% of the respondents, followed by the 50-to 59-
year age group of 20.9% of respondents. The majority of the respondents
originated from Italy (61.2%), followed by Austria (19.4%) and the uk
(11.5%). The structure of the foreign tourists in the sample differs from
that of the structure of the foreign tourists in Slovenia. In fact, according
to the data of the surs (2008), the structure of the foreign tourists in
Slovenia in 2007 was: 21% of Italian tourists, 12% of German tourists,
12% of Austrian tourists, 5% of tourists from the uk. Therefore, we can
see that our sample includes a greater percentage of Italian tourists.
The multivariate factor analysis confirmed the existence of the four
common factors explaining the impacts of the Euro adoption: attrac-
tiveness, costs, expensiveness, and comparison (table 3). The Principal
Component methods with Varimax rotation were employed on all 14
items from the first part of the questionnaire. The eigenvalue criterion
and Scree Plot were used to identify the number of common factor di-
mensions. The four common factors emerged with eigenvalues greater
than 1. The four common factors solution was found to explain 66.7%
of total variance across the 14 items. A Bartlett's test of sphericity indi-
cated a statistically significant (p = 0.000) correlation matrix and a kmo
produced value of 0.793. This reveals that a factor analysis solution was
appropriate for the 14 items. Cronbach's alpha was computed for each
common factor. Its scores ranged from 0.557 to 0.873. Thus, the results of
the factor analysis are considered to be reliable.
The first common factor is labelled as 'Attractiveness' and includes five
items with the highest weights greater than 0.8. They are items 'Decision
on choice to travel to the destination', 'More frequent travel to destina-
table 2 Descriptive statistics on the demographic profiles of respondents
	Frequency	%
Gender		
Male	69	49.6
Female	70	50.4
Age group		
19 years or below	5	3.6
20 to 29 years	14	10.1
30 to 39 years	20	14.4
40 to 49 years	24	17.3
50 to 59 years	29	20.9
60 years and over	47	33-8
Country of origin		
Austria	27	19.4
Belgium	1	0.7
Czech Republic	1	0.7
Germany	6	4.3
The uk	16	11.5
Italy	85	61.2
Netherlands	3	2.2
tion', 'Better known destination', 'More attractive destination because',
and item 'Better image of a destination'. The second common factor is
interpreted as 'Costs' comprising four items with the highest weights
greater than 0.7 for the 'Feeling of greater value for money', 'Reduction
in travel costs', 'Time reduction of travel preparation' and item 'Easier
travel'. Item 'Decision on choice to travel to the destination' had a fac-
tor loading of 0.552 on the first common factor and 0.588 on the second
common factor. However, since the item reflects attractiveness more than
costs dimension, we decided to include it in the first common factor. The
third common factor reflects three items with the highest weights greater
than 0.8 that are associated with 'Expensiveness'. These items are: 'More
expensive destination', 'More expensive than outside the Euro-zone' and
'As expensive as in other parts in the Euro-zone'. Each of the three items is
'negatively' worded, meaning that higher values of the results show less
agreement with positive impacts of the Euro or, more specifically, they
indicate negative impacts of the Euro. The last, fourth common factor
table 3 Factor matrix explaining the impacts of the Euro adoption
Factors and items	(1)	(2)	(3)	(4)
Factor 1: Attractiveness		5.017	35.834	0.873
b6 Better image of a destination	0.849			
B5 More attractive destination	0.812			
B4 Better known destination	0.771			
B3 More frequent travel to the destination	0.598			
B2 Decision on choice to travel to the destination	0.552			
Factor 2: Costs		1.844	13.169	0.769
A3 Reduction in travel costs	0.767			
A4 Time reduction for travel preparation	0.701			
B1 Easier travel	0.684			
A2 Feeling of greater value for money	0.605			
Factor 3: Expensiveness		1.379	9.851	0.665
a6 More expensive than travelling outside the	0.805			
Euro zone				
A5 More expensive destination	0.794			
A7 As expensive as in other parts of the Euro zone	0.717			
Factor 4: Comparison		1.099	7.847	0.557
B7 Easier comparison	0.744			
A1 Direct price comparison	0.716			
notes Column headings are as follows: (1) factorloading, (2) Eigen-value, (3) variance
(%), (4) alpha. kmo = 0.793. Bartlett's Test of Sphericity = 755.516 at df = 91 with a
significance of p = 0.000.
is labelled as 'Comparison' and includes two items with weights greater
than 0.7 for 'Direct price comparison' and 'Easier comparison'. There-
fore, these results imply lower transactional and operational costs using
the Euro across the Euro zone.
The mean values and standard deviations for the 14 analyzed items
were calculated (table 4). The mean scores of the Likert's scale possible
from 1 to 5 ranged from the lowest of 2.77 to the highest of 4.17. The re-
sults suggest that the adoption of the Euro enables better comparison
of the tourist economy between Slovenia and other tourist destinations
in the Euro-zone. In fact, the mean values of both items reflecting the
common factor 'Comparisons' are the highest among all the items as
they ranged between 4.14 and 4.17, respectively. The respondents had a
table 4 Mean values and standard deviation of analyzed items
Factors and items	m	sd
Factor 1: Attractiveness
b6 Better image of a destination
B5 More attractive destination
B4 Better known destination
B3 More frequent travel to the destination
B2 Decision on choice to travel to the destination
Factor 2: Costs
A2 Feeling of more value for money
A3 Reduction in travel costs
A4 Time reduction for travel preparation
B1 Easier travel
Factor3: Expensiveness
a6 More expensive than travelling outside the Euro zone
A5 More expensive destination
A7 As expensive as in other parts of the Euro zone
Factor 4: Comparisons
B7 Easier comparison
A1 Direct price comparison
notes m - mean value, sd - standard deviation.
relatively high level of agreement with the items regarding the common
factor 'Costs'. Their mean values ranged between 3.30 for the item 'Feel-
ing of greater value for money' to 3.84 for the item 'Easier travel'. There
was less agreement among the respondents about the common factor
'Expensiveness' and the common factor 'Attractiveness'. The mean val-
ues of the items in the common factor 'Expensiveness' range between
3.04 and 3.54, indicating the perception of a more expensive destination
after the Euro adoption. The items of the common factor 'Attractiveness'
have mean values that ranged from 2.77 to 3.45. We have to stress that
there is just one item with a mean value below the neutral answer 3.00
in the common factor 'Attractiveness'; this is item 'Decision on choice to
travel to the destination' that regards the Euro impact on the decision to
visit Slovenia. There is also a wide divergence of opinion among respon-
dents reflected by relatively high standard deviations ranging between
the lowest of 1.113 and the highest of 1.523 among the items. The widest
3.45	1.294
3.17	1.293
3.44	1.287
3.03	1.523
2.77	1.515
3.30	1.317
3.63	1.247
3.45	1.270
3.84	1.270
3.25	1.235
3.54	1.249
3.04	1.334
4.17	1.113
4.15	1.335
divergence of the opinions was with the item 'More frequent travel to
destination', which states that tourists are likely to travel to Slovenia more
often because of the Euro adoption.
Conclusion
The aim of the paper has been to answer the question of whether there
are any impacts of the Euro adoption on the international attractiveness
and competitiveness of the Slovenian tourist destination. The study has
uncovered the characteristics of the Euro adoption in Slovenia as per-
ceived by the foreign tourists. A great majority of the foreign tourists in
our sample are Italian tourists. It was found that there are four common
dimensions of the Euro adoption connected with the perceptions of the
foreign tourists in Slovenia as the tourist destination particularly inside
the Euro zone.
The price competitiveness due to the Euro adoption is explained by
the four common factors: Factor 1 (Attractiveness), Factor 2 (Costs), Fac-
tor 3 (Expensiveness), and Factor 4 (Comparison). The mean values of
the analyzed items have revealed that there is a strong agreement among
the respondents regarding the items that are included in the common
factor 'Comparison'. The result suggests that a higher level of competi-
tiveness in international tourism in the Euro zone is set through enabling
easier and direct comparison of prices among the tourist destinations in-
side the Euro zone. Lower agreement is found with items regarding the
common factor 'Costs' according to the mean values. Furthermore, there
is an agreement with the items regarding the common factor 'Expen-
siveness' showing that, in the light of the foreign tourists in our sample,
Slovenia is now a more expensive tourist destination than it was before
the Euro adoption (mean score = 3.54) and it is also more expensive in
comparison to the countries outside the Euro zone (mean score = 3.25).
The latter finding depends also on cross-exchange rates or on real ex-
change rate developments of the Euro vis-a-vis other currencies, which
has not been explicitly analyzed. However, this is in line with the find-
ings of Smeral and Weber (2000) that countries with soft-currency will
feel disadvantages in price competition after the Euro adoption. This dis-
advantage, however, can be surpassed in the long-run through structural
and real economy improvements, whereas our focus has been on the bet-
ter comparison of prices in the Euro zone. Contrary to our expectations,
there is just a slight association between the Euro adoption and the in-
crease of the attractiveness of Slovenia in the perceptions of the foreign
tourists. The mean values of the items that are included in the common
factor 'Attractiveness' vary around the average score. The empirical re-
sults imply that the advantages of the Euro adoption are seen by better
comparisons, lower travel-operational costs and just a slight improve-
ment in destination attractiveness. The Euro adoption is not found as the
main criterion among the respondents for choosing Slovenia as a desti-
nation to visit. Other items regarding the common factor 'Attractiveness'
are all above the neutral answer. This is quite important for Slovenia for
its positioning as an international tourist destination.
The elimination of exchange rate transaction costs and better price
comparisons in the Euro zone have been clearly confirmed by the percep-
tions of the foreign tourists, but higher prices and just a slight increase
in attractiveness of the tourist destination have failed to contribute to a
more competitive environment of Slovenian tourism. Nevertheless, the
research does shed some light on issues related with the Euro adoption
effects on the tourism industry.
We are aware that among possible limitations is the size of the sample
as an issue for future research. Among the possible improvements of the
research is also the widening of the number of the variables in the ques-
tionnaires to be used in the multivariate factor analysis. Furthermore,
among the issues for future research are the impacts of cross-exchange
rate relations between the soft- and hard-currency countries. This can
be investigated by an inclusion of the real exchange rate with issues of
real exchange rate appreciation vs. depreciation and by different sample
coverage focusing not only on the Euro zone tourists, but also on wider
international tourist destinations. Lastly, further research is needed to
investigate possible improvements in the competitiveness of Slovenian
tourism in the long-run, vis-a-vis other new member states of the eu,
that are caused by the Euro adoption.
Notes
1 In 2002, the Euro was introduced in twelve countries: Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Nether-
lands, Portugal, and Spain. Among the EU-15 at that time, Denmark, the
United Kingdom, and Sweden remained outside the Euro adoption. In
2007, the Euro was introduced in Slovenia and in 2008 in Cyprus and
Malta. Moreover, it is worth mentioning that the Euro is also used in
transactions in some non-Euro zone countries, particularly as explained
by Gros (2002), in the 'euroized' Balkans (Montenegro and Kosovo).
2	These five macro-economic convergence criteria are: an inflation rate of
no more than 1.5 percentage points above the average of the three coun-
tries with the lowest inflation rates; nominal long-term interest rates not
exceeding by more than 2 percentage points those for the three countries
with the lowest inflation rates; no exchange rate realignment for at least
two years prior to the Euro introduction; a government budget deficit not
in excess of 3 percent of each country's gdp; and a gross debt to gdp ratio
that does not exceed 60 percent.
3	We have to clearly underline that our focus is not on the Euro impacts in
cross-exchange rate terms (e.g. Euro vis-a-vis us dollar or any other world
significant currency), but rather on the importance of the Euro adoption
for tourists that are visiting Slovenia. As the majority of them are from
the Euro zone countries, our results are biased towards the Euro impacts
on attractiveness and competitiveness of the Slovenian tourist destination
inside the Euro zone.
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