legal framework assessment of armenia's tourism industry

164 Pages·2007·0.64 MB·English

LEG AL FRAMEWORK ASSESSMENT

OF A RMENIA’S TOURISM INDUSTRY

JUNE 2007

This publication was produced for review by the United States Agency for International Development. It

was prepared by the Strategic Development Agency NGO for the Competitive Armenain Private Sector
Project.
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LEGAL FRAMEWORK ASSESSMENT
OF ARMENIA’S TOURISM INDUSTRY

DISCLAIMER: The author’s views expressed in this publication do not necessarily reflect the
views of the United States Agency for International Development or the United States
Government.
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TABLE OF CONTENTS

EXECUTIVE SUMMARY........................................................................................................4
INTRODUCTION..................................................................................................................19
PART I
LICENSING AND CERTIFICATION SCHEMES..................................................................22
1. Hotel classification/certification.....................................................................................22
2. Tourist guides and tour escorts.....................................................................................35
3. Regulation of tour operators’ and tour agents’ activities...............................................51
PART II
ACCESS TO AND MAINTENANCE OF TOURISM FACILITIES AND SITES....................72
1. Equal access to cultural sites for nationals and foreigners..........................................72
2. Maintenance of cultural sites........................................................................................73
3. Disabled access and facilities, building regulations and design....................................75
PART III
TOURISM RELATED ENVIRONMENTAL REGULATIONS ...............................................86
1. Environmental management practices, company policies and technical measures.....86
2. Protected areas law (tourism zones, breach of regulations, planning).........................94
PART IV
SAFETY STANDARDS AND PRACTICES IN TOURISM FACILITIES AND SITES.........106
1. Fire safety...................................................................................................................106
2. Food and sanitary standards.......................................................................................112
PART V
TRANSPORTATION INFRASTRUCTURE........................................................................123
1. Transportation safety .................................................................................................123
2. Certain means of trasnport necessary for tourism purposes......................................128
PART VI
SECURITY OF TOURISTS AND PROTECTION OF THEIR RIGHTS ..............................141
1. General overview....................................................................................................141
2. Tour contracts.........................................................................................................142
3. Providing information to tourists..............................................................................144
4. Consumer protection, breach of tour contracts and compensation of damages.....148
5. Security and insurance of tourists and their goods.................................................150
6. Emergency and rescue services.............................................................................152
7. Settlement of tourism disputes................................................................................152
8. Signs in tourism sites and facilities.........................................................................154
9. Bankruptcy of tourism enterprises...........................................................................155
10. Legal framework for investments in tourism sector.................................................155
11. Legal regulations for export of cultural values and souvenirs.................................157
12. Entry visa regime for tourists...................................................................................160
CONCLUSIONS..................................................................................................................161
LIST OF ANNEXES............................................................................................................164

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EXECUTIVE SUMMARY

Tourism is one of the most dynamically developing fields of Republic of Armenia’s
(hereinafter RA) economy. A significant input in the development of these processes
was the declaration of tourism as a dominant sector of RA economy by the
Government of RA (hereinafter GOA).
One of the major factors for increasing the competitiveness of a tourism industry is
existence of a sound legal, regulatory and business environment, reasonably
balancing the interests of both tourism service providers and consumers.
This research has been conducted by Strategic Development Agency NGO based
on a signed agreement with Competitive Armenian Private Sector (CAPS/USAID)
project in the period of January 15, 2007 – April 15, 2007.
The goal of the research was to assess the current situation and opportunities
for developing tourism sector in Armenia through improvement and
development of RA tourism legislation to insure sustainable development of
tourism in Armenia.
The goal has been achieved through:
a. legal analysis of the current laws of RA to reveal the shortcomings and
imperfections of tourism regulation.
b. examination of enforcement of the current laws and regulations and their
impact on businesses.
c. comparative analysis of tourism legislation in the view of the international best
practices, WTO recommendations and regulations, EU directives, research of
best practices of tourism regulation in countries with similar economic
situation, applicable in RA.
d. evaluation of efficiency of the existing practice and system for dispute
resolution arising between tourists and the suppliers of tourism services.
e. examination of participation of GOA in bilateral and multilateral treaties and
charters, cooperation with international organizations in tourism sector.
f. conclusions and recommendations for addressing problems and issues
relating to the legal aspects of prohibiting tourism development in RA.
Throughout the research, a number of coordination meetings were held with CAPS
representatives to discuss various aspects of the work, including a more detailed
structure of the research and the final report, areas to emphasize and review the
process of the assessment.
During the research a combination of various tools and methods has been used such
as: primary research (including over 150 formal/standard interviews and over 25
expert/in-depth ones with industry stakeholders etc.), desk research and analysis.
The received data has been then cross-checked and analyzed, based on which the
final report containing corresponding recommendations was drawn.
The report consist of the following main sections, with a brief summary prior to each
one, analysis and recommendations’ sub-sections following as well as a general
conclusions section.
1. Licensing and certification schemes
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2. Access to and maintenance of tourism facilities and sites
3. Environmental regulations that could create basis for ecotourism development
in Armenia
4. Safety standards and practices in tourism facilities and sites
5. Transportation infrastructure
6. Security of tourists and protection of their rights
Attached are 20 Annexes referred in the report with more detailed information on
field research, sources and documents used.

1. LICENSING AND CERTIFICATION SCHEMES

1.1 HOTEL CLASSIFICATION/CERTIFICATION
Proliferation of hotel industry emerged the need for establishment of a certain
system, which would enable to gain some insight about the quality of services
offered by different accommodation establishments. As a result, hotel
classification/certification system has been historically developed either on the
initiatives of states or various associations in the field. Since then, many efforts have
been made to develop a uniform or model classification system. Anyhow, it still
remains diverse and special for each country (state established and controlled in
countries such as: France, Hungary, Italy, Lithuania etc.; NGO sector established
and controlled in countries like: Austria, Czech Republic, Germany, Ireland and a
combination of the two such as Estonia etc.), though with some common features. In
Armenia, the hotel classification system is a voluntary one established and controlled
by the state (i.e. Ministry of Trade and Economic Development).
Another important issue in classification remains the base-line approach towards the
criteria for the evaluation:
(cid:190) infrastructure, the most traditional set of requirements towards technical
standards the hotel should meet (such as: room sizes and numbers, room
soundproofing, heating and air-conditioning, bathroom facilities, phone
system, electrical equipment etc.)
(cid:190) service, one of the recent trends in classification of accommodation
establishments; subjective and objective evaluation of the range and quality of
services offered as a result of growing interest of customers in service and not
just facilities available (e.g. 24-hour room service, the number of languages
spoken by the reception personnel or the general attitude and helpfulness of
the personnel, certain managerial practices and the concierge's knowledge of
local restaurants etc.)
(cid:190) Mixed criteria of infrastructure and service, combining the both criteria.
Here, the accommodation establishments in general are classified by stars
mostly based on infrastructure criteria, but at the same time they can apply to
receive a classification for quality of service (like in Mexico, where
accommodation services are awarded one to five stars depending on hotel
facilities, and one to five diamonds depending on the quality of service).
The major legal acts addressing the hotel classification system in RA are the Law on
Tourism and Tourism Activities and GOA Decree of 10.06.2004 N 946 on “Adoption
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of Order and Conditions of Providing Accommodation Services, Certificates of
Category of Accommodation Establishments and Procedure of Certification”.
Gaps in the existing classification system/procedure in RA and
recommendations on further legal improvements:
(cid:190) The provisions of the GOA Decree of N 946 should be further developed in order
to address issues such as: who may not act as a member of the Evaluation
Committee for conducting the certification, as well as conduct the follow up
inspection of the accommodation establishments,
(cid:190) It is advisable to further specify the provisions in the Law on Tourism and GOA
Decree regarding the inspections of the accommodation services, whether the
inspections are made individually or by a certain committee or group, composition
of the body for exercising the inspections.
(cid:190) GOA Decree of N 946 should limit the grounds for unjustified rejections of
certification for shortcomings providing an opportunity to set deadlines for
eliminating those. Moreover, the applicant must be provided with clearly
formulated reasons for non-conformity.
(cid:190) Examination of classification standards provided by the GOA Decree 946
demonstrate that the latter are “quite complicated”, detail and “difficultly
understood” by the sector. There is a need for further simplification of these
standards. It is advisable to provide clear distinction between infrastructure and
service standards, and further divide the standards into subcategories in order to
make them easy to understand and use.

In addition, in order to make the hotel classification system popular within the
sector:
(cid:190) the benefits, costs and other implications of certification systems should be made
clear to the private sector,
(cid:190) there should be provided technical consultancy options from the initial expression
of interest and through the application phases onward, as well as guidance to the
applicant at every stage of the process,
(cid:190) there should be a good media coverage to the awarding ceremonies.

1.2. TOURIST GUIDES AND TOUR ESCORTS
Tourist guides and tour escorts are persons in direct contact with tourists, so that the
quality of their service largely determines the impression of the tourist of both; the
tour and the country in general.
The guide guides visitors in the language of their choice and interprets the cultural
and natural heritage of an area and possesses an area-specific qualification. Under
RA Law on Tourism the basic difference between the “tourist guide” and “tour escort”
is that the guide has special informational knowledge which is being provided to
tourists and that constitutes the essence of guide’s service, meanwhile the tour
escort is responsible only for organizational issues during the tour.
States pay special attention to qualifications possessed by a person acting as a
guide or tour escort and establish special licensing procedure for pursuit of such
activities. In RA there also exists a mandatory state licensing procedure for
exercising tourist guide’s and tour escort’s activities. Exception form the licensing
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requirement is provided only for the employees of a certain tourism object (site) (e.g
Guides in the State Historic Museum, Matenadaran, etc.).
The procedure of licensing and requirements to the applicant for licensing are
governed by the GOA Decree No 954 On Adoption of the Procedure of Licensing of
Tourist guides And Tour Escorts of 10.06.2004 and the Order of the Minister of
Trade and Economic Development N 190 on Adoption of Statute of the Committee
for Qualification and Licensing of Guide and Tour Escort dated 23.11.1004.

During the research of the existing legal framework and the field the following
the major gaps have been revealed:
(cid:190) Certain amendments should be made to the examination of professional
qualification of tourist guides (escorts) in RA, so as to combine both: formal
questionnaires and oral phase enabling the evaluation of academicals knowledge
and certain professional qualities necessary for the guides, such as
communication techniques, guiding skills, etc.
In addition, the licensing procedure should provide opportunity for checking
linguistic skills of the candidates. The latter should include Armenian language
testing for foreigners that are not aliens of Armenian origin or citizens of RA (such
practice exists also in Greece, Scotland, Quebec, etc.), as well as knowledge of
foreign language on behalf of candidates of Armenian origin/citizenship.
(cid:190) From the point of promotion of professionalism of tourist guides (tour escort’s) it
is advisable to provide either certain mechanism of renewal of guide’s license or
providing a binding requirement of annual trainings.
(cid:190) Special attention should be paid to promotion of contractual relations between the
tourist guide (escort) and travel undertakings, introduction of model contracts, in
order to prevent the distorted practice of obliging the guides to exercise functions
which do not directly derive from the profession of the tourist guide.
(cid:190) The guides are often obliged to endanger themselves as a result of certain
unpredicted actions of tourists or emergency situation during the tour. Thus, it is
advisable to pay certain attention to insurance of tourist guides, which may be
provided either by the tour operator on behalf of the guide (escorts) or be set as a
binding requirement for issuance a licensing to a guide (e.g. like in Austria).
(cid:190) Organization of professional education for guides should be further actively
promoted and encouraged by the GOA (its authorized body), and be promoted
with a wide involvement of professional unions of the sector. Examination of
foreign experience makes clear that countries differ in their approaches to
organization and duration of the training. However, basic principles of
organization of such trainings include:
a) wide general knowledge with specific reference to the history, geography, art,
architecture, economics, politics, religion ad sociology.
b) specialized linguistic knowledge with all languages spoken fluently including
the special terminology in various fields,
c) interpersonal skills, knowledge of communication techniques comprising the art
of guiding.
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(cid:190) Besides the training for preparing professional guides, an important issue is also
ensuring continuous retraining of already licensed guides, which is necessary for
their professional development.
(cid:190) Serious measures should be undertaken for capacity building of the professional
association uniting interests of majority of guides, namely: Armenian Guides’
Guild, which represent their interests, initiate changes and development in the
sector, dialogue with state and non-state institutions etc. The professional
association can significantly assist travel undertakings by keeping database of
working guides and providing information about those (e.g. languages spoken,
knowledge in special area and other qualifications), as well as receive and
register the feedback about the quality of service provided by the guide.

1.3. REGULATION OF TOUR OPERATORS’ AND TOUR AGENTS’ ACTIVITIES
For marketing Armenia as a beneficial tourism destination major input have the tour
operators and travel agencies. The quality of organized tour packages, especially in
inbound tourism, directly influences the rating of Armenia in the world tourism
industry.
Tour operators are engaged in preparing tour packages and making relevant
arrangements for those (e.g. reservation in accommodation establishments,
organization of sightseeing trips, distribution of tourists and arrangement of food etc),
as well as disseminating tour packages. In the meantime, tour agents act like an
intermediary in distribution of the results of tour operator’s activities.
Tour operators can be categorized into two major groups: inbound (offering for sale
packages that include travel services provided in Armenia,) and outbound (offering
for sale packages that include travel services provided outside of Armenia).
RA Law does not provide any kind of licensing or registration procedure for activities
of both: tour operators and travel agents. International practice is also different in its
approaches to this issue. Some consider existence of licensing schemes as an
artificial bar for the access of newcomers to the industry and thus ineffective (e.g.
Thailand, Mongolia, where licensing schemes have been discouraged). On the other
hand, examination of the existing practice in many European countries and countries
with Anglo-American traditions shows that they are prone to keeping a mechanism of
state control over the activities of tour operators and travel agents (e.g. Canada,
Australia, Japan, Israel, Greece, Finland, France, Croatia, Poland, Bulgaria, Serbia,
Estonia, Lithuania, etc.).
Insuring the quality and reliability of tour operators’ and travel agents’ activities in
Armenia and protection of consumers’ interests from possible swindle of
inexperienced travel undertakings, emerge the need for a certain “soft control" over
the industry, which has been raised by the sector representatives themselves.
However, such interference should, in no case, be limiting for the industry and the
criteria for licensing/accreditation should not imply artificial limitations for access to
the market for new travel undertakings, as well as create invincible obstacles for the
ones who are already in business, thus stimulating “unfair” competition amongst the
existing tour operators (agents).
In general, it should be underlined that elaboration and implementation of licensing
schemes in RA should be done hand in hand with existing travel undertakings and
their professional unions. Moreover, introduction of licensing procedure should be
done gradually, in a non distorting way for the industry. One should bear in mind also
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the fact that the costs of licensing should not be quite high, as these costs will
undoubtedly pass on consumers.
The analysis of the existing legal framework and practice of the field allows
underlining the following major issues, which need to be considered in order to
create beneficial legal preconditions for providing travel services:
(cid:190) To have a complex idea on operating tourism undertakings and thus to efficiently
exercise the state policy on tourism development in RA, it is advisable to
establish a State Register on Tourism Services (relevant examples exist in
Poland, Croatia, Serbia, Lithuania, Estonia, etc.).
(cid:190) During the field research, the field representatives particularly mentioned two
main criteria that should be prioritized while establishing licensing criteria at first:
educational or relevant work experience requirements (e.g. the manager of
the travel undertaking must be an experienced professional having either X years
experience at managerial level, or a university or college-level education in
tourism and two years experience in tourism, etc.). In addition, the examination of
foreign experience shows that certain other requirements, such as knowledge of
at least one foreign language, absence of criminal record on behalf of the
manager of travel undertaking, existence of relevant business premises etc, are
also considered (e.g. Bulgaria, Estonia, Lithuania, Serbia, Cyprus, Greece, etc).
(cid:190) Examination of foreign practices makes clear that another basic condition for
licensing travel activities is an existence of financial guarantees on behalf of
travel undertakings. They are used for returning to the passenger the difference
between the contracted price of the journey and the price of the journey reduced
in proportion to the amount of services contained in the program of the journey
but not rendered, or incompletely rendered, and for the costs of the passengers'
return trip in the case of the receivership or temporary insolvency of the organizer
of the travel. Safety funds generally may take the form of an insurance policy, a
bank guarantee, trust accounts, consumer restitution funds (administered either
by government or professional unions), financial deposit etc. Another mechanism
for this purpose is also establishment of a special requirement to the minimum
capital of the travel undertaking. It should be mentioned that financial guarantees
and safety of funds are more appropriate for outbound travel, while liability
insurance considered more important for inbound operators. However, bearing in
mind the absence of relevant practice in RA, it is advisable to provide alternatives
to travel undertakings in choosing the form of required safety.

2. ACCESS TO AND MAINTENANCE OF TOURISM FACILITIES AND SITES

2.1 EQUAL ACCESS TO CULTURAL SITES FOR NATIONALS AND
FOREIGNERS
Attractiveness of tourism sights and facilities in Armenia largely depends on two
major elements:
(cid:190) easy access for tourists
(cid:190) condition and quality of the site, which can be guaranteed by proper
maintenance.
Generally, there are neither physical nor financial obstacles for tourists visiting
cultural sites and monuments. Foreigners are provided the same opportunities as
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local visitors, fees charged are also equal. Despite the fact that there are no
regulations on discounts on legislative level, in practice most of the cultural sites
apply discounts for different groups of visitors, such as students, pupils, disabled,
etc.
The main shortcoming with access in practice is that visitors are often not
aware of discounts and other favorable terms of service in tourism sites. It is
therefore advisable for the authorized state body to order visibility of
information on existing discounts and other relevant terms of entrance for the
tourists, visiting the site.

2.2. MAINTENANCE OF CULTURAL SITES
Another important issue is the proper maintenance of tourism sites and facilities,
which is a prerequisite for attracting tourists. Maintenance is largely interconnected
with the issue of ownership of the cultural monument, as it is usually carried out
either by the owner or by his tenant. From the point of ownership, there are three
main groups of monuments: state owned unalienable monuments, state owned
alienable monuments and monuments not owned by the state. Legal acts, regulating
the regime of ownership, possibility to pass the monument under lease contract and
obligations of the tenant with respect to preservation and maintenance of the leased
cultural monument, are the Law on Historical and Cultural Monuments of State
Ownership not Subject to Alienation (11.04.2003), and the Law on Preservation and
Use of Immovable Historical and Cultural Monuments and Historical Environment
(11.11.1998) The lease contract contains specific provisions on preservation and
maintenance of the monument. In case of alienation the new owner still has the
obligation to preserve the monument and undertake actions for its due maintenance.
Accessibility of historical and cultural monuments for tourism has been considered
as an important direction of GOA policy since 1999. In the Protocol of GOA meeting
of 28 January 1999 the GOA emphasized the necessity to use tourism as a tool of
preservation of historical and cultural monuments, by placing signs, advertising and
popularizing monuments, publishing booklets and other materials, containing
information to attract tourists. It should also be noted that though existing legislation
provides for an opportunity to lease the monument to an organization, capable of
performing all the above-mentioned measures, which would lead first, to implication
of cost based approach and self-financing, and then, to profitability, few practical
steps have been taken so far. Therefore, it would be recommendable to undertake
the following measures:
(cid:190) Draft model contracts and introduce terms, necessary for the leaser to develop a
maintenance strategy and plan tourism activities in the territory of the monument.
(cid:190) In order to secure monuments the law can be amended with additional
mechanisms of control, such as preliminary approval of plans for restoration and
maintenance of the monument by the authorized state body, as well as permitting
modernization of monument or some parts of it only upon schemes, prepared by
licensed specialists.
2.3. DISABLED ACCESS AND FACILITIES, BUILDING REGULATIONS AND
DESIGN
Disabled access to tourism sites and facilities in Armenia is regulated under general
rules on disabled access. The main acts in the field are the Law on Social Protection
of Disabled (14.04.1993), the GOA Decree on Approval of Strategy of Social
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