From Budva we head into the hills on the main road towards Podgarica, the country's administrative capital. The road winds up directly above Budva and Sveti Stefan, affording an incredible early evening vista.

We pass Lake Skadar, one of four national parks and one of Europe's largest lakes, a mecca for bird-watchers. We also spot Sophia Loren - or, at least, a pair of peaks at the end of the lake dedicated to the well-endowed actress.

Diana points to the turning to Cetinje, and explains that Montenegrins consider this their capital - for 500 years its montainous location kept invadors at bay. They are proud of their recent independence, and that their small kingdom resisted the Ottomans for so long.

Podgorica is unremarkable, sitting in a wide valley at the confluence of the Zeta and Moraca rivers. It's one of the only flat bits of countryside that we see all week. We are soon heading up again, this time through the Moraca Canyon towards the alpine-like town of Kolašin. It's an wonderful drive, through improbable tunnels, with dramatic drops to the canyon floor. As we climb higher, the mountains become thick with forests, white-roofed farmhouses clinging to the mountainsides.

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• Into the mountains of Montenegro

Kolašin acts as a base for any number of adventurous activities as well as having a ski resort for the winter. There are two excellent hotels: Lipka, which opened in December last year, and Bianca, its larger sister property. Our rooms in Likpa are luxurious considering it is the cheaper of the two. Both are built from wood and stone to fit in with the surroundings.

We meet Vlado Lučić, Managing Director of Adriastar Hotels, which runs both of the Kolašin properties as well the hotel Adala in Budva and the Queen of Montenegro in the next coastal village of Becici, where we are staying on the coast. They are all graded at 4 stars, but Vlado reckons Bianca should be upgraded to 5. Avala is partially closed for renovation into a 5-star, one of a number that are springing up on the coast at a rate of knots.

Vlado is keen to point out the opportunity to enjoy mountain pursuits so close to the coast - it's 2.5 hours to Budva from here, from 2,000m+ to sea level, and with the climate as it is at some times in the year it's possible to sunbathe and ski on the same trip. He is working with a number of British package companies, who are either doing Montenegro add-ons to their Croatia trips, such as Thomson and Holiday Options (Dubrovnik is about an hour and a half's drive from Budva), or those with dedicated Montenegro itineraries - we came on a 7-night trip with Inghams.

Our host admits that the infrastructure could be a problem - the road from Kolašin to the coast is through the canyon and is also the main road to Belgrade, so it's easy to get caught behind lorries, increasing the journey time by up to an hour. Roads are improving, however, with large highways being built to link Croatia in the north to Albania to the south, speeding up the journey time on the coast, and another from the coast to Belgrade, so the journey to Kolasin will be cut dramatically. Vlado reckons they could take four years to build - it's no mean feat of engineering through the Montenegrin terrain.

We are unlucky with the weather - the week before we arrived in mid-September the coast had temperatures of more than 30 degrees celsius, but it's closer to 20 now, with the mountains a chilly 7 degrees, but at least it's sunny. To the locals they are Arctic conditions, usually there are high temperatures on the coast from May to October.

The next day we take a jeep safari with Luka Bulatovic, owner of the Explorer agency, and translator Jasna Vulevic. A second ski lift opens early next year, and Luka, a former Balkans skiing champion and now an instructor who runs a Slovenian resort each winter, is clearly excited by the opportunity.

On the way Luka points out land that has been bought for development, including patches rumoured to have been acquired by Roman Abramovich. In less than a year they've knocked up facilities at the base of the lift that include a couple of restaurants and a large ski equipment hall.

Jasna’s not so enthusiastic about the development of the country as a whole. She says that Montenegrins with land are all selling up to real estate companies and, with more money than they know what to do with, are sitting around all day drinking coffee and spending their time sourcing sports cars and designer clothes. There's a sense that the country is being sold out to the highest bidder, with landowners getting richer but destined to blow the money without benefitting the rest of the population. The trade-off is that more people will get jobs in the tourist industry.

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