Coronavirus Answering Real Estate and Overtourism Issues – Brutally

Lauren Simmonds

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As Poslovni Dnevnik/Marija Crnjak writes on the 16th of April, 2020, there is no doubt that the current coronavirus pandemic will hurt tourism globally and severely, including Croatian tourism, and that there will be a lot of losses this year, and maybe next year, too.

At the same time, however, it is already evident that this pandemic could lead to a transformation of the market, which will be beneficial for many in the medium term, from tourists to the resident population in overcrowded destinations up and down the country. Maybe we’ll even get a chance to really experience what sustainable growth actually means in reality, a term that has otherwise sounded like a pie in the sky idea to many.

As the first analyses of the rental market have already shown, in the circumstances of Croatia’s significantly diminished demand for short-term rentals, the future of renting apartments and other properties, an activity which has experienced a surreal boom in recent years and caused chaos in numerous places across Europe, has been called into serious question.

The notion of overtourism was a drum that was being banged constantly until just a few months ago in Croatia’s highly specific case, and it came about primarily as a result of the private rental boom.

In Croatia, what for decades has been known as ”family accommodation”, under the blessing (or indeed ignorance) of the state and local government units has turned into a grimly disloyal business where everything seems to be permitted, from the devastation of the local environment, to permit and tax issues, right down to the direct and indirect mistreatment of the local population.

There can be no doubt that the residents of some Croatian cities and towns will finally be able get some sleep this summer.

Is this finally an opportunity for hotels?

Apartments in cities that are no longer profitable for renting out to foreign tourists have already begun to turn to long-term rentals, which should become cheaper with increasing supply, thus solving the problem for many who don’t own their properties. This process is happening, gradually, across the whole of Europe, where many cities have been stifled by the breakthrough of Airbnb and similar platforms, which are now looking for salvation in long-term rentals.

This segment of the Airbnb market could be well-influenced with its tools that streamline and speed up the process and reduce red tape and potential problems. Consequently, the process can also go in the direction of seeing property prices diminish, which has also been a pendulum swinging rapidly due to this kind of “tourism”.

With the unburdening of many cities, the hotel industry will benefit from stopping the boom of private rentals, which, whether they like it or not, has become direct and very serious competition. In addition, hotel owners have another opportunity to switch things up and enjoy potentially more favourable terms of contracting with global brands in the post-coronavirus crisis period.

Specifically, although the travel industry has changed rather dramatically over the last ten years, hotel brands persistently adhere to strict regulations and high franchise and management fees. At a time when most hotels in the world have closed their doors, leading hotel brands such as the Marriott or Wyndham allowed delays in investments for their interior, they also reduced their fees and marketing costs, and on top of that – they delayed inspections.

If the right parties manage to meet half way during the coronavirus crisis, hotel owners could end up with looser conditions, with brands making it easier to expand their portfolio to destinations like Croatia, but also the rest of the Mediterranean, which is a ”stronghold” still mostly dominated by local brands or independent hotels.

In the ongoing coronavirus crisis, guests could also benefit, especially local ones, who make up the main target group of tourism marketing this year, and maybe in 2021, too. Summer 2020 will depend on domestic guests from all European countries, even if the borders are opened. This is an opportunity for Croatia to adapt and implement, for example, the Cro Cards project, and perhaps some new ideas and projects that will encourage Croatian residents to explore the country more.

The Croatian National Tourist Board (HTZ) and the Ministry of Tourism could use these “lockdown” days to consider, and very carefully so, what they have available in their arsenal in this regard. Just what local entrepreneurs, innovators and local tourism professionals have to offer? It will be a challenging job knowing that Croatian tourists typically make up about 10 percent of tourist traffic, and it’s very difficult to convince Croats who simply go to the houses of relatives and friends to spend a kuna or two at a Croatian hotel or guest house, even when they can quite easily afford it.

What does Croatia want in five years?

A lot of energy needs to be invested immediately in devising the right strategy for 2021. It’s already clear that due to the collapse awaiting the airline industry, Croatia won’t be able to count on distant markets, and therefore in advertising – the country should focus on the European continent, with a particular emphasis on those who plan to arrive in Croatia by car.

Croatia is fortunate that the Germans, Austrians, and the neighbouring Slovenians have long been the base of tourist traffic in this sense, but it should be remembered that their respective governments are, more now than ever, working to keep their tourists within their own countries, too. Consideration should also be given to what travel opportunities the Italians, who have been hit hard by the coronavirus epidemic, will ultimately have.

Safety, availability, excellent hygiene, and a dose of good organisation will be the key benefits of various destinations for as long as the memory of the coronavirus pandemic lasts, and Croatia should take advantage of it.

Now is another opportunity to sit down and imagine what kind of tourism Croatia actually wants to have in five years, and on top of that – just what we want and can develop besides tourism. Placing all of your eggs in one basket is never a good idea, and Croatia’s incredible reliance on tourism and very little else at all has now proven to have been a catastrophic choice.

Make sure to follow our dedicated section for more on coronavirus in Croatia.


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