Gari Cappelli Discusses Exposure of Croatian Tourism to Crisis

Lauren Simmonds

On the occasion of World Tourism Day, which embodies one of the most important and key economic branches in Croatia, the second conference entitled Tourism and Urbanism took place in the Vir Municipality, organised by Poslovni Dnevnik and Večernji list. The face of Croatian tourism, Gari Cappelli, discussed the ins and outs of the sector.

As Poslovni Dnevnik/Ivan Tominac writes on the 27th of September, 2019, longtime Minister of Tourism of the Republic of Croatia, Gari Cappelli, spoke precisely with the aim of informing the public about the current state of play and future plans in Croatia’s tourism sector. His overall message was that he believes the situation is good, and with new projects, Croatia is ready to raise the sector’s overall quality.

”If you had 1 to 2 percent more physical indicators, you’re talking about a successful tourist season, and if you had 3 percent less physical indicators, then you’re not a good minister, even though you created better financial effects and created more income with less expenditure. I avoided talking about physical indicators, but then they said that the numbers were bad.

There was talk of the July slump and the collapse of tourism, but the tourism industry saw 6 percent more tourists and 5.4 percent more revenue in the first 6 months of 2019. In July and August, due to the increase in prices, we had a short stagnation because we were waiting for a possible decrease of the same. In the end, when we add it up, we had 8 percent better results. We have fiscalised more and generated a higher turnover with higher revenues, and we expect a slight increase of 1 to 2 percent in September, which will confirm the forecasts in which we spoke abour 3 percent growth,” Croatian Minister of Tourism Gari Cappelli stated.

When it comes to apartment building and oversaturation, he said he called for a halt last year and a reorganisation of the situation which would be better aimed at matching supply and demand.

”In three years, we received 145,000 new private accommodation units and only 5,000 in terms of the hotels. On the other hand, there was an increase in occupancy in 5 star accommodation units and a decrease in those with 3 star ratings. No one asks if it’s expensive, if it’s worth it. The sustainability of the system must stop in the sense that supply is higher than the demand for private accommodation,” Cappelli added.

Austria, which transformed the concept of diffuse integral hotels 30 years ago, also faced the Croatian challenge of having too many private accommodation units. This has to start happening here as well, and it’s all about re-categorising and naming things for what they actually are.

”If we own 30 apartments, then we’re really talking about a hotel, and diffuse integral hotels have to start being built with a common reception and with a certain quality and offer that will be upgraded. These are the opportunities that they worked on in Austria when they were faced with this challenge over there. This can be an advantage for Vir in terms of increasing quality.

Croatia has quality accommodation. In some countries there are 60-70 hotels. We have the highest 3-star rating capacities, and with those, there’s still been a 3 percent drop. That’s why we have passed a law on recategorisation. What’s happened to us that is that the 3 star category facilities were categorised by someone who did so many years ago, and today, these are not the same apartments of the same quality, because time moves on.

Re-categorisation will raise both price and occupancy if you offer people what they paid for. The accommodation has to be upgraded every day, it has become a classic type of enterprise. Apartments are no longer necessarily family accommodation but entrepreneurship and business,” explained Cappelli, adding that a good offer and frequent upgrading results in a 150-160 day occupancy.

An example of good practice is Istria, which made good use of the fact that it was not in the peripheries of war thirty years ago, but on the other hand, they were educated and led the situation with positive examples from abroad. Shifts have started to happen in Dalmatia in the last 4-5 years, and they are seen in segments that were primarily focused on infrastructure. Thus, according to Cappelli, a positive example is the development of wine and gastronomic tourism in places like Benkovac near Zadar.

In addition to education, in order to generate traffic, it’s also necessary to cooperate with airlines and ferry ports and to take this service to a new level.

”Season 365 was also supported by 70 million kuna to encourage air travel, which resulted in 10-15 percent more passengers as we do joint advertising with tour operators and airlines. In two years, we’ve come to the point of having flights leave earlier and hotels staying open for longer. The ferries for the islands, on some routes, such as that of Hvar, now have 18 catamaran lines running.

As part of the new round of tax relief, the tourism tax rate should be cut by 13 percent, and as Cappelli points out, this should be reflected in a 10 to 12 percent pay increase. Prices will not be reduced and investments will seek to raise the service to a new level.

”Unless that is reduced, there will be no manpower and facilities will not be able to be filled up,” Cappelli said.

”Croatian tourism employs about 150,000 people, with a further 18,500 abroad. Importing labour is not only a Croatian reality, for example, Austria imports around 50,000 in terms of labour and is growing. There is nothing new happening to us that is not happening elsewhere,” he added.

Currently, quality conditions are being created for the development of human resources in tourism, and this is being attempted through the establishment of Centres of Competence in Tourism and Hospitality.

”We invest in staff training through 6 centres of competence for tourism, all with the aim of achieving more practice and less theory for high schools and then for retraining and lifelong education. We’re financing that with 300 million kuna, and our lecturers will come here from abroad,” said Cappelli

The much talked about Cro card project also goes in the direction of employee care. According to Cappelli, the employer would need to pay out 2,500 kuna as a reward to his employees, and that money could then be spent here in Croatia.

In addition to employer-to-employee care, mutual encouragement should be encouraged, and this is possible through affiliate advertising. Gari Cappelli also touched on the need to make sure residents are taken care of, and that tourism isn’t allowed to get out of hand and make their daily lives needlessly difficult.

”The residents must feel good first, and then come the tourists. As much as 75-80 percent of the population must be satisfied with the state of tourism in their areas, and this is tested through 15 parameters that are expressed by the local population. In Lošinj, when I was the mayor there, they were pleased with the situation. If dissatisfaction exists, then you have dissatisfied tourists and residents,” he said.

In the end, he addressed the potential crisis and how Croatia could best try to shield itself as much as possible from its negative effects.

”We’re more exposed to a crisis because we’re tied to the German market. As many as 2,900,000 tourists come to Croatia from Germany and that’s our problem. That’s why we’re focused on promotion on distant markets, and in the off-season, we’re planning promotion in 14 countries,” concluded Croatian Minister of Tourism Gari Cappelli.

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