How Much is Coronavirus Really Making Croatian Hotel Industry Suffer?

Lauren Simmonds

In the first half of the year, the most significant source of revenue for hotels along the Croatian Adriatic are typically conferences and congresses that were cancelled due to the coronavirus outbreak.

As Poslovni Dnevnik/Marija Crnjak writes on the 16th of March, 2020, the closure of most Croatian hotels due to coronavirus for two weeks, as was reported by the Croatian Tourism Association (HUT) on Friday, still doesn’t represent a significant loss in terms of revenue for the sector, which in the first quarter still records only minuses, and its first revenues are just starting to be generated from Easter onwards.

As Easter is less than a month away, the two weeks mentioned would therefore give the Croatian hotel industry plenty of time to ”warm up” for their first guests this year, and judging by past seasons, about 40 percent of hotels are waiting until after Easter precisely for that, despite the situation with coronavirus.

In this whole blurry situation, due to the uncertainty of what the epidemiological picture will look like after these two weeks or even after another month, it would be much more difficult for them to recruit seasonal workers, which due to movement restrictions will be technically difficult and it will be problematic to try to anticipate employment needs.

In the case of closures, Zagreb hotels, which expected a lot from revenues related to the current Croatian presidency of the EU Council in the first half of the year, will suffer more damage. The success Zagreb’s hotels once predicted is now questionable due to a series of cancelled meetings.

The first quarter is symbolic for Croatian hotels.

When it comes to the first quarter, in the years when Easter falls in April, the results of the hotel business in Croatia remain symbolic. Seasonality is a hallmark of business for those who have invested heavily in hotels, such as Valamar Riviera, which earned just 53 million kuna in the first quarter, with operating costs of 160 million kuna.

In the first three months of this year, Valamar generated only 2.4 percent of its total annual revenue of 2.2 billion kuna, or only 95,000 overnight stays, with an average daily price of 522 kuna.

The largest hotel companies, Valamar and Maistra, also reported a lot of cancellations for the period from April to May, while the summer season is still on the cards as far as they’re concerned. If the coronavirus situation improves, last minute bookings are also expected.

When it comes to Easter, 57 percent of hotels were opened during Easter last year in Croatia, which is 661 hotels out of 1167, which is about 60 more than back in 2017 when Easter fell a week earlier.

Specifically, hoteliers tend to calculate when it actually pays to open a facility, as Easter is followed by very uncertain spring months, such as the rainy and cold May of 2019, which cut incomes for many.

The current coronavirus outbreak has made many place their travel plans on hold…

Coronavirus has a strong influence on the global travel and business industry, in which conferences, trade shows and business meetings have been being cancelled. The latest Global Business Travel Association (GBTA) speed survey conducted among 1,000 of its member companies about ten days ago found Asia to be the most affected.

There, at least three of the four companies reported cancelling or suspending all or most of their business trips. Travel delays to Asia are significantly higher than their last survey, just ten days earlier, with 19 percent less travel to Hong Kong, 46 percent less travel to Taiwan, and 71 percent less travel to other Asia Pacific countries.

Half of GBTA members reported that their companies had cancelled or suspended business trips to Europe, eight percent more than ten days earlier.

Nearly one in five companies cancelled or suspended travel to North America, down from just two percent ten days earlier. One-third discontinued travel to Latin America, and nearly half cancelled travel to the Middle East.

More than four in ten (41 percent) GBTA member companies stated that their company had cancelled or suspended all international travel, regardless of the destination region.

GBTA member companies cancelled on average 43 percent of business trips (all global regions) previously booked for March 2020 due to the coronavirus outbreak. Almost 60 percent of companies, either hotel or airline companies, admit that coronavirus has already significantly soured their revenue.

Make sure to follow our business and travel pages for more. For more on coronavirus and Croatia, follow our dedicated section.


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