Pandemic ¨Steals¨ Billion Euros from Croatian Hospitality Industry

Lauren Simmonds

Updated on:

Copyright Romulic and Stojcic
Copyright Romulic and Stojcic

As Jadranka Dozan/Poslovni Dnevnik writes, back at the very beginning of this week, the terraces of restaurants and cafes finally came back to some form of life. Although due to space constraints, many working in the Croatian hospitality industry have said over recent days that it is doubtful how profitable this form of re-opening will actually be for them as they may only operate outdoors. Initial estimates suggest however that a solid majority have decided to open their terraces anyway.

The state´s economic measures to preserve jobs are still in force for those who have experienced a large drop in traffic (more than 40 or 60 percent) due to the pandemic, but there was almost zero traffic for those who didn´t have the possibility of delivery for three months.

The latest detailed data from the Tax Administration on fiscalisation clearly shows how deeply the country´s epidemiological measures have left their mark on the turnover of cafes and restaurants and the Croatian hospitality industry as a whole.

From the beginning of December 2020 to the end of February 2021, ie the period in which caterers could only do deliveries (with the possibility of selling food to go as of mid-February) in the activities of preparation and serving of food and beverages, invoices worth 685 million kuna, equal to only 25 percent recorded in the same period a year earlier, were calculated. This time last year, those fiscalised receipts amounted to a very, very different 2.76 billion kuna.

If we look at the time since the appearance of the coronavirus in Croatia and the accompanying epidemiological responses of the National Civil Protection Headquarters, which is now a full year, we can see that when it comes to catering and the wider Croatian hospitality industry, the losses amount to a devastating billion euros.

Since the beginning of March last year, the fiscalised turnover in these activities has reached 9.42 billion kuna, while in the previous one-year period it exceeded 17 billion kuna. The value of reported turnover dropped, therefore, by almost 45 percent. Of course, within that average are also those with a much larger and smaller decline.

According to the data of the fiscalisation system in terms of cash transactions (and in addition to banknote payments, this includes cards, cheques, etc, except for those done via transaction accounts with banks), the second largest absolute decline in fiscalised turnover is expected by other Croatian hospitality industry workers, such as accommodation providers and rental owners.

In the past year, the fiscalised turnover in the accommodation category amounted to 4.56 billion kuna, which is 6.1 billion or 57.3 percent lower than in the previous 12 months.

According to current data, in the transport and storage sector, the fiscalised turnover since the appearance of the novel coronavirus in this country has exceeded 1.62 billion kuna, while the year before it was more than twice as much, standing at a massive 3.26 billion kuna.

More than halved turnover (-51 percent) in the year-on-year comparisons over the past 12 months was also reported by taxpayers from activities related to culture and sports (such as the arts, entertainment and other forms of recreation).

In this group of activities, turnover of less than 690 million kuna was fiscalised, which is a decrease of more than 51 percent when compared to last year’s 1.39 billion kuna. Although this week’s slight easing of the epidemiological measures also applies to sports activities, the situation in this segment remains more or less unenviable.

Although every double-digit decline is a hard pill to swallow for many enterprise owners, hairdressing and beauty salons, in the second wave of the pandemic managed to avoid putting their keys in their locks, so their decline has been holding at a still concerning but not quite as terrible 22-23 percent for some time now.

In addition to epidemiological rules, the use of their services is also affected by generally reduced movement and social life, which in fiscalised turnover in the past year was reflected in 865 million kuna value of issued receipts when compared to 1.12 billion just a year earlier.

At the same time, the information and communications sector is a category of the business sector in which the negative impact of the coronavirus crisis is barely noticeable. Fiscalised turnover in it fell just one percent; in the past 12 months it amounted to 1.51 billion kuna in total.

The same is true for fiscalisation in the agriculture, fisheries and forestry sector, in which invoices and receipts worth 1.56 billion kuna were issued over the past year, equal to around 50 million kuna less than in the previous twelve months.

Croatian enterprises operating within the health and social care sector, for example, remained out of pocket by almost half a billion kuna in turnover in these year-on-year comparisons; since last March, they reported a little more than two billion kuna in turnover, and the year before they reported 2.53 billion kuna.

The Tax Administration publishes weekly updated data on the state of fiscalised turnover in the trade sector. However, within this sector, which as a whole is recording a single-digit decline, the results of retail and wholesale differ considerably, as do those of food and non-food retail.

Croatia´s strongest economic branch, tourism, has suffered an unimaginably heavy blow at the proverbial hands of the novel coronavirus and all of the restrictions to life and movement that came with it, and with vaccination delays, new strains of the virus and difficulty in implementing certain decisions, it seems that the Croatian hospitality sector will be waiting a considerable amount of time indeed before anything that might remotely resemble normality returns.

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