Autumn to Show Real Situation with Croatian Hotel and Investment Market

Lauren Simmonds

Split, Croatia
Split, Croatia

In these turbulent times dominated by the global coronavirus pandemic, it looks as if we’ll need to wait until the warmer summer months pass before we know the true state of the Croatian hotel and investment market.

As Gordana Grgas/Novac writes on the 18th of June, 2020, for greater security, Valamar Riviera has reduced the capacity of its hotels for this season by 20 percent, they’re not thinking of attracting guests by lowering prices but by offering additional services, and after the borders with Austria and Germany are opened, guests no longer have to be quarantined upon returning home.

Croatian hotels are managing to open their doors considerably earlier than what was initially planned, bookings are going better in Istria than they are in Croatia’s southernmost city of Dubrovnik because Istria is a car destination. Camps are more full up than the hotels are, while among hotels – those of a higher category are doing better. The above briefly but accurately explains the situation in Croatia after the lockdown due to COVID- 19.

“We’ve prepared quite well and we have no intention of working with losses. We’re opening our hotels with the dynamics that support it,” Denis Prevolsek of Valamar Riviera notes. Most Croatian hoteliers have announced this year that they expect results at around 30 percent of what 2019’s were.

What are the opportunities for the tourism and hotel industry in the years to come? Questions like this were asked at the Colliers virtual round table called ”Tourism 2020-2022: What to expect? What to hope for?” which was held on Wednesday. The guest speaker was Dirk Bakker, the director of hotel services at Colliers International EMEA.

Hotels were generally an attractive target for investors before the coronavirus crisis struck, and this investment market was discussed, among others, by the member of the Management Board of the PBZ CO pension company Goran Kralj, which has invested a lot in tourism in recent years. He emphasised that the investment market will be very cautious until the situation around the business of hotel companies in 2020 is clarified, since those who are more heavily indebted will probably find it quite difficult to find their feet again.

“What autumn is going to look like is questionable, and the overall macroeconomic situation is important here. It will be interesting to see what the demand for accommodation will be in the next year, and what the implications in the end for tourism will be,” said Kralj when referencing the Croatian hotel and investment market.

The lockdown will be followed by a year in which the business focus is on surviving and recovering from the coronavirus crisis, says Zagreb City Hotels CEO Josipa Jutt Ferlan, who manages Hilton hotels in the region, and whose biggest source of income is congresses and business travel. They opened three Hilton hotel facilities in the City of Zagreb, held training sessions for the local congress industry in the new epidemiological conditions and are already seeing results.

“We’re rational with business and our costs, but we have to start somewhere. We can’t wait for the ideal conditions because we don’t know when they’re going to come,” she added. They have also acquired a license to operate Marriott hotels, so there are also expectations of that. Commenting on hotel prices for guests, it’s a question of a cause-and-effect relationship between supply and demand, lowering price levels can’t be the sole driver of the market.

Marina Franolic, regional manager of the international company BenchEvents, says that the autumn will show the real situation on the Croatian hotel and investment market. It will be quite difficult for everyone.

“This is an extremely good moment for new products and projects,” said Marina Franolic, adding that the problem is that no one knows how long the situation with the coronavirus epidemic will last. As for hotels in Croatia, she believes that large, branded companies will be more successful because it will be easier to convince guests of their safety, while others will find that somewhat of a challenge. She also believes that there could be a separation between the ownership of hotels and their management, which she considers to be something which would lead in a very positive direction.

For more on the Croatian hotel and investment scene, follow our business page.


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