Valamar’s Revenue Drops 81%, Company Manages to Keep Workforce

Lauren Simmonds

Croatia’s tourism giant Valamar reported a drop in revenue of 81 percent amid the ongoing coronavirus pandemic, but in spite of that, several positive results have come about.

As Poslovni Dnevnik writes on the 31st of July, 2020, in the first six months of this year, Valamar generated total revenues of 134 million kuna, or 81% less than it did back during the same period last year, as a result of the closure of tourist facilities from March to the end of May and significant disruptions to tourist flows caused by the global pandemic. The aforementioned factors continued to negatively affect the volume of business for Valamar in June.

In the first half of this year, Valamar actively managed the coronavirus crisis and launched action plans to stabilise its operations in time. The business was successfully “paused” on March the 15th, all jobs were preserved and Valamar was ready to welcome the opening of the season in June with modified products and services that increased the safety of guests and the quality of services.

The necessary liquidity for the company has been ensured until 2021 through plans for operational savings, investment savings, payment delays and agreements with investors. Operating costs were reduced by 61% compared to the same period last year, and the package of economic measures introduced the Croatian Government helped to preserve all jobs during the closure of Valamar’s many facilities. Despite the crisis, Valamar Riviera confirmed its status as the best employer in Croatian tourism this year yet again, and took an impressive 6th place on the list of the best employers in all of Croatia.

All jobs were preserved within Valamar despite the economic crisis caused by the coronavirus pandemic

As of April the 1st, Valamar, with the support of its social partners, has been implementing the Pause, Restart programme, under which all employees who aren’t working are provided with salary compensation in the amount of at least 60% of their regular salary, but not less than 4,250 kuna net per month. In the period from March to June, over 90% of Valamar’s employees were on this ”pause”, for which the costs were jointly borne by the shareholders and the state, which subsidises this type of compensation. After the successful opening of most of Valamar’s facilities and the start of the season, today, Valamar has more than 4,000 employees working again, while 1% of the large company’s employees are still not working. Valamar will continue the Pause, Restart programme during the autumn and winter in order to preserve jobs until the spring of 2021, when business normalisation is expected.

Financial stability was maintained for further development

In addition to preserving jobs, Valamar’s priority was to ensure sufficient liquidity to amortise the coronavirus crisis and continue development in the year 2021. In March, the decision to pay a dividend for 2019 was revoked, members of the Supervisory Board waived their fees, and the company management’s salary was reduced by up to 30%. Additionally, policies and mechanisms of agreed payment deferral for 6 to 12 months to other stakeholders, including sales partners, suppliers, contractors, banks and others, have been introduced, with the aim of a balanced approach to crisis management and achieving business sustainability in times of crisis.

In agreement with the banks, Valamar has postponed the repayment of loans in 2020, and the finalisation of a new medium-term liquidity plan is expected in the coming days. Successfully acheived financial stability and an ownership-operational management model will enable full business start-up and continued development in 2021.

Investment management

The initially planned investment cycle for 2020 amounted to over 800 million kuna, but was reduced by 125 million kuna by the end of June. Valamar also temporarily slowed down the construction of the Valamar Pinea Collection Resort in Porec, Istria, the largest single investment in Croatian tourism worth a total of 790 million kuna, and postponed the completion of this investment. The investment in raising the quality and capacity of the Valamar Parentino hotel in Porec was successfully realised and the new family hotel received its first guests in the second half of July. The Supervisory Board of Imperial Riviera had given its prior consent for the continuation of investments in 2021 in the amount of 36 million kuna, which will complete the previous investments in Valamar Meteor hotels in Makarska and Valamar Parentino hotel in Porec, readying them for the 2021 tourist season.

The course of 2020’s tourist season…

During June and July, Valamar gradually opened 21 hotels and resorts and all 15 campsites in eight Croatian Adriatic destinations, which are currently accommodating more than 30,000 guests, a remarkable success given the challenges facing tourism globally at the moment.

Croatia has a unique opportunity, given the high level of security, as well as its geographical in Europe, to impose itself as the most desirable destination in the Mediterranean and achieve strong growth in 2021. It is therefore necessary to preserve jobs in tourism and support business systems that have the ability and responsibility to start business back up again very quickly. With the support of all stakeholders, Valamar actively managed the crisis, launched the 2020 tourist season and ensured its quality position for a successful return to normal.

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