August 14, 2020 – Another major foreign investment in Croatia heading for the graveyard, despite being a project of national strategic importance? A major blow for the Four Seasons Hvar project.
It is more than three years since I find myself in the rather unusual position of drinking Champagne on a specially chartered train from Zagreb to Sesvete, in the east of the Croatian capital, before a transfer to a warehouse.
It was perhaps not the most luxurious of settings, but what I found inside certainly was, a mock-up room of the 140-million-euro showcase Four Seasons Hvar resort, which was about to up the luxury tourism story on the Adriatic.
The Brizenica Bay and Four Seasons partnership in Stari Grad was set to give Croatia’s premier island of Hvar the global hospitality brand worthy of its elite identity, and the mood within that Sesvete warehouse was ebullient, as TCN reported at the time:
“This extremely important project, almost a billion-kuna investment, will be of great importance to Stari Grad on the island of Hvar as well as for the whole of Croatia. The island of Hvar will be provided with the necessary quality accommodation facilities, which will certainly stimulate further investment in additional facilities, thus enabling the further development of tourism on the island of Hvar. This is also an opportunity for the local tourist community to begin with the complete management of this destination and thus make the island of Hvar a high quality destination. As an islander, I am particularly pleased to see that the potential of our islands has been recognised and I would be delighted if such investments were made on my island as well.” said Tourism Minister Gari Cappelli, adding that this investment would certainly trigger other potential investors to pay deeper attention and look for opportunities for investment on the island of Hvar, in Split-Dalmatia County and in Croatia in general.
Dennis Wijsmuller, co-founder and CEO of Arqaam Capital, highlighted how proud Arqaam Capital is to support the Croatian tourism development strategy and contribute to the social and economic development of the country, the island of Hvar, and especially Stari Grad.
“By realising this project, we are strengthening the tourist infrastructure within the region, creating new jobs, and firmly placing the island of Hvar on the global luxury destination map” stated Wijsmuller, noting that the first guests at Brizenica Four Seasons – Resort and Private Residences are expected in 2019.
Minister Cappelli’s time in the spotlight passed.
It is now 13 years since the investors bought the land to develop the resort. One might have thought that a public announcement from a government minister stating that this was a project of strategic national importance would mean something in a country starved of foreign investment, largely due to its bureaucracy. And yet, it appears not to be the case.
A town council meeting in Stari Grad yesterday voted on the changes to the urbanistic plan to include amendments to the Four Seasons Hvar project, which now has a location permit, but still no road access after all these years. The investors must have been confident that the amendments would pass or they would not have put it forward for approval (if rejected, an amendment cannot normally be resubmitted for 6 months). But it would seem that their local intelligence was somewhat lacking.
The vote of the 13-person Stari Grad council was unanimous – for the motion 0, against the motion 13.
Yet one more delay for this increasingly ill-fated project, perhaps a fatal one. Interestingly, 6 of the 13 councillors to vote against were members of the ruling HDZ party, whose minister talked of the project’s national strategic importance just three years ago.
As a message to the international investment community, this is the latest high-profile failure of a major international hotel brand in Croatia.
As I noted in an editorial over a year ago, while the potential of Croatian tourism is huge for international investors, the successes are miniscule compared to the competition. Neighbouring Montenegro, for example, has a much higher investment despite a lesser tourism brand and only a sixth of Croatia’s coast. Major investments of 1.1 billion euro (Orascum, Egypt), 900 million euro (Porta Novi, Azerbaijan) and 500 million euro (Porto Montenegro, Canada and UAE) are just some investment examples which dwarf the size of the most successful major investments on the Croatian Adriatic – 160 million euro in Falkensteiner Punta Skala in 2011 and Sun Gardens Dubrovnik in 2009.
Local sources in Stari Grad told me that the opposition to the project resolves around unfulfilled financial promises (a commitment to pay for the connecting road – a road, it should be noted, whose ownership is still to be determined), aggressive lobbyists, a total absence of community involvement. Issues, one would have thought, could have been resolved over a 13-year period since the acquisition, but apparently not.
A 13-0 vote against three years after a public government commitment tells its own story and probably signals the Brizenica Bay Four Seasons Project to the major foreign investment graveyard for which Croatia has unfortunately become well-known. The door has been left open, however, as next year is election year. Applications can normally be resubmitted only after six months, but the council has agreed to a vote at any time. One wonders what would have to happen to enable a unanimous vote against to suddenly become acceptable.
It is not all bad news for foreign investors, however, and this weekend sees the opening of only the second 5-star hotel on Hvar. Maslina Resort in Stari Grad lies across the bay from Brizenica Bay. Smaller in size, embracing local manpower and products where possible, it has managed to navigate the rocky waters of Croatian planning, as well as the setbacks of corona, to open one of the most luxurious developments on the Adriatic.
It is a rare exception to the rule for foreign investments on the Adriatic.