Croatian hotels poised for new era after EU presidency
Croatian hotels poised for new era after EU presidency
24 MARCH 2020 8:14 AM

Croatia’s hoteliers are hopeful that proposed tourism-infrastructure initiatives being put in place by the government will position the country’s hotel industry for success once the coronavirus is a memory.

REPORT FROM CROATIA—It is no understatement to suggest that Croatia’s assumption of the presidency of the European Union for the first six months of this year will be different to that of its predecessors.

In these unprecedented times, however, Croatia is well-positioned to weather effects of the coronavirus (COVID-19) pandemic and come out stronger, according to sources.

Siniša Topalović, managing director at Horwath HTL Croatia, said Croatia’s agenda for the EU presidency includes initiatives to set up a dedicated fund to help development, product differentiation and tourism-related infrastructure.

“Due to other problems over the last years, the country has not invested heavily in public infrastructure, and that now presents a problem when it comes to the industry’s sustainability model,” he said, adding that is also a concern in neighboring countries such as Hungary and Slovenia.

“Croatia has a significant lack of infrastructure, a lack of convention centers, a lack of transport infrastructure,” he said, noting much of these concerns temporarily will be put to aside to deal with more pressing issues around the growing pandemic.

He added he is positive the country—and the planet—will get through the coronavirus pandemic, crediting the Croatian government for being proactive and clear in its messaging. At press time, a raft of economic measures were expected.

“This kind of weakness could be a potential risk-mitigating factor. There still is a kind of hope,” Topalović said, referring to much of Croatia’s tourism offering being largely restricted to three or four warmer summer months.

Katarina Kovačev, hotel manager of the 45-room Hotel Štacija in Kastela, which opened in 2017, said hoteliers are following government directions and setting the future of their hotels.

“We have had three very good seasons behind us, so we will build on that,” she said.

Adding to the 16%
Sources said hoteliers in Croatia will have opportunities to capitalize on demand once normalcy begins to return.

Zoran Kasum, managing director and partner at Zagreb-based HD Consulting, speaking to Hotel News Now before the coronavirus outbreak, said generally much hotel product in the country is going through a process of consolidation, with the bigger companies buying the smaller ones.

That might continue, he said.

“As well as some retirement and pension firms, investment funds are investing in troubled companies and acting as Propcos, delivering assets and portfolios to bigger hospitality companies (Opcos), for management,“ Kasum said.

He said the goal is to improve the Croatian hotel industry.

“Investments are mostly connected to increasing the level of quality in existing properties, and there is some interest for hotel franchises in already operating properties. Greenfield-wise, not many projects can be noted. Most are brownfield projects, and within that there are difficult procedures when obtaining land and permits,“ Kasum said.

Topalović said approximately 16% of accommodations/lodgings choices in Croatia are hotel rooms, while camping makes up approximately 20%, and more than 55% are holiday homes or alternative accommodations.

“We need visible products that can prove they have significant benefits of tourism, especially around sustainability. We have the potential to add a significant pool of new capacity,” he said.

Sources said the competition for guests puts big pressure on hotels in terms of occupancy and average daily rate.

“Croatia has high seasonality, which drives 85% (of guests) in three to four summer months. Therefore, despite coronavirus, there is still hope of good traffic,” Topalović said.

According to data from STR, the parent company of Hotel News Now, Croatia hotel occupancy dropped 15.2% year over year to 32.6% in February, and revenue per available room fell 7% to 195.08 Croatian kuna ($27.39). Average daily rate, though, grew by 9.7% to HRK597.53 ($83.91).

The dramatic events of the first few months of 2020 will affect Croatia’s tourism offering, sources said.

“Most hit will be three destinations,” Topalović said. “Dubrovnik, which has a lot of (meetings, incentives, conventions and exhibitions) business; Istria, a traditional drive-in market attracting many Italians and Central Europeans, and which will be definitely affected this Easter; and our capital, Zagreb, where a lot of things related to the EU presidency will be postponed or cancelled,” he said.

Topalović said in Istria the majority of hotels have closed to minimize the virus’ spread, with the hope to reopen at the beginning of June.

“There are three Hilton (hotels) in Zagreb, and one remains open. For other hotels, it is not clear, but not all will remain open,” he said.

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