TRENDING
FILLING GAPS in Southeast Europe
RISKS , RETURNS CHALLENGING , BUT TIMING RIPE FOR LIKES OF CROATIA , SERBIA , MONTENEGRO , SLOVENIA .
Contributed by ALICIA SHEBER Mama Shelter Belgrade
As globalization drives travelers beyond top-tier cities , the former Yugoslavia and its neighbors are striving to replace the image of a war-torn landscape with one of unspoiled nature , ancient landmarks , cultural optimism , political stability and transactional transparency .
Yet hotel supply is lacking , particularly 4- and 5-stars . But now , according to Siniša Topalović , managing partner at Horwath HTL in Croatia , the area has 6,500 to 7,500 rooms and around US $ 1.5 billion in projects in the pipeline , suggesting an average investment of US $ 200,000 per key . Croatia , Slovenia and Montenegro are seeing double-digit growth and have the largest forecast for 5-star rooms , he says . “ Although the region still poses challenges , the risks are manageable and can potentially offer investors high rates of return .”
Croatia has led the way in mainstream development and has the largest pipeline of 4-star rooms , along with Serbia , Topalović says , with the recent combined investment of US $ 740 million into Zagreb , Dubrovnik and Split airports key to the success .
“ ALTHOUGH THE REGION STILL POSES CHALLENGES , THE RISKS ARE MANAGEABLE .”
— SINIŠA TOPALOVIĆ , MANAGING PARTNER , HORWATH HTL
Valamar Riviera , Croatia ’ s largest upscale hotel owner and operator , has about 12 % of accommodation capacity in the country . “ In recent years , labor cost has increased and labor supply is a challenge for the tourism industry ,” says Ivana Budin Arhanic , VP of business development and corporate affairs . Along with high income taxes , “ all of these lead to lower investment levels than what we would expect , given very high demand for Croatia as a destination ,” she says .
Croatia ’ s 2013 membership in the European Union fueled growth , but the notion of oversupply is a misconception , says Tomislav Popović , CEO of Maistra . “ We would really like to see serious competitors because it could be a serious step forward for the whole country ,” he says .
One of the country ’ s few companies to develop greenfield properties , Maistra owns and manages all of its more than a dozen hotels and resorts except the Hilton Dubrovnik . “ 60 % of tourist nights are in private accommodation ,” Popović says . “ The government needs to become much more
10 hotelsmag . com July / August 2018