How Has Croatian Economic Crisis Affected Valamar Riviera's Business?

By 3 November 2020

November the 3rd, 2020 - Just how has the ongoing Croatian economic crisis caused by the coronavirus pandemic affected one of Croatia's largest and most successful companies? There's a mixed bag of results.

As Novac writes, during the first three quarters of 2020, Valamar Riviera, the largest Croatian tourist company, generated 2.2 million overnight stays and total revenues in the amount of HRK 673 million, equal to 33 percent of the previous year's revenues.

At the level of the business year, Valamar Riviera expects to make a net loss, but also achieve a positive cash flow with an operating profit in the range of HRK 100 to 115 million. Valamar emphasises that they have been actively managing the situation caused by the Croatian economic crisis and the balance with the enfeebled tourist season since the very beginning of the pandemic. In March alone, the decision to pay a dividend for 2019 was revoked, members of the Supervisory Board waived their fees, and management gave up around 30 percent of salaries.

There was no contagion in their hotels

In parallel with austerity measures and increased liquidity, Valamar actively prepared for the season and modified its products and services to welcome guests safely and securely. This season, 24 hotels and resorts were opened, as well as all 15 camping resorts in eight Adriatic destinations, which employed more than 4,400 employees. Although the tourist season started at the end of June and during July, travel restrictions to Croatia caused a sharp decline in the second part of August and during the off-season. However, since the beginning of the pandemic, almost 300,000 guests have stayed in Valamar's facilities, and no cases of transmission of the infection have been recorded in any of the company's hotels and resorts. The planned investment projects for 2020 in the total amount of HRK 800 million have been partially reallocated for implementation in a period of two years. During the autumn and winter, the reconstruction of the Valamar Parentino Hotel in Porec and the Valamar Meteor Hotel in Makarska will be completed. In the next 12-24 months, all other large investments will be put on pause, including works on the construction of the Valamar Pinea Hotel in Porec, otherwise the largest tourism project in Croatia, carrying an impressive total value of HRK 790 million.

"The Croatian economic crisis has shown that systems that have previously strived for excellence and cared for all stakeholders will do so even more during times of crisis, in order to maintain the confidence of their stakeholders and be ready for a recovery period. Valamar actively managed the crisis throughout 2020 and ensured its strong position to continue development during 2021 and 2022, when business normalisation is expected. We'd like to thank all of our stakeholders, especially our employees, shareholders, suppliers, builders, banks and the Croatian Government, who partnered with Valamar in this demanding business year,'' Zeljko Kukurin, President of the Management Board of Valamar Riviera, pointed out in a statement.

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