Wednesday Column - Croatia Business 6: The Hotel Industry

This is another ambitious subject for a brief posting in the Croatia Online business column and we’re not going to pretend to do anything but scratch the surface, ready to delve deeper in future postings. One thing is abundantly clear: the Croatian Hotel Industry is in a period of rapid change, where innovators will do very well and those that find it hard to change will undoubtedly suffer.

Croatia is the “it” place at the moment and the hotel industry is poised to be one of the biggest winners from this. However it’s a very different market from just a few years ago, when the holiday makers were largely Eastern European or Germans and Austrians with holiday homes. When we first visited Croatia five years ago, there was hardly another Western European in sight, particularly from France and England, and no American twang to be heard. Now, particularly with the arrival of low cost airlines, and a number of additional routes to the main Croatian airports, Croatia is near the top of everyone’s list and, at last, serious thought is being given as to how to attract more visitors, outside the packed high season of July and August, and how to extract more value from tourists. Those thoughts need to be put into action sooner rather than later. When we travelled round Istria three years ago, we could only find one apartment owner entrepreneurial enough to heat up his holiday apartments so they were comfortable in February and we’ve been going back to him, every six months, ever since. Two Christmases ago we were the only guests in the only hotel open on the island of Vis, and only last year, in a gloriously sunny and hot first week of September, not a single restaurant (hotel or otherwise) was open for lunch on the island of Pasman.

Eastern Europeans have been very faithful to Croatia and it would be a great shame to see them priced out of the market. However, they’re not traditionally big spenders and the cheap apartment accommodation and package resort hotels are not always to the taste of the new type of tourist. The Americans are going to be a particularly hard market to attract and retain. They tend to “do Europe” rather than just pick one holiday destination and there’s a high probability that any international chain that establishes itself in Croatia may clean up on this market by being able to book the whole tour. Now is therefore the time for good Croatian hotels to put themselves on the map with the American market. Encouragingly, Time Out Publications are launching a Guide Book, a Magazine for Visitors and a Website this year in Croatia and that should go a long way to putting Croatian Hotels on the map with American and English Visitors.

It is also very encouraging to see new boutique style hotels sprouting in a variety of destinations and some established hotels recognising the need to change. Hotel Split, with it’s own beach, in Split, is a good example of this. It’s been bold enough to recognise the need to appeal to the changing market place and is undertaking major refurbishment in 2007 to gain it’s fourth star. It’s already a cut above the average older style “beach hotel” and therefore has succeeded in attracting business visitors as well as holiday makers. Art Hotel, nearer to the centre of Split, and only in it’s second year, is also aiming at the business market and has a business centre as well as good internet facilities in the rooms, something quite rare in Croatia. Given the size of Split, good hotels are fairly sparse but we hear there are plans for 15 new ones and that Le Meridien has made its first major step into the hotel market by refurbishing a large hotel just outside the town to turn it into a quality conference centre, amongst other things.

In Zagreb there are some good business hotels to choose from and the classic Hotel Esplanade, by the train station, built in 1925. In the other cities and larger towns, it is much more difficult to find anything other than the large resort style hotels, quite a few of them state owned. Trogir is an exception and now has about four small good quality hotels.

So what exactly does the future hold for the industry? Much of the answer to that is tied up with how Croatia decides to deal with the bureaucracy that paralyses a lot of its economy and deters entrepreneurs. Bureaucracy is a particular nightmare for any businesses where property is a large part of the investment. Time scales for planning permissions are erratic and uncertain which makes it extremely difficult to respond to market changes and to plan new investment or refurbishment. The next major issue is good quality market research – who exactly is the new “average” tourist, what do they want and how much will they pay. Anecdotal evidence suggests that the new breed of tourist finds it hard to spend their money in Croatia which suggests they are looking for better quality, more entertainment, better services and something a bit different. Internet services are increasingly expected in any hotel of three stars and above and not always very easy to find. A little more proactive assistance from some reception desks would help bring a smile to guests faces and a few more innovative local activities would help to provide amusement. If the more demanding American visitors do start to come in force there will no doubt be a bit of a culture shock on both sides.

The length of the season is a chicken and egg conundrum. Many hotels shut at the end of August because nobody comes; nobody comes because there’s nowhere to stay. A limited season might be the right decision for some of the more remote island hotels which depend on the weather for tourism but, with cheap flights all year round now, many of the larger towns and villages would make great weekend break or conference destinations and that’s where good marketing, advertising and delivery comes in.

Above all, if the industry can’t move fast, it may quickly loose the goodwill which it has recently re-acquired. As a relatively new top ten destination, expectations are high and disappointed visitors won’t come back. Worse they won’t be giving good reports to their friends.

In a country with so much potential as a top quality tourist destination, abundant natural assets and a relatively cheap and skilled labour force, the Hotel Industry just has to concentrate on managing its resources well, understanding and meeting the needs of its new customer base and making sure the world knows exactly how much it has got to offer. It’s only fair that the government should assist in this process where possible by taking away some of the red tape, helping to make sure the best training and education is available and co-ordinating the vast state owned tourist board network. The Tourist Offices could be much more proactive in projecting the right image internationally, rather than when people arrive, and assisting its “clients” to offer the appropriate and relevant services.