HUT: Tourist companies' profitability lower despite increase in number of arrivals

Despite an increase in physical indicators - arrivals and overnight stays - tourist companies in Croatia have this year reported a decrease in profitability, which can impact their future investments, Croatian Tourism Association (HUT) director Veljko Ostojic said on Tuesday.

Presenting to reporters an analysis on the tourism sector in the fourth quarter of this year, Ostojic said that all types of accommodation this year recorded a drop in the occupancy rate and that all companies had to deal with a labour shortage.

"The number of overnight stays this year has grown more slowly than the number of new beds and that disproportion brings into question the profitability of companies. This year, expenses, notably labour costs, have grown faster than revenues, which has also had an impact on the results," he said.

He warned that 2020 would be a very challenging year, especially as Croatia's rivals in the Mediterranean have been recovering owing to good results this year.

Ostojic said that he was primarily referring to Turkey, which is this year's leader in the Mediterranean, with an increase of slightly more than 14% in arrivals from 2018, while Spain, with a decrease in arrivals, is the biggest loser.

Ostojic said that Spain planned to stop increasing accommodation capacity and turn more to investments in product and service quality, which, he said, could be a good message to Croatia as well.

The European hotel market expects a 1-3% increase in average hotel prices, similarly as on the global market, and the value for money ratio will be the most important, Ostojic said, adding that in planning the 2020 tourist season one should take into account the slowing down of the European economy, Brexit and climate change, as well as other trends affecting the behaviour of tourists and their holiday destination choices.

"All recent economic forecasts for 2020 are optimistic, and for tourism they are even better, so the Croatian tourism industry can expect the continuation of current trends, but more will have to be invested in quality to keep financial results at this year's level," said Ostojic.

(Hina)

News