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Croatia

Capital Zagreb
Time Zone CET (GMT+1)
Country Code 385
Mobile Codes 91,92,95,98,99
ccTLD .hr
Currency Kuna (1EUR = 7.26HRK)
Land Area 56,594 sq km
Population 4.5 million
Language Croatian
Major Religion Roman Catholicism

The Croatian Tourism Industry and Outlook for 2013: Interview with Peter Fuchs

Balkanalysis.com editor’s note: in the following interview by Balkanalysis.com Director Chris Deliso with Peter Fuchs, CEO of Valamar Hotels and Resorts Croatia, readers are treated to an inside view of Croatian tourism from an industry leader in charge of Croatia’s biggest hospitality provider.

In the interview, Mr Fuchs discusses everything from his company’s holdings and activities to the challenges and opportunities that face Croatia  as it tries to modernlze and diversify its tourism offerings while finding creative ways to lengthen the tourism season. In the interview, Mr Fuchs voices his optimism that imminent EU membership will help the already strong Croatian tourism sector compete further on the European and world tourism market, and notes the benefits of recently increased air routes to Croatian destinations.

Introducing Valamar

Chris Deliso: Please tell us a little more about Valamar, which I understand is the biggest hospitality provider in Croatia. When was the company established, and what good practices did you use to develop and establish a dominant position?

Peter Fuchs: We are the leading Croatian hospitality management company, operating 39 properties situated on the Adriatic coast, with a major presence in two of the main tourist regions in Croatia, Istria and Dubrovnik. Valamar is the first Croatian hotel brand, present on the market since 2004, and represents a combination of international standards of service quality, Mediterranean gastronomic enjoyment and Croatian hospitality.

Balkanalysis-Interview with Peter Fuchs Valamar Croatia

“Croatia is becoming more and more interesting to foreign tourists, and I believe that its EU entrance will help raise awareness about Croatia,” attests Mr Fuchs.

We hold around 10% of overall Croatian categorized capacities which makes us the largest tourism portfolio owner managed by one company. We operate 23 hotels, seven apartment villages and nine campsites.

Our dominant position lies in the fact that we have the capacity for around 40,000 guests at almost 40 properties of various kinds. But of course that is not enough. We invest a lot in people. The hospitality industry makes the most of its business in service, and service is provided by people. We are aware of how important it is to attract the best people in the industry- not only managers but also the best chefs, waiters and other specialists.

Another factor behind our success is our lean management structure. We are completely focused on guest satisfaction. Our service approach is driven by the idea that each guest should leave our care carrying lasting memories of Valamar and our destinations. Our size and structure is also a very important factor explaining our success. Valamar as a management company focuses on sales and marketing activities, purchase department, operations management, HR and all other internal services. That makes us additionally competitive on the market.

Online Upgrades Increase Bookings

CD: You have recently announced your new website. What increased functionality does it have? How do you project it will help visitors and drive business?

PF: Our development of the new website was based on feedback we have received from our visitors at our old Valamar.com website. Our marketing department made a thorough analysis and thanks to their efforts and global trends we have been following, we created a completely different web page with clarified design, simple architecture and upgraded and optimized content. In the hospitality industry, content is very important – guests decide on their travel destinations based on picture, advice and on how well we manage to convey the experience of our destination.

In the hospitality business,  creating our own booking service has been a high priority since we want to have more reservations through our own channels. This also has a strong influence on our business. If we compare January 2012 with January this year, just through having the new web page we have generated 20% growth in online reservations and 30% growth in revenues.

Challenges to Tourism Operators in Croatia

CD: What are the biggest challenges to operating in Croatia? On the other hand, what are the best benefits the country offers- aside from the obvious sea, islands and history?

PF: Well, various taxes and administrative burdens are something that has a huge impact on doing business in Croatia. We are paying many taxes that are influencing our business on a daily basis. Our holding company, Valamar Adria Holding is one of the biggest investors in Croatian tourism. The Croatian government has made some steps towards improving the investment climate, and I hope that the new national tourism strategy – presented a few days ago by the minister of tourism – will additionally help Croatia to become one of the top 20 destinations in the world. Certainly, there is room for improvement in the current building and land legislation.

I would also like to see an educational system that would allow students of tourism schools, colleges and universities to receive an educated focused more on the practical side of the business, and to be able to respond to the market demands much better and faster. There is a gap in expertise in specific tourism knowledge like F&B specialists and operations managers and that is for sure a challenge for the whole Croatian tourism industry.

Croatia is a beautiful country, a true Mediterranean jewel. The biggest advantage of the country is its beautiful clean sea, untouched nature and traditional way of living. This is one of the best places in the world to live, with a very high quality of life. Therefore, it must be also a great place for tourists to visit and spend some time here.

Client Profiles and Target Audiences

CD: What is the typical tourist profile for Valamar, and does it vary between the hotels and residential properties? In terms of nationality, median age, place of residence, time of visit, etc?

PF: By definition, we are a leisure tourism company. Most of our guests are families and couples, but since we are building a strong MICE segment also, we have many business groups and individuals that are business-related. Our northern destinations like Poreč, Rabac or Krk are more family oriented, while Dubrovnik is more visited by couples, groups and elderly people. Istria is naturally very interesting to guests with specific interests, because of additional offers like hiking, biking or wine and gastronomic tourism offers.

Although our guests come from all over the Europe, our priority markets are Germany, Austria, Slovenia, France, Italy, Scandinavia and the UK. Most of them are aged between 25 and 45. Our camping guests, on the other hand, comprise a very specific market: most of them come from Germany, Austria and Slovenia, and visit us from April to November. Last year, our camping business did very well.

Croatian Tourism: Predictions for 2013

CD: What do you predict for Croatian tourism in 2013? Increase, decrease, and why?

PF: In 2012, Valamar enjoyed a growth rate of 7.8% in overnights and 14% in total revenue compared to 2011. Croatia is becoming more and more interesting to foreign tourists, and I believe that its EU entrance will help raise awareness about Croatia as a beautiful and safe country for nice and relaxing holidays. Last year Croatia as a destination did very well. There were many factors for that success; for sure, the uncertainties of the Arab Spring and the Greek crisis did help Croatia to have many more tourists, but I believe that Croatia has also become a top choice for many travelers who want to discover a new European jewel and a peaceful oasis in the middle of Europe. This year, Croatia will be a very interesting destination for not only European, but also Asian and other overseas guests.

The Impact of EU Membership on Croatian Tourism

CD: In your opinion, what will EU membership do for Croatian tourism and in particular your company? Is there anything – whether legislation, competition, consumer inflation, or other factors – that will affect your success and the success of the country as a whole?

PF: The investment climate in Croatia is getting better but there is still a lot to be done to remove administrative burdens for doing business and for investments. EU entrance could help by speeding up those processes. Croatia is at the moment enduring a relatively difficult economic situation and tourism is one of the most important industries, supporting GDP substantially.

Economic indicators show that Croatia will benefit from EU entrance. This will reflect on tourism too, and have some positive impacts. In Valamar we traditionally serve mostly foreign European guests. Entering the EU will additionally promote Croatia as an interesting destination.

Valamar sees an opportunity in the coming years, hence we are heavily investing in our properties and quality of service. In 2013, we are investing around 23 million euros in our properties. Our biggest investment is in Hotel Valamar Sanfior in Rabac, in Istria, which will become a four-star property for leisure guests with discerning demands. Our second biggest investment is in one of our best campsites on the Adriatc coast, Camping Krk on Krk island. It has its own pool, spa area, mobile homes with satellite TV and their own yard, beautiful beaches and essentially the full infrastructure of a hotel, under open skies. These investments, together with Croatia’s EU entrance, are making us set optimistic goals for the coming season.

The Challenge of Diversification and Destination Management

CD: In what ways do you see Croatia being able to diversify its tourism offering to becoming a more year-round destination, if this is possible?

PF: Croatia unfortunately still isn’t a year-round destination, and that is a huge challenge for Croatian tourism in general. That is also one of our priorities in Valamar. How can we bring a guest to Dubrovnik or Istria out of the season and provide him with memorable experiences? Property services are not enough. This year for the first time, we are having two hotels remain open for the whole year (Valamar Lacroma in Dubrovnik and Valamar Diamant in Poreč).

Croatia has a lack of destination management (DMC), quality management of destination that would strongly impact Croatian tourism in general, and naturally Valamar. Foreigners still don’t know that Dubrovnik, the former Dubrovnik Republic [of Ragusa], is the cradle of modern diplomacy and even when they come to Dubrovnik there are few developed offerings about history. The development of such products will have a strong influence on Croatian tourism in the future, and that is a challenge for a tourism country such Croatia.

On the other hand, through providing financial support, the ministry of tourism has done a good job of stimulating air traffic in the pre- and post-season periods. For example, this year we have had, for the first time, direct Croatia Airlines flights to Dubrovnik from some major European cities. This had a very positive impact on tourist arrivals to Dubrovnik this winter, and it is one of the main drivers for tourists to visit certain destinations- first of all, to have a suitable way of getting there.

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