November the 1st, 2022 - The Croatian company Valamar has enjoyed some excellent results and impressive revenue growth, but could all that end up being threatened by inflationary pressures? It seems rising costs are already making a dint.
As Poslovni Dnevnik writes, according to Valamar's business report for the first nine months of 2022, this huge Croatian tourism company achieved results that confirm the recovery of business operations after two years dominated by the public health crisis, and they also indicate the significant impact of the new crisis on business costs.
2.32 billion kuna in operating income was successfully achieved by Valamar, which was an increase of 14% when compared to the pre-pandemic 2019, primarily as a result of an increase in average prices of 19.5%. Operating profit (EBITDA) during the first 9 months of this year reached 943 million kuna, representing growth of 7.7%. The highest growth was achieved by premium hotels and campsites, which confirmed the justification of Valamar's previous investments in tourism with high added value. Northern destinations have also been recording higher demand and faster recovery than southern Croatia has, although hotels down south in Dubrovnik also reached the level of traffic they enjoyed back in 2019 during the main summer season.
Operating costs for the first nine months of 2022 grew by 19% compared to 2019 due to the significant increase in energy costs and the growth of other operating costs under the influence of spiralling and ongoing inflation. Electricity costs increased by a massive 89 million kuna, while other costs increased by a total of 126 million kuna when compared to back in 2019. The biggest impact on the increase in costs has been a staggering three-fold increase in the price of electricity to 230 euros per MWh, due to which, the work of many larger accommodation facilities during the off-season has been shortened.
"With revenue growth of 14% compared to 2019, Valamar Riviera has achieved full recovery from the crisis caused by the coronavirus pandemic. Through the increase in service prices, primarily the price of accommodation in the premium segment, we managed to amortise the enormous increase in energy costs and the increase we've seen with other operating costs.
Ahead of us is a year full of a lot of uncertainty and challenges owing to the energy crisis, inflation, the cost of financing and geopolitical disturbances, but there's also good news such as Croatia's impending entry into both the Eurozone and into Schengen. The country's tourism sector should turn to the preparation of the next tourist season as soon as possible in order to ensure competitive business conditions and sustainable growth of tourism in time,'' said Zeljko Kukurin, President of the Management Board of Valamar Riviera.
Despite the crisis, investments in the amount of 530 million kuna were realised this year within several facilities managed by Valamar. The investment in Valamar Amicor Green Resort in the amount of 220 million kuna has significantly raised the quality of the offer on the Central Dalmatian island of Hvar, and refers to the construction of the first summer resort that follows the highest standards of green construction and sustainability. On the mainland in Makarska, the Dalmacija hotel was completely renovated and became Valamar's second lifestyle hotel under the PLACES brand. The Corinthia Hotel in Baska was renovated according to the standards of the Sunny Plus brand, and back in July, the acquisition of the third hotel in Obertauern was finalised, which will open for the 2022/2023 winter season, welcoming guests as Valamar Collection Kesselspitze Hotel 5*.
Valamar is otherwise the largest employer in Croatian tourism by far, employing 7,700 employees this year alone. In order to improve working conditions and retain local employees, 15 million euros were invested this year in salary increases and numerous reward programmes. By entering the TOP 10 most desirable Croatian employers, Valamar has confirmed its long-standing position as the best employer in the country's tourism sector. Back in June this year, Valamar presented its brand new sustainability strategy and ESG goals which it intends to implement until the year 2025, within which, over the next three years to be precise, it plans to become a carbon-neutral company in the first and second scope and to invest 50 million euros in the further development of its destinations and sustainability projects.
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