March the 24th, 2022 - The Croatian geothermal investment wave has well and truly begun, with investments in many continental Croatian cities, including Bjelovar, Krizevci and Sveta Nedelja.

As Poslovni Dnevnik/Marija Brnic writes, over recent days, announcements from various cities in the continental part of the country that they have managed to obtain grants for the development and preparation of their projects for the use of geothermal springs have been able to be read in the media. The Ministry of Regional Development and EU Funds has conducted two tenders, which cover most of the costs of preparing all of the necessary technical documentation and to increase the capacity of geothermal energy production.

A total of three million euros was made available for documentation preparation projects, and almost five million euros was set aside for increasing production capacity. The Ministry hasn't yet announced the final results, but the cities of Bjelovar, Sveta Nedelja, Krizevci and Karlovac were the first to boast that they had received a positive response.

However, this is just the beginning, the real impetus for the use of geothermal springs, which Croatia abounds in, is yet to come. Through the NPOO programme, the Hydrocarbons Agency was approved 225 million kuna for projects to confirm geothermal potential, with the aim of using geothermal energy in heating.

It is already foreseen in the NPOO that six projects will be included, and although it isn't known by which criteria, a list of who will be candidates for a slice of the "cake" is already ready. It has been announced in the NPOO that Velika Gorica, Osijek, Donji Miholjac, Vukovar, Djurdjenovac, Zapresic, Pozega, Vinkovci and Sisak will all compete to enter the shortlist.

These are all sites that are already known to have great potential, and through the NPOO programme, the intention is to finance the assessment of geothermal deposits in four cases, and in two projects an exploration well would be built, which is crucial for obtaining geothermal water permits and as such continuing the Croatian geothermal investment wave.

The Agency for Hydrocarbons has been authorised to carry out oil and mining works on geothermal potential testing in various locations across the country, and according to the timetable, six selected projects should be ready by mid-2026.

As was made clear in the NPOO, large stand-alone projects aren't planned to support and co-finance on this basis, but the space in the new budget period will be made available through the Competitiveness and Cohesion Operational Programme, through which about 25 projects are planned in this regard.

The city of Sveta Nedelja already has one user of geothermal springs. Late last year, the Ministry of Economy granted a 20-year concession to a private investor, Eko Plodovi, a sister company of Rajska cherry tomatoes, whose geothermal sources provide the energy for greenhouses.

The new project, supported by the Ministry of Regional Development and EU funds provided by Norway, Iceland and Liechtenstein, will be supported by the City of Sveta Nedelja, and Mayor Dario Zurovec says several locations will be valorised.

The choice of locations

"One of them refers to the northwestern area, near the business zone, where geothermal water could be used to heat both public and private spaces, and the other is the southern part of the city, with many industrial consumers and public facilities," said Zurovec. A pool project is also planned, and the study will, according to Zurovec, show where the best location will end up being. The heating of the public swimming pool is also planned, but it isn't yet known at which location it will be built.

However, Bjelovar Mayor Dario Hrebak knows where the swimming pool will be in his area, which will certainly use geothermal springs. The city already has a project ready, it has even obtained building permits, and Bjelovar's pools and the entire system would be heated by a project for which the grants were obtained in these two tenders. More can be read about that here.

Karlovac and its energy company GeotermiKA, which already has a license to explore geothermal sources, managed to provide more than 3.5 million kuna for the development of the project, which intends to ensure the production of heat, primarily for public buildings, hospitals, schools, kindergartens and public lighting.

A step ahead

In addition to European funds being absorbed in this Croatian geothermal investment plan, the preparation of these projects is also being carried out by individual counties, such as Virovitica-Podravina and Osijek-Baranja. In this year's county budget, the people of Virovitica have provided 1.5 million kuna in support for the preparation of all of the documentation for research into the potential of geothermal springs in their area, and the city company Poslovni park Virovitica already has a permit for undertaking all of the research in that area.

Several years ago, Osijek-Slavonia County Prefect Ivan Anusic took secured almost three million kuna for the preparation of all of the study-technical documentation for geothermal potential exploration, also financed from EU sources, which, according to him, detected five micro-locations.

He added that an investment study is currently being prepared, which will determine what is suitable for exploitation in certain areas, ie for the needs of heating, tourism and agrogeothermy, and part for the production of electricity, because the deposits have a temperature of up to 120 celsius.

It has long been known that the Republic of Croatia is very rich in geothermal resources, and it is generally well prepared in terms of project preparation. With the new EU green policy and the current energy crisis culminating in the Ukrainian-Russian war, it has been confirmed that this is no longer a fad and a trend, but a necessity, and those who started with their preparations earlier are certainly at an advantage now.

For more, check out our business section.

March the 14th, 2022 - Croatian tech companies now have a chance at getting their hands on a slice of the ''cake'' being offered by the European Investment Bank (EIB) following the launch of a Strategic European Security Initiative (SESI) worth up to 6.6 billion euros by the year 2027.

As Poslovni Dnevnik/Ana Blaskovic writes, with the war continuing to rage in Eastern Europe following the Russian invasion, both EU and non-EU European countries are turning to stronger investment in defense and security.

The aforementioned money is earmarked for dual research (for civilian and military use), development and innovation, civilian security infrastructure and state-of-the-art technology projects, from space investment, AI, quantum technology, cyber and bio security including human security, food production and resources like water.

This new initiative will not change the definitions of excluded sectors, which specifically means that the EIB will not continue to finance armaments and defense as it is fundamentally defined. "SESI projects must be dual-purpose and guided by civilian implementation, which means that they're expected to have predominantly civilian use," the bank said.

A chance for the Croatian academic community as well

Gordan Pesic, who is in charge of business development at DOK-ING, has welcomed the EIB's initiative, believing that there are many opportunities within it for Croatian tech companies, but also for the academic community.

"There's certainly room in that programme for Croatian manufacturers, especially for those who close the so-called ''capability gaps'' in terms of security. Among them is DOK-ING, which produces robotic and automated high value-added systems that move people out of imminent danger,'' said Pesic.

Although it doesn't fund arms manufacturers or basic defense, the SESI initiative's propositions leave ample room for maneuver. "Croatian tech companies like the Osijek startup Orqa, Sestan Busch, GDI, and even textile companies developing smart materials could fit into that framework," he said.

DOK ING, at the recently concluded World Defense Show in Saudi Arabia (and about which we recently wrote), attracted a lot of attention from the Saudis with its Chest of Drawers, a unique robotic platform for operating in conditions of chemical, biological, radiological and nuclear hazards.

In addition to the real space sector, according to Pesic, there is also room for research projects taking place in institutions such as the Faculty of Electrical Engineering and Computing and the Faculty of Mechanical Engineering and Naval Architecture, as well as a range of sophisticated computer solutions, such as AI.

The Croatian tech company Orqa, which is now a world-famous startup for highly innovative drone management goggles, has also confirmed its potential interest in this new European funding programme.

"A lot of things we're developing naturally are dual purpose things, from radio communication solutions to remote vision systems, and drone technology in general," explained co-founder and CEO Srdjan Kovacevic, noting that they have used both European and Croatian funding sources effectively in the past.

''We're developing a system for transmitting video signals with low latency, which means that the video signal has a small delay and enables the efficient and precise control of a remote platform (such as a boat, vehicle or drone), it's for hobby drones, but essentially the same technology can be used defensive purposes,'' he explained.

Referring to the current turn of Europe and the EU as a bloc towards strengthening defense and security, Kovacevic says that Europe, unlike the United States, has invested very little in these segments through initiatives of private innovative companies, so in light of current events it is not surprising that there are now attempts being made to try to reduce the gap.

For more on Croatian tech companies, check out our business section.

March the 1st, 2022 - One huge Iskra investment, made by the well known Sibenik-based company, has had to be halted in the wake of the Russian invasion of Ukraine which occurred just several days ago.

As Poslovni Dnevnik/Suzana Varosanec writes, the current outbreak of war in Ukraine following an unjustified Russian invasion has currently halted activities on a project that is vital to Iskra Brodogradiliste 1's largest strategic investment in Sibenik.

Uncertainty loomed over the construction of a floating dock for the overhaul of a 5,000-tonne, 120-metre-long ship, contracted back in November last year with Ukraine's well known Pallada shipyard in Kherson. However, the solidarity of the local people of Sibenik is being shown in action. According to the claims of the director of that Sibenik shipyard, Rok Vuletic, the work in the Ukrainian shipyard, which specialises in the construction of docks, has been suspended due to the state of emergency, and people have been invited to stay at home.

"We're monitoring the development of the unfolding situation, and for now the only thing we're thinking about is that we hope that as few people as possible are suffering. We stand in solidarity with Ukrainian partners; namely, we in Croatia also have the experience of war, so we have full understanding for the situation in which they've found themselves,'' Vuletic pointed out, adding that they hope for an end to the ongoing war operations and stabilisation in the coming days.

Vuletic was in the inspection of the works on the dock about ten days ago, when, he says, everything was going smoothly and according to the dynamics and deadlines. The Iskra investment plan also envisages the modernisation of the company's facilities and infrastructure, the purchase of new equipment for shipbuilding, an increasing of capacities and the raising of energy efficiency.

For more, make sure to check out our business section.

February the 13th, 2022 - The yet-to-be-opened Kukuljanovo logistics centre near the City of Rijeka on the Northern Adriatic is the result of yet more investments made by Croatian post (Hrvatska posta), of which there have been several lately.

As Poslovni Dnevnik/Darko Bicak writes, after spending the cash of an an investment cycle totalling almost one billion kuna over the last five years, most of which went to building new and modernising existing logistics capacities, Croatian Post (HP) is about to open the new Kukuljanovo logistics centre (LC) in the Kukuljanovo industrial zone near Rijeka. The facility is worth 60 million kuna, and it should be in operation in around one month.

Prerequisites for further growth

Croatian post explained that in the previous period, their logistics space in the City of Osijek was expanded, a new logistics centre was built in Zadar, capacities in Bjelovar were expanded and a new sorting centre was built in Velika Gorica near Zagreb, which, totalling a massive 350 million kuna, is the largest investment in Croatian post's history.

According to them, the Kukuljanovo logistics centre with its 5,000 square meters of business space is the final point of investment in infrastructure, which created the preconditions for further logistical growth and development of the company.

“The new Kukuljanovo logistics centre is an important link when it comes to raising the quality and speed of providing our services to all residents who gravitate to this area - Gorski kotar, Istria, Kvarner... Infrastructural investments in the network of sorting plants will have a favourable effect on the overall development of the logistics market across Croatia.

All of the locations of modern sorting plants are strategically selected and are placed in locations that are well connected in terms of traffic and are in line with logistics trends. In the past, such facilities were located in the centres of large cities, and today they're placed on the outskirts along important traffic routes.

The number of locations where the operational part of the shipment business, such as sorting and processing, is performed, while not reducing the number of post offices available, is in more than 800 settlements with a network of 1,016 post offices,'' they said from Croatian post, headed by Ivan Culo.

"With this investment in the Kukuljanovo logistics centre, we're completing this cycle of investments in logistics and logistics infrastructure in accordance with the development strategy. Employees, green energy and digital development are the direction we're heading in. Investing in logistics and sorting capacities, the digitalisation of processes and the ‘last mile’ in the form of a network of parcel machines has brought us to a completely equal position of the leading EU postal operators. We're no longer a trend-following post office, but an equal partner. Global e-commerce retailers recognised us before the emergence of the coronavirus pandemic, and we've justified their trust in us over the last two years,'' Culo added.

In order to be in the trend of the EU Green Agenda, the Kukuljanovo logistics centre will have a solar power plant installed on its roof.

An explosion of logistical needs

The growth of e-commerce and especially Croatia's accession to the European Union (EU) has led to an explosion of logistical needs in this country. The entire logistics sector had to find a solution in a relatively short time and radically change its established ways of meeting the needs of both private and business users.

The situation was further accentuated by the global coronavirus pandemic, and for many people, online shopping and the delivery of goods to their doors has become a substitute for going out shopping in the classic way, ie going to the store. Solutions for the "new normal" do of course exist, but they aren't cheap or fast.

The fact that the transformation of Croatian post, through investments in new technology and infrastructure, has been recognised, is confirmed by the fact that some of the largest Internet retailers, such as Amazon, AboutYou and many others have chosen them for their services in Croatia and the wider region. It's worth noting that Croatian post processes Amazon shipments even for Greece and Cyprus.

For more, make sure to check out our business section.

February the 4th, 2022 - Croatian energy investment with a European Union (EU) plan to pump in a massive 6 billion euros is attracting a lot of talk among those in the sector.

As Poslovni Dnevnik/Darko Bicak writes, as announced back at the end of last year, the European Union recently presented a plan which, despite being controversial for some, will consider new investments in nuclear energy and gas thermal power plants. On top of that, it will make infrastructure environmentally sustainable, ie green, which means that it will be facilitated institutionally through EU funds and private investments in such projects.

The supplementary delegated act on the taxonomy of climate sustainable activities to mitigate and adapt to climate change, which covers certain energy activities in the gas and nuclear sectors, is particularly interesting for Croatia and Croatian energy investment because there are several projects that could be financed directly from EU funds on that basis.

First of all, we can look at the second block of the Krsko Nuclear Power Plant, which is primarily planned to be built by the neighbouring Slovenes, for which the first permits were issued last year. Croatia is not indifferent to the project and is likely to participate in it. The Krsko NPP was built back in 1983 and it has remained unchanged to this day. It represents an investment, as well as maintenance and the distribution of energy in equal proportions between the two neighbouring nations of Slovenia and Croatia.

Although there are no details about that yet, it is certain that such a model would be applied to Block 2. The estimated cost of the project is between six and 10 billion US dollars, according to green activists in the wider region who oppose expanding nuclear capacity in Krsko and point out that it is, in addition to being dangerous and archaic, too expensive and unprofitable in regard to technology.

It is interesting that most of the opposition to the upgrade of Krsko comes from Austria, where there is a common position of politicians, as well as from the public and activists that this project must be prevented at all costs. Over more recent years, Croatia has invested heavily in gas infrastructure, and a similar trend is expected in the coming period. The LNG project on Krk proved to be important and functional, as an example. All energy experts have warned for the past 20 years, as far as this project is concerned, that LNG gas is too expensive and unprofitable compared to natural gas coming through gas pipelines.

That being said, they also didn't deny that this is a strategic infrastructure project that will give Croatia and the wider region, through energy diversification, much greater geopolitical power in the event of a political or energy crisis in Eastern Europe or the Middle East. A certain level of instability in the Middle East has become a normal situation for several decades now, and trade and energy flows have learned to "live" with it. The current crisis between Russia and Ukraine has been going on for about ten years, and it has recently escalated again, so the possibility of a war that could range from a low-intensity hybrid conflict through a spatially and temporally limited armed conflict to something continental and of global proportions is something we don't even want to think about at the moment.

Gas prices have risen from about 30 US dollars per megawatt (MWh) to almost 100 dollars. Recently, gas on the reference European gas exchange TTF in the Netherlands was just under 80 dollars. Therefore, it is clear that the existing floating LNG, worth a massive 234 million euros, of which the EU gave Croatia 100 million, has already justified its existence today and the authorities are probably already planning the second phase of the project - building a fixed terminal on the coast and increasing the existing capacities of 2.6 billion cubic metres of gas per year. It appears that Croatian energy investment isn't going to stop there, either.

Croatia has turned almost all of its city heating plants, mostly owned by HEP, into gas power plants, and although the authorities have been pretending over more recent years that the Plomin C project doesn't actually exist, nor has it ever existed, it is increasingly likely that, with its originally planned coal technology, it will also be constructed as a large gas power plant, perhaps on LNG given that this thermal power plant has its own port for docking ships, either for unloading coal, or in the future on LNG.

Additionally, a plan of a private investment in a hybrid gas thermal power plant in Slavonski Brod with a total capacity of 500 MW and an estimated investment value of 420 million euros has been operational for about fifteen years now. Only the listed projects in half of NPP Krsko, the fixed LNG terminal, Plomin C and TPP Slavonski Brod total almost six billion euros and it is clear that the new and green EU classification of nuclear and gas technology will have a great positive effect on Croatia and Croatian energy investment as time goes on.

The presented EU proposal will have to be studied by national governments in the coming period, and before it is officially adopted. The fact is that the EU has 27 member states and that each of them has its own energy strategy and position on the positive or negative effects of a certain form of energy, but the EU has come to this in such a way that one or several countries cannot veto the decision. The EU's plan will be rejected only if 20 member states oppose it, and it is already clear that countries like the Netherlands and Denmark don't want gas involved in the Green Plan, because they use it less and less and sometimes even reject it, while on the other hand, gas is of existential importance for Germany.

The nuclear lobbies in the EU are led by France and the Czech Republic, which are the loudest of them all, and aren't typically opposed by many other countries, which have both realised that they will NOT ensure their energy independence for many years to come. Many green associations and institutions, on the other hand, warn that it will be a step backwards because it will make it difficult and stop many renewable energy projects and give the public the so-called Greenwashing, or a false notion which convinces the public that the products, goals and policies of this plan are environmentally friendly.

The Ministry of the Economy and Sustainable Development pointed out that the Republic of Croatia, in accordance with the stated policy and its strategic documents in the field of energy, "Energy Development Strategy of the Republic of Croatia until 2030 with a view to 2050" and the “Integrated National Energy and Climate Plan for the Republic of Croatia”, encourages the development of renewable energy sources and the strengthening of energy efficiency.

"In this policy, we can see a number of opportunities for the Croatian economy, especially in the development of new technologies dedicated to renewable energy sources. In order to ensure further economic development, as well as a sustainable transition to clean and climate-neutral technologies, we believe that the inclusion of investments related to natural gas and nuclear energy can have a positive effect on the decarbonisation processes. Of course, all of the above must be dedicated to the ultimate goal of decarbonisation, both of the energy sector and of the economy as a whole,'' said the aforementioned ministry, headed by Minister Tomislav Coric.

For more on Croatian energy investment, check out our politics section.

February the 3rd, 2022 - The Dubrovnik Valamar portfolio reshuffle has been completed, and a new investment cycle is set to begin this autumn, following the main summer tourist season.

As Poslovni Dnevnik/Marija Crnjak writes, Valamar Riviera announced on Tuesday that a transaction with Imperial Riviera was concluded on the last day of January, on the transfer of the Dubrovnik Valamar portfolio to Imperial.

These are three hotels which boast a total of 947 accommodation units, Valamar Lacroma Dubrovnik Hotel, Club Dubrovnik Sunny Hotel by Valamar and Tirena Sunny Hotel by Valamar, with an acquisition value of 95.3 million euros and 100,676 euros per accommodation unit.

"Considering the interests of the acquirers of the hotels in question, the financing of this transaction was secured by taking over the company's credit obligations for two club loans with OTP Banka from Split and OTP Banka from Budapest, and four loans from the Croatian Bank for Reconstruction and Development from Zagreb, totaling 90.2 million euros at the current overall weighted average interest rate of 1.36 percent and secured liens on the hotels being transferred, while the remaining amount of 5 million euros will be paid in cash.

These three hotels in the area of ​​Babin Kuk in Dubrovnik, together with the real estate previously entered into the Imperial portfolio in the process of increasing the share capital (with an estimated value of 352.8 million kuna), will form a sustainable and strategically important technological unit,'' they said from Valamar.

They added that through Imperial, a joint company for growth and development, the Dubrovnik Valamar portfolio, as a destination, will start with the further development of its tourism portfolio as soon as this autumn, through significant investments by both Valamar and AZ pension funds.

As previously announced, the five-year investment plan in the destinations of Dubrovnik, Makarska and Rab is worth 2.1 billion kuna.

For more, check out our dedicated business section.

January the 30th, 2022 - An enormous EBRD Croatian investment took place last year, with the investment of a massive 176 million euros in various private sector projects which were primarily focused on supporting domestic companies affected by the global coronavirus pandemic.

As Poslovni Dnevnik writes, according to the final results, the European Bank for Reconstruction and Development (EBRD) recorded its largest investment in Croatia in three years in 2021.

The total amount of EBRD Croatian investments to date stands at a huge 4.1 billion euros, and the current value of the portfolio is 850 million. During 2021, 200 million euros were withdrawn, which shows that EBRD funds are being used to provide active support to the Croatian economy.

"The EBRD is very active in Croatia, but the EBRD isn't only there to finance projects. Our team based in the City of Zagreb raised more than 100,000 euros for earthquake victims in Sisak-Moslavina County thanks to the initiative of its employees and the EBRD's Community Initiative programme,'' said Victoria Zinchuk, the EBRD Director for Croatia.

The funds raised will support the equipping of the Vrbina Sisak Children's Home, the construction of a new "Miracle Room" for children with special needs in the region, and the construction and renovation of several private homes for vulnerable families.

Renewable energy sources

The EBRD's focus throughout the year 2022 will be on developing and stimulating the renewable energy market. This approach is in line with the priorities of the Government of the Republic of Croatia, which recently introduced a new programme of support for investments in renewable energy sources, which is expected to attract new investments in the sector and contribute to achieving renewable energy goals, including objectives set out in the National Recovery and Resilience Plan.

It is crucial for Croatia to take the steps necessary to improve its overall electricity network in order to enable the best possible connection of renewable energy sources to the national network. In partnership with the Croatian Economic Renewable Energy Association (OIEH), the EBRD has developed an action plan identifying priority investments and activities to enable the smooth integration of renewable energy sources into the country's existing energy network.

The EBRD and OIEH have also developed a comprehensive guide for investors in the sector, which is available on the OIEH website. The study was financed by the Bank in the amount of 150,000 euros. The EBRD has also identified three renewable energy projects that it plans to finance soon, making it a leading investor in this particular sector.

Entrepreneurs and companies are also getting a look in

The EBRD's SME Business Advisory Programme has also had a very dynamic year.

With the support of the European Investment Advisory Hub and the EBRD's Small Business Impact Fund, more than 32 advisory projects were launched during the year. In addition to that, several training sessions were organised for female entrepreneurs, women on supervisory boards, small and medium enterprises in the tourism and hospitality sector which were negatively affected by the crisis caused by the ongoing coronavirus pandemic, as well as a webinar for start-ups on "Sources of funding".

The European Commission (EC) has selected the EBRD as its partner who will work closely with the Ministry of Physical Planning, Construction and State Property to work closely on legal and regulatory reforms.

Back in 2021, the EBRD invested a total of 10.4 billion euros, the second best result in a row, and this bank's support remains an important factor in the recovery of new markets from North Africa to Central Asia.

For more on this EBRD Croatian investment and much more, check our our dedicated politics section.

January the 29th, 2022 - Tesla's Nest, a luxury Lika resort which was due to spring up in Croatia's green heart, more precisely in Lovinac, encountered issues as it was being constructed. A true Croatian tale of red tape suffered by well-known investor Goran Strok.

As Poslovni Dnevnik writes, Tesla's Nest in Lovinac was supposed to be the a luxury Lika resort owned by investor Goran Strok. Construction began almost three years ago and envisions an investment totalling 15 million euros in luxury wooden houses on an artificial lake was planned. Construction halted halfway through. The project is still hampered by financial issues, but also by a problem that was far from actually expected, according to a report by HRT.

The biggest problem of this colossal tourist investment in Lika's potentially excellent elite tourism sector was the artificial lake that was losing water. Several project changes have sucked up millions, the end is still far away, but the people of Lovinac aren't losing hope for this luxury Lika resort.

''If everything was done properly, I don't know if there would be anything better than that anywhere in Europe,'' pointed out Vojo from Lovinac.

''We and our children would have a place to work and that would mean a lot to us,'' added Ankica, also from Lovinac.

This luxury Lika tourism project envisages seventy larger and smaller villas with two restaurants, all of which would be maximally sustainable and powered by green energy. Seventy employees, mostly local people, would find work there, but everything got stuck in the complex process of closing the new financial structure.

''Unfortunately, we've approached the figure of 25 million euros and now those five million pose a problem. I think that HBOR has lost its appetite with us,'' said investor Goran Strok. Regarding the potential of this project, but also to help complete it, Strok addressed the Lika-Senj County Prefect.

''Of course, we still stand behind that project and we think it should be realised in this area, we'll become lobbyists for every positive investor,'' Prefect Ernest Petry stated.

If HBOR will not stand by the investor, it doesn't mean Strok or his luxury Lika tourism project which would revitalise this shamefully overlooked and abandoned but gorgeous part of the country will be shelved.

''I've never lost in my life, neither in sports, nor in business, nor during my 40 years spent in England, I've been married for 53 years, I'll push this project through, even if I die doin it,'' claimed a doggedly determined Goran Strok.

He did however point out that this is one of the most difficult projects in his career in which he started eighteen hotel houses, but he believes that by the end of the year, if all of the funds are raised, everything should be built as planned.

For more, check out our business section.

December the 20th, 2021 - The Dalmatian Sunce hotels brand are planning to invest an enormous amount of money in the general ''do up'' of their many facilities in the hope of 2022 being the year in which tourism and travel return to pre-pandemic norms.

As Jozo Vrdoljak/Novac/Jutarnji list writes, Sunce hotels informed the Zagreb Stock Exchange that their supervisory board has approved investments for further raising the quality and services in the company's facilities for the year 2022 in the large amount of 44.2 million euros.

The largest amount, as much as 13.6 million euros, is planned to be invested in the Elaphusa Hotel in Bol on Brac, followed by the Soline Hotel in Brela, for which 9.7 million euros has been set aside. The third largest investment is in the Borak hotel in Bol of 7.9 million euros, and 6.7 million euros will be invested in the Maestral hotel in Brela. About 2.5 million euros will be invested in the Kastelet hotel, and 150,000 euros in Neptune. 2.9 million euros will be invested in employee accommodation, and around 800,000 euros will be pumped into other accompanying investments.

They explained from Sunce hotels that these investments confirm the intentions of their majority shareholders to develop the company's future business by strengthening their market position by implementing new and developing existing capacities and services, as well as continuing to invest in raising the quality of accommodation for their employees.

Out of a total investment of 44 million euros, approximately 29 million is planned to be raised through a capital increase by issuing new shares, for which purpose an extraordinary general meeting of the joint stock company was convened. As for the rest of the funds, Sunce hotels plans to raise the cash by borrowing from commercial banks, using the possibility of withdrawing funds for this purpose as agreed when refinancing the financial obligations of the company back on November the 2nd, 2021.

Hrvoje Veselko, a member of the board of Sunce hotels, explained that all of these investments will be mainly focused on refreshing the company's existing accommodation units, ie in what leaves a real impression on the guests.

''These aren't investments in additional capacities, ie investments that require the obtaining of any permits. It's all mainly in relation to furnishing rooms with new furniture, refreshing our hotel rooms, reconstructing the bathrooms, decorating and refreshing the common and public spaces, horticultural planning and similar investments. We took the least invasive path because it's important for us to complete most of these investments by the beginning of the summer season next year, ie on May the 15th, 2022,'' explained Hrvoje Veselko.

Under the Bluesun Hotels & Resorts brand, Sunce hotels manages 11 hotels along the Croatian Adriatic coast, one campsite and one leased facility, or a total of 2,973 accommodation units, making them one of the largest hotel companies in all of the Republic of Croatia. They also own 50.2 percent of Brac Airport. In addition to tourist facilities in Tucepi, Brela, Starigrad Paklenica and Bol on the island of Brac, they're in a joint venture with the tour operator TUI AG and have a premium hotel, TUI Blue Jadran, with 161 accommodation units to boast of.

Since March this year, the majority owner of Sunce hotels has become the company Eagle Hills Real Estate, which took over the stake from the family of Jako Andabak for about 101 million euros. Eagle Hills Real Estate is engaged in real estate investing and real estate development with a focus on the markets of Europe, the Middle East and Africa, and is headed by Mohamed Ali Rashed Alabbar, who currently manages development in the United Arab Emirates, Egypt, Serbia and some other destinations. These are mixed-use facilities worth 50 billion euros. The company intended to build Zagreb's so-called ''Manhattan'', and is also known for the Belgrade on Water project, which it did develop.

In the first nine months of 2021, Sunce hotels generated an impressive 333.8 million kuna in operating revenues, which is an increase of 107.1 compared to the same period in 2020, which was dominated by the global coronavirus pandemic, The Group achieved a positive EBITDA of 116,405 million kuna, which is a better result than 102,650 million kuna, the amount recorded back during the same period last year. The main reason for the strong growth of EBITDA is the growth of operating revenues from the sale of accommodation services and non-board revenues.

The largest part of operating expenses for Sunce hotels are staff costs in the amount of 98.5 million kuna, which has been 23.5 million kuna more in the first nine months of 2021 compared to the same period last year, and material costs amount to 85 million kuna and are higher by 58.7 percent when compared to the same period in 2020, mostly due to higher activities and operating income generated from the sale of accommodation services.

Financial expenses for Sunce hotels have veen significantly lower for the first nine months of 2021, mainly because there were no net negative exchange rate differences. Total financial expenses amount to 9.7 million kuna, which is a decrease of 8196 million kuna when compared to the first nine months of 2020, when total financial expenses amounted to 17.9 million kuna. Net profits in the observed period amounted to 68.8 million kuna, and in the same period last year the loss amounted to 45.6 million kuna, again because of the pandemic crisis.

For more, check out our business section.

December the 8th, 2021 - A decline in tourism, and as such Croatian tourism investments, can more or less explain almost the entire decline in GDP. A massive 8.1% decline back in 2020 was certainly not what anyone needed, or could have ever imagined coul happen after the record year of 2019.

As Poslovni Dnevnik/Marija Crnjak writes, the overall decline of GDP in Croatia back in pandemic-dominated 2020 can be explained by the decline in tourism, the most affected industry that has led to a decline across all related sectors, while at least 4.5-5 percent of total GDP growth in 2021 can be attributed to the subsequent recovery of tourist traffic.

This shows the exceptional importance of tourism for the Croatian economy, but despite a significant increase in tourist traffic this year, the situation remains dramatic as the crisis has caused a sharp drop in Croatian tourism investments and the recovery will not be spontaneous without additional investment incentives from the state.

Analyst Velimir Sonje warned about precisely that, presenting his research on the connection between tourism and the pandemic recently at the Congress of Hoteliers, organised by the Croatian Hotel Employers' Association (UPUHH).

“Croatian tourism investments and its activity is in a sharp decline of 60-66 percent when compared to 2019 and the duration of such a situation threatens to weaken the positive development effects of tourism, such as a proven contribution to alleviating emigration from Croatia. We got the impression that after this season, which was short, but successful, that everything would be fine and that we're finally returning to normal. But a spontaneous recovery won't happen unless there is a strong recovery in investment soon. This requires investment incentives, and investors' expectations are focused on the new Law on Investment Promotion and the implementation of a new regional aid map,'' explained Sonje, whose research is based on the results of a survey among the ten largest hotel companies in the country, with total revenues of 5 billion kuna recorded back in 2019.

"Paradoxically, despite the fact that tourism is crucial for economic recovery, the European Commission has allocated only 5 percent of the total amount from the National Recovery and Resilience Plan to this sector," concluded Sonje.

The Director of the Croatian Tourism Association, Veljko Ostojic, pointed out the four biggest challenges that the hotel business will face in 2022. With the return on investment, after the 2021 season in which Croatia had the best tourism results in the Mediterranean and Europe, the biggest challenge in preparation next year will be the sheer lack of qualified personnel, an issue present in the sector throughout Europe at the moment.

"In Croatia, it isn't only a question of engaging domestic workers, but also a faster and more flexible administration in hiring foreign workers. The second most important issue will be the continuation of investments in quality, without which Croatia will not be competitive in relation to other Mediterranean countries in particular. There will be an important contribution of money for NPOO projects, but also the legislative framework, primarily addressing the issue of tourist land. We're in intensive talks with the Ministry of Construction and State Property and I believe that in the coming weeks we'll be able to find solutions that will enable investments and generate significant revenues to the state budget,'' believes Ostojic.

The fourth important factor will be the unfolding epidemiological situation, which is still a challenge and a trigger for the majority choosing a holiday destination, but Croatia and the sector have done a great job in the last two years, so there are no severe worries. Hoteliers also point out the important challenge that inflation and the situation with supply chains will pose in financial operations.

"It will be a very big challenge that we won't be able to mitigate through rising prices and many will not be left for investment. Without the help of the state, through the Law on Investment Promotion and similar solutions, we cannot expect the recovery of the investment power of the tourism sector,'' warned Popovic.

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