Kristian Šustar is board member of the HUP Zagreb hotel company and President of the Association of Hotelier Employers of Croatia (UPUHH). HUP Zagreb is the biggest investor this year in Croatian tourism: after several years the company is moving into the construction and renovation of hotels on the Dubrovnik Riviera, and is also renovating two Zagreb hotels within the group. Investments in tourism, the strategy of Croatian tourism and the state of the meeting industry were the topics of conversation with one of the most influential Croatian hoteliers.
Croatia has adopted a strategy for tourism development by the year 2020 with which it wants to position itself among the twenty most competitive global tourist destinations. How realistic is that, given the current position?
The set strategic target sounds ambitious, but in my opinion it is very realistic. According to the research done by the World Economic Forum, Croatia is ranked 34th out of 139 countries in the world, which following the release of the results sparked euphoria among many. But if we go deeper into the essence of the research, it turns out that we are ranked high because of great natural resources, while in what we characterise as “business areas” we are very badly positioned. For example, if we take into account the tax burden we are 134th, and according to the impact of conditions in foreign direct investment 131st, by price competitiveness at 101st place, etc. So, on the key issues that affect the level of investment in tourism, we will need to work a lot, but the first step has been taken.
I believe that with the adequate measures that the new strategy talks about, we can reach out and get into the leading twenty countries, there’s nothing unrealistic about that. The first action measures of the new strategy are connected exclusively to legislation modifications and business conditions improvements, which are essential for the creation of an adequate basis for new investments, and the deadline for their implementation is two years. If they are really implemented, the strategy will be successful. If not, we’ll also know why not. It is important to note that the success of the strategy can be measured solely on the basis of work done in a given period, which has not always been the case.
ZAGREB NEEDS A LARGE CONVENTION CENTRE
The situation in the region is interesting: Zagreb has seen significant increases of summer month guests in recent years, while Belgrade is one of the fastest growing meeting destinations in Europe.
In recent years Belgrade has become a business centre thanks to a number of multinational companies that chose this city for their regional headquarters, and we should also not neglect its congress infrastructure. On the other hand, Zagreb is rapidly growing in the leisure segment, partly because it hosts summer tourist groups that go on to the Adriatic, which is not a typical organic growth. Where we should grow organically, in business tourism, which occurs in the spring and autumn months, we have been declining, and we are trying to compensate this with leisure groups. However, the hotel infrastructure of Zagreb is not fully prepared for such a change in the business model. Thus, the primary growth in Zagreb should come from the corporate segment and congress and business groups, while leisure tourism should be only an upgrade, not the basis of growth in the Croatian capital.
What else does Croatia need to do in order to position itself at the forefront of European congress destinations?
In Croatia every major destination would want to have a convention centre, but we have to understand the industry so that we can assess whether we really need it. Objectively, Zagreb is currently the only destination in Croatia that can service a large convention centre. Among other things, you have to have an infrastructure that makes it possible to bring a thousand or more people in a single day to the destination and take them out. The number of destinations on the Adriatic, which can do this is very limited, regardless of their attractiveness on the tourism market. A national convention centre project is necessary for the continued growth and development of Zagreb as a tourist destination and its positioning as a regional business centre. It is natural that a convention centre or adequate halls do not turn it into a congress destination, but this is the first step and prerequisite for the development of other elements. With accession to the EU our visibility will increase, we will become part of a larger story. Those who had not perceived us as a business destination will begin to do so. The sooner we make congress infrastructure, the sooner we will be able to attract these people. But this depends on us, not the European Union.
How do you comment on suggestions of some members of the Croatian meetings industry that business meetings can be organised by tourist agencies alone?
I think this is absurd because it is in stark contrast to European and international practice. If something like this was brought into the new law on the provision of services in tourism, we would become a unique country in the world. In Croatia, realistically only a few specialised agencies exist that are able to organise larger conferences from start to finish, and PCOs have been doing that for years and are top professionals with whom every hotel gladly works. However, most of the other travel agencies in Croatia rarely come into contact with a real congress.
Recently, a large multinational company has independently organised its international conference in our hotel Westin, which would be illegal according to these principles, because it did not engage a travel agency for tourism and hospitality services. Imagine a situation in which the inspector showed up at the conference and punished the company that organises its own conferences on six continents independently and in the same way, through their own staff – how can you even explain this to those people who do business globally? I believe that it ultimately violates all the rules of competition and to be that way with institutional help makes pre-conditions for monopoly. It is necessary to introduce clear rules and regulate this area, but not at any price. It is useful to be innovative, but in a situation like this, when we depend on the market, there’s nothing wrong with using the experiences of other countries.
MILLIONS INVESTED IN THE DUBROVNIK RIVIERA
HUP Zagreb is investing around 50 million Euros in Croatian tourism this year. When will the new facilities on the Dubrovnik Riviera operate and what kind of guests will you target?
We are planning to build a new resort, comprised of hotels in Srebreno and in Mlini, places close to the world famous Dubrovnik. The Orlando Hotel, which was demolished in the war, will be the central building of the resort. Further south, in the town Mlini, we have two hotels: the Mlini hotel will be replaced by a brand new building, and the hotel Astarea, which is in operation, will be converted. We hope to have a completely new product on the Dubrovnik Riviera in full function in the season 2014. In the end, we will have more than 750 accommodation units at the resort. Conceptually it will be designed for various target groups, from the classic holiday and family tourism, to congress tourism, given the strength of Dubrovnik on the international congress market. I believe that the project will be a new tourism star in southern Croatia. We have no ambition to make all capacities work throughout the year because it is not realistic. However, we plan to make modular buildings that will meet different needs of guests depending on the season and to make a part of the facility always work in all of the twelve months.
The second part of the investment refers to the Zagreb hotels Adriatic and Sheraton.
At the moment a reconstruction of the Hotel Adriatic, which is a small boutique hotel in the old centre of Zagreb and one of the few 3-star hotels in the city centre, overlooking the Cathedral, is being finished. The hotel is open all the time, no matter that the renovations are in progress, and we expect it to be completely rebuilt by the end of March. We believe that Zagreb is missing this kind of hotel and have no doubt whatsoever that the hotel Adriatic will be adequately recognised on the market. By the end of the year we plan to start a reconstruction of one of the leading business hotels in Croatia – the Sheraton. Currently, in co-operation with an international design house we are working on finalising the design, after which we will approach the planning dynamics of the renovation, with the goal to maintain and enhance the Sheraton’s leading position on the market.