Owners of family and small hotels have entered the business by investing millions of euros, pledging their own property, and the return on investment is more than 30 years.
In hotels with up to 50 rooms, of which there are about 450 in Croatia, the drop in overnight stays in 2020 was 63 percent, which clearly speaks of the crisis in which they found themselves. Despite greater elasticity in relation to large companies, micro and small companies in the Croatian hotel industry during the COVID crisis are marked by an below-average share of EBIT and EBITDA in revenue.
With structural above-average indebtedness, reduction of business activity and income, and then reduction of economy and consequent lack of working capital, financial risk is increased, ie the probability that business will not enable generation of sufficient cash flows to finance interest and principal repayment.
Four demands to overcome the crisis
In order for family and small hotels to survive and overcome the problems, the help of the state is of crucial importance, according to the National Association of Family and Small Hotels, and they point out that they are defined. four demands to save this sector: moratorium on repayment of annuities on long-term loans until June 30, 2022 or bridge financing with state guarantees; restructuring of existing long-term interest-free loans for commercial banks with the possibility of additional collateral insurance through HAMAG-BICRO if due to the corona crisis the assessment of the market value of real estate does not meet the requirements of commercial banks, or a new HABOR program for that purpose; co-financing of working capital and direct lending through HBOR and HAMAG-BICRO for adequate preparation for the 2021 season, and finally ensuring the availability of new loans for liquidity and product improvement through commercial banks with a state guarantee of one hundred percent.
"Small and family hotels are the foundation of sustainable development of Croatian tourism, their economy is competitive, their offer is autochthonous and authentic, they employ an average of 15 mostly local people, most of our hotels are open all year round, in winter they promote tourism in most destinations. and most importantly, the local population participates in the tourism product" he pointed out Šime Klarić, President of the National Association of Family and Small Hotels, which has 128 family and small hotels in Croatia.
Family and small boutique hotels should be the backbone of our tourism. For the sake of comparison, we have about 450 small family hotels in Croatia, while Italy has 23, and Greece and Austria about 10.
"In the development of tourism in Croatia, small hotels are the initiators and bearers of change in the improvement of the entire hotel industry and promoters of the original Croatian hospitality. By no means should we allow two extremely difficult seasons to ruin small hoteliers, as the situation is expected to normalize in the 2022 season."Concludes Klarić.
Photo: Boškinac, Novalja Pag