Nedo Pinezić: Family accommodation - what if we lose it?

If we lose family housing, we will lose permanent residents in small communities. Local lifestyle, income tax and other income will be lost

Author  Nedo Pinezić

10. December 2022.

If we lose family housing, we will lose permanent residents in small communities. Local lifestyle, income tax and other income will be lost; we will have empty settlements for most of the year. In the summer season, non-resident property owners and their friends will stay in all these apartments. We will become a country without permanent residents in small communities. Communities outside the big cities will become weekend municipalities. And not only that...

People want private accommodation

Accommodation in private apartments and houses is in great expansion all over the world. Some will say that OTA platforms such as booking.com or airbnb are to blame for this, however, the success of these platforms would not have been so huge if the desire for private accommodation had not grown from year to year.

At the beginning of its activity, booking.com did not even do business with hosts, owners of apartments and houses. I am witness to the efforts to win them over as well as the unsuccessful talks with Expedia. However, it prevailed "give the people what the people want".

"Everyone" rents through platforms

The consequence of such a development is that today it is really not difficult to reach a guest from over 40 countries of the world through just one OTA platform. That is why an increasing number of owners of accommodation facilities in well-known tourist destinations decide to rent accommodation to tourists. In fact, owners of vacation homes and apartments are also increasingly involved in renting out their capacities through these platforms.

In that fierce match, the natives, who were among the first to rebuild their facilities for the reception of tourists, come out on top. At the time, it was perhaps a major undertaking and a significant improvement in the quality of the offer, however, with each new real estate investment, newer, better arranged facilities with an even higher quality of accommodation are created.

Non-commercial tourist facilities

It is not only accommodation that is declared as accommodation rental to tourists that is a competitor in providing accommodation services to those who are "older" in providing the service. In fact, we find a significantly higher capacity of modern, quality accommodation in newly built apartments and holiday homes that are declared as "non-commercial tourist capacity". There is almost three times more such accommodation in Croatia than the classic, tourist, categorized one.

Tourists become hosts

Everything that was built as an object for temporary housing is actually a tourist capacity in its nature. No matter how you classify it, such a capacity hosts a significant number of people who stay here to spend their free time in the destination. It is not uncommon for tourists who fell in love with the destination during their annual vacations to buy or build temporary housing facilities. Thus tourists become hosts.

In most cases, when the accommodation is rented by owners who do not reside in the tourist destination, the accommodation is rented out just as an apartment would be rented to tenants, without any obligations of the host. It is a model that suits a large number of hosts as well as guests. Because of this, the share of intermediaries who offer complete management of this operation of renting accommodation to tourists is growing. The owners leave all the work "in the hands" of a mediator, an agency for real estate management and tourist mediation.

Sustainable and unsustainable

Over time, the mass construction of apartments for temporary housing enters a phase when this capacity exceeds the capacity of apartments for permanent housing several times. Today, such development is increasingly called unsustainable development. We can find unsustainability on both sides of life in the local community. On the one hand, the large capacity of accommodation for temporary housing requires large and expensive communal capacities for the supply of energy, water, waste disposal, landscaping and maintenance of public areas, roads and the like.

On the other hand, a small number of permanent residents bear a large part of the costs of such a communal system. In addition to the allocation of income tax from the gross salary for non-independent work and independent occupations, permanent residents also pay increased communal fees due to the costs caused by the large-scale construction of apartments for temporary housing.

Permanent residents are more under the scrutiny of control, so as a rule they are more disciplined in meeting their obligations, they legally engage in the service of renting accommodation to tourists and pay additional income tax, tourist tax and membership fee. All these benefits, under the pressure of increased needs to maintain the expensive communal system, are constantly increasing.

We are getting to the point where we have a constant increase in the costs of the permanent population, growing competition in accommodation for tourists through the increased construction of apartments for temporary stay and still, due to the short season, a large part of the year without additional income for permanent residents.

A long period without sufficient demand makes it impossible for many industries to be employed throughout the year.
The possibility of doing business, starting a business, employment is narrowed down to works in construction, that is, in the same activity that indirectly accumulates problems.

Another possibility is seasonal employment in trade, catering and numerous related activities, but for a short period of a few months.

Outside of the main tourist season, there simply isn't a critical mass of people to make it worthwhile to do business, even if you break even, for most activities that aren't related to construction.

The question of the survival of family accommodation

Such a complex situation is made even more difficult by the misunderstanding of the authorities, so efforts to achieve sustainability are taken in a completely wrong direction. Measures are being adopted to reduce and limit legal, categorized household accommodation. This further endangers the survival of the local community, because without additional income, the permanent population will not be able to bear the ever-increasing payments.

At the moment when the legal rental of accommodation to tourists becomes unprofitable, there will be erosion of income from tax on other income, from tourist tax and membership fee.

The solution cannot be sought in different rights and obligations depending on the place of residence. Given that any form of discrimination is unacceptable, it is impossible to prohibit the rental of tourist accommodation to owners of apartments without residence in the place of rental, nor is it acceptable to increase benefits only for them.

A missed opportunity for space management

The space had to be managed before mass construction began. Demographic parameters and the right to establish a home for family members living in the community should have been incorporated into the spatial plans, and the purpose of the buildings should have been defined according to the need to earn a second income in order to strengthen the household budget and provide a better quality of life to those who decided to stay in that small the middle.

As for the "weekend" construction, it should have been limited spatially as well as functionally. We had such an example in the former state, when "cottages" were really small facilities intended for a family to spend their free time. Such buildings could be built in certain areas, they had to have a larger garden, as a rule only one, maximum two floors, small floor plan areas...

Someone will say that it was one way or another wrong, but with a gap of 30-40 years we can see the indicators. The most important indicator is the demographic situation. It is devastating today. If this was to be avoided, the space and development had to be managed differently. Now we have what we have.

Possible scenarios

The absence of proper management of tourism development in the destination leads to consequences that we are already noticing.

One scenario leads to the sale of facilities that can no longer cope with the competition. Owners and heirs leave the community and go to some other environment. In doing so, we have examples of going to larger cities, but also to rural areas of the interior, where with the income from the sale of real estate on the coast, you can buy, renovate, build accommodation capacity of a higher category, with greater privacy, achieve better housing and start some other entrepreneurial activities.

The second scenario is more common. Owners enjoy the acquired property for the rest of their lives as retirees with additional rental income for a more dignified life. Heirs sell property, go to urban centers where they have already created a new life, or go abroad.

A much rarer case is the long-term rental of real estate, say to digital nomads.

In any case, alienation of real estate by residents, "natives" as a rule means that ownership of that real estate is acquired by people who did not grow up in that environment, did not live there. They have no social or emotional ties with people, customs, local culture of living.

Normally, such an object is used by the new owners as an apartment for temporary residence, perhaps as a place of residence. Most often, new owners, relatives and friends stay in such an object in the summer months, less often on weekends outside the summer and lately for several months if the nature of their work (remote work) allows it or they are retired.

Through all the above scenarios, the community loses permanent residents, kindergartens and schools, post offices, and bank branches, gas stations, shops are closed... The most obvious example is in the area of ​​Gorski kotar.

We are losing what Croatian tourism is known and appreciated for

Croatian tourism has been enjoying a position among the top five households in the world for years. Good housekeeping ratings across the largest OTA platforms are truly impressive. We can compare them with the world achievements of Croatian athletes. Just as we are a small country for great sporting successes in football, handball, Nordic, alpine skiing, water polo, sailing, rowing, martial arts, bocce... so we are also a small tourist country for a large number of satisfied guests who put hospitality first.

Croatian contact personnel are rapidly disappearing from the catering and hotel industry. Fewer and fewer waiters, receptionists, maids and valets and other staff who are in contact with guests know the Croatian language. Once the language has been mastered, it is necessary to "absorb" the local culture in order to be able to further promote it to the guests.

It's time for family accommodation. And he is less and less Croatian, less and less local, recognizable, unique.

With the loss of family accommodation, which is increasingly being replaced by rental properties, our recognition, our Croatian brand, is slowly disappearing.

It's hard to correct mistakes

In many environments it is difficult to "get life back". When there is a critical level of demographic decline, a large loss of the younger population, places gradually turn into lifeless environments for most of the year.

In some areas, we even have a slight demographic recovery, but the huge construction of apartments for occasional stays has "suffocated" the pulse of life for most of the year.

The "scattering" of social facilities also contributes to this. If there were a kindergarten, a school, a sports hall, a clinic, a post office, a bank, a gallery, the headquarters of associations in the same area, in the "same circle", there would be an all-day concentration of people, so restaurants and shops would start to open in that zone... Place would have its own "center of life". Unfortunately, in most of the smaller coastal areas, we do not have such thoughtful development.

What can we do?

In order to avoid mistakes in places that, like Gorski Kotar, have just embarked on the expansive development of tourist capacities, we must first learn the lesson of missed opportunities for sustainable development on the coast.

The next step is to study and implement good programs in developed countries such as Bavaria, Austria, Switzerland, Italy.

We will write about this in the next installments.

Photos: Nedo Pinezić, nedopinezic.com

Author  Nedo Pinezić

10. December 2022.