Revenue growth and good business results in Valamar under pressure of accelerated cost increases

Published 31. October 2022.

According to the third quarter financial report, Valamar Riviera has achieved results that confirm business recovery after two years of Covid crisis, but also point to a significant impact of the new crisis on operating costs. The Company generated EUR 308.1 million in operating revenues, an increase of 14% compared to 2019 primarily due to an average price increase of 19.5%. Operating profit (EBITDA) in the first 9 months reached EUR 125.2 million which is a 7.7% increase. Premium hotels and camps achieved the strongest growth, confirming Valamar’s strategy to invest in premium products and services. Northern destinations in Croatia recorded more demand and a higher recovery rate than southern destinations, although hotels in Dubrovnik reached 2019 revenues during the high season.

increase in energy costs as well as all other operating costs as a result of inflation.  Energy costs increased by EUR 11.8 million, while other costs increased by a total of EUR 16.7 million compared to 2019. The triple increase of the electricity price to EUR 230 per MWh had the largest impact on cost increase, which prompted Valamar to close most properties earlier this fall season.

"With a revenue growth of 14% compared to 2019, Valamar Riviera has made a full recovery from the Covid crisis. We were able to compensate for the enormous increase in energy costs and the increase in other operating costs by increasing prices, primarily accommodation prices in the premium segment. We anticipate uncertainty and challenges in the year ahead with regards to inflation, energy crisis, financing costs and geopolitical disturbances, but also good news such as Croatia entering the euro zone and the Schengen area. The tourism sector should turn to the preparation of the next tourist season as soon as possible in order to stay competitive and ensure sustainable growth,” said Željko Kukurin, President of the Management Board of Valamar Riviera.

Despite the crisis, investments in properties under Valamar management were completed and amounted to EUR 70.4 million this year. The investment of EUR 29.2 million in the construction of the first eco resort following the highest standards of green construction and sustainability, Valamar Amicor Green Resort, has significantly raised the quality of the tourism offer on the island of Hvar. Hotel Dalmacija in Makarska was completely renovated as the second hotel under the innovative PLACES by Valamar brand. Hotel Corinthia in Baška has been renovated to the standards of the Sunny Plus brand. In July, the acquisition of the third hotel in Obertauern was finalized. Valamar Collection Kesselspitze Hotel 5* will welcome its first guests in the 2022/2023 winter season.

Valamar is the largest employer in Croatian tourism, employing 7,700 employees this year. In order to improve working conditions and keep local employees, the Company has invested EUR 15 million in salary increases and reward programs this year. Valamar was voted among the TOP 10 most desirable Croatian employers and has confirmed its years long position as the best employer in tourism.  In June 2022, Valamar presented its sustainability strategy and ESG goals by 2025. Valamar Riviera plans to become a carbon neutral company in the first and second scope in the next three years and plans to invest EUR 50 million in destination development and sustainability projects.