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Missing Variables in Assessing the Potential
for Tourism Development in Croatia


by Barry Napier

December 2007 - Readers should know by now that I place great store in accurate research and views from all sides. Hence this short article on assessing destinations, Croatia in particular. It is more of a gentle reminder.

In their well-researched assessment of Croatia as a new destination, the authors did a thorough and excellent job. But, in my opinion, they missed out a few important variables. (Source: The Potential for Luxury Resort Developments in Croatia, by Arlett Oehmichen and Dominique Bourdais, HVS International, 6th December, 2007). This in no way detracts from their study, but it could certainly affect Istria, the north-western region of Croatia, by inadvertently placing doubt in the minds of investors.

Their article “highlight(s) the potential for resort developments, but also the possible downsides.” Yes, of course there are always downsides, but the assessment failed to address very important facts: that Croatia has only just emerged from civil war and has become a state in its own right; the former state was communist; and that Istria, as a region, is forging ahead in leaps and bounds whilst trying to shake off its past politics. These should be assessed alongside the usual economic and resort-ready status. The war might have finished in 1995, but the change from war/communism to a western/free mindset takes longer than mere adherence to usual practices.

Thus, assessment of Croatia, and especially Istria, should take these factors into account, rather than look at the country through western eyes only. It is true that the country is “constrained by the lack of hotel supply”, but what the country lacks in luxury accommodation, it certainly makes up for in warmth and friendship. Surely these are worthy enough to mention? 

Istria has shown remarkable foresight in choosing its plan for renewal, which includes the creation of luxury hotels to international standard. I have already tackled this plan in some detail, showing that, to date, Istria has just two five-star hotels. The assessment I refer to seems to suggest these are self-designated ratings and so somehow questionable. Because I have personally visited those two hotels (one of which is a resort), I can say that their five-star status is well-deserved and actual. Both were new-builds.

Another two hotels are currently being refurbished in Istria, to luxury status, and I have no doubt they will achieve the same high-level results.  This should be viewed against a backdrop of the country’s severe financial position under communism, and the trickle of people from rural to town areas, where accommodation was scarce and in poor condition. That went for hotels, too, many of which were used to house poor people. This meant there was never money to refurbish. Though present hotel refurbishment might be slow, it is founded on a genuine desire by Istria to literally pull itself up by its boots… and that will take time.

Another comment was that Croatia “has relatively poor accessibility by air compared to other Mediterranean destinations.” Again, this is true, but it also does not mention the attitude of Croatia (and Istria in particular), which is to reject the high-rise, beer-swilling resort development found in so many western countries. Instead, it wants steady, quality growth. Building airports just anywhere offends that philosophy. Croatia is going for top-level, not cheapness. The Istrian Plan typifies this desire to be excellent, even if it takes time. Negativity only slows it down even more. 

Personally, I found that Pula airport in Istria definitely needs upgrading. But, I am able to look beyond the need for refurbishment and expansion and see the heart of the country. I prefer the friendliness and warmth of the people, to a westernised airport any day! I can wait to see it developing… but the genuine desires of people cannot be refurbished or invented!

The majority of visitors to Croatia stay in Istria. This was correctly assessed. And despite the need for refurbishment and expansion, and its lower input, Pula (Istria) took in its fair share of visitors. It would be a pity if the sophistication of westerners caused them to denigrate Pula airport just because it doesn’t look like their own. Other visitors arrive by car from Italy (Trieste), Slovenia and Germany. Some even come via the ferry from Venice, whilst a growing number come by large yacht.

The report correctly identifies the market in Croatia as seasonal. But, the Istrian plan hopes to spread the season to all-year. Again, this takes time, because Istria is starting from scratch. However, the report incorrectly applies the Istrian Plan to all of Croatia, when the ‘Masterplan’ referred to is not for Croatia, but for Istria. The rest of Croatia is watching how the Plan affects Istria, before taking it on board nationally.

Another slightly questionable statement in the report is the number of golf courses in Croatia, because it confuses Istria and the rest of the country. Istria is the region that is chasing golf courses most fervently. Progress is very slow, partly because each municipality in the region is responsible for its own part of the masterplan, but mainly because western companies are trying to ignore the Croatian way of life. Both will no doubt meet in the middle, with time. It is notable that the Masterplan wants golf courses to be placed where they fit most naturally. Istria is the most sustainable and ‘green’ destination I have come across, its natural way of life far exceeding anything in the west. This is because everything is organic and natural: they don’t need green groups to show them the way… they already live it to the full, from the smallest farm to the biggest resort.

When mentioning marinas there was no reference to the one already in Savudrija (owned by the Skiper-Adriatica resort), or the marina right outside the Nautica, in Novigrad, that can take a huge number of super-yachts. But, mention is made of future marinas. This can only imply to visitors that Istria has no yachting facilities as yet, when it has modern berths for hundreds.
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Nautica Five-star Hotel, 
Novigrad

Part of super-yacht marina owned
by the Nautica, Novigrad
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As for property, yes, buying in Croatia is full of blocks and difficulties. But, again, this is not really a fault – it is part of Croatian economic strategy to keep things slow, so as to regulate what is built. Because of this, one of my family has taken over two years to get his luxury villa built, and has still not obtained his certificate allowing him to rent. Frustrating though this might be to westerners, they are in a foreign country that is taking care not to become another Spain or Florida! In the end, they will benefit greatly.

The report implies the area is still a ‘hot spot’, but land and building prices have already peaked according to estate managers in the country. You might still be able to find a bargain, but this will now be rare (which is why my earlier articles urged readers to get in quick). What you will now buy into, even since last year, is an established market with stable buying prices. However, those villas that already exist are experiencing a rapid rise in returns. 

Even so, it is wise to realise that Croatia’s slowness in allowing foreigners to build is a deliberate part of their quality program… and Croatians are still getting their heads around the concept of investment building. This is why there is a lack of luxury properties. Almost to a man, Croatians are very concerned to retain their natural way of life and the integrity of their land, and they will not budge from this attitude. Good for them! The advise is simple – go slow with the Croatian flow! It’s a plus, not a minus.

The report is accurate in saying properties next to a resort have an extra-value, as I pointed out in my article on the Kempinski site in the north of Istria. The properties outside this site are not all luxury by any means, but they have all experienced a rise in price. That is why I suggested a number of localities that investors might think about, slow though the process is.

Finally, the report says Croatia has tremendous potential due to its beautiful landscape. This undersells the place, because in many parts it is stunning, but you have to travel through the hidden bits to see it. It also refers to the culinary traditions in Croatia. This is well-deserved because all food, wine and beer is natural & seasonal, without additives/chemicals, and completely safe.

Branded hotels are starting to take notice of Croatia, but investors should not be put off by their small number – the ones already built and being refurbished by Croatians are just as luxurious and worthy of examination, especially as building costs are currently lower.

The variables I have mentioned are worthy of consideration when reading detailed reports of the kind I have looked at. Do not just look at the outward signs, but see what makes the country tick. What might seem to be backwardness or a slowness to respond, may just be, as with Croatia, a deliberate political plan. And one of its regions, Istria, under visionary tourist head, Denis Ivosevic, is set to become a genuine luxury destination. By that I mean ‘luxury’ has not just been tacked-on to tourism – it is a huge masterplan that builds an economy from the ground up, rooting itself on natural and real traditional values. These are variables often overlooked in the best of studies.

© December, 2007. Barry Napier

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Contact:

Barry Napier
barry.napier@ntlworld.com
 

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Also See: Right Man, Right Time: Denis Ivosevic - the Head of Tourism for Istria, Croatia / May 2006
Opportunities in Istria for Golf Courses Combined with Hotels / January 2007
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