Renters are unconnected micro-entrepreneurs whose needs suppliers have yet to recognize

At the peak of the season, it is almost impossible to find a free bed in private accommodation, but it does not last long and occupancy is more or less a consequence of inertia and the mass arrival of tourists who book accommodation at the last minute. There are renters who are full for only a month, maybe two if they are lucky. If someone strolls through the streets of most smaller coastal towns in the pre-season and post-season, they will not be particularly impressed by the number of visitors.

There are several reasons for this, and one of the most important is the quality of accommodation. We are not saying that the accommodation in this beautiful Kvarner town is bad, but it simply does not meet the expectations and standards of the modern guest. Novi Vinodolski is just a passing example of many family renters in Croatia. There are about 62,000 of them, managing around 500,000 beds and achieving 23 million overnight stays per year.

To attract new guests, they must invest in equipment. Family renters are the largest buyers of goods and services in the tourism sector in Croatia. Just for ongoing maintenance, family accommodation invests more than one hundred million euros a year.
– Every household needs furniture, bedding, sanitary facilities, garden equipment, air conditioning, digital telecommunications equipment, as well as painting, cleaning, horticultural work, masonry, carpentry, plumbing, and electrical services. For all this, it is necessary to ensure accompanying financial support, promotional materials and tools, photographs, refreshing drinks and fruit for welcoming guests, hygiene supplies, cleaning equipment, and so on – explains Nedo Pinezić, president of the Family Tourism Association of the Croatian Chamber of Commerce. If, for example, 62,000 renters bought new bedding or garden equipment at once and if each of them was willing to spend a thousand kuna on it, we would quickly reach an amount of 62 million kuna. How much savings and lower prices would there be if they all procured the mentioned products together? Unfortunately, as it is, everyone buys for themselves. There are several reasons why unified procurement does not work.
– Many suppliers of equipment and services are not ready for such a challenge because they are faced with thousands of unconnected micro-entrepreneurs who each need tailored goods. However, the market functions equally in other segments of supply, from communication equipment, smartphones, cosmetics to cars. All well-organized suppliers of goods and services have realized that they must first inform themselves about the needs of their customers and their payment capabilities, that they must address them directly, personalized, and deliver the service or product to their home address directly or through an authorized intermediary – explains Pinezić, emphasizing that this way of communication has so far been accepted by only a few serious partners of the Family Tourism Association of the Croatian Chamber of Commerce, such as Raiffeisen Bank, Zagrebačka Bank, Metro Croatia, and Darsonik. Their way of monitoring household needs has sparked interest among other suppliers of products and services.
But how to connect, for example, a renter from Poreč, Zadar, and Mali Lošinj? Almost impossible, but there is a solution. The Family Tourism Association is most compact at the level of the tourist destination where, in cooperation with the local tourist board and the family accommodation association (if, of course, it has been formed), interested potential buyers can gather for the presentation of targeted products and services. However, local will not function without national. Therefore, in October, the FOS (Family Accommodation Forum) is organized where supply and demand meet, trends in tourism are presented, and needs for service improvement are discussed. Then come regional forums and finally sub-regional educational workshops.
– From October last year to May this year, more than 3,500 owners of family accommodation passed through the national and ten regional forums and about ten sub-regional workshops. At all these meetings, individual suppliers of goods and services also participated. There, they were enabled to interact with potential customers, create a database, and continue communication with future business partners – says Pinezić.

Since every renter must tailor the offer to the guest, and every offer of goods and services must be tailored to the customer, in this case, the renter. Pinezić says that goods must come to the customer, not the customer to the goods. After equipping the accommodation, it is crucial to determine its price. In Croatia, accommodation in rooms, apartments, and holiday homes is offered at an ‘all-inclusive’ price.
– This price includes the use of all equipment in the accommodation, consumption of water and electricity, a fully furnished and equipped kitchen, all bedding, and cleaning costs. Prices range from 15 to 30 euros per day per person. In higher standard accommodation, they can reach up to 50 euros per day, and in early pre-season and late post-season, simpler accommodation can be found for 10 euros per day – emphasizes Pinezić.
The price of accommodation is determined by the market, but given that the offer is already so diversified, everyone can find their price range. Therefore, every renter should conduct a little market research. How does the market determine prices? For example, the rental market for apartments in Zagreb has increased by an average of 50 euros per apartment. The two largest student dormitories are being renovated, and about four thousand more students than last year will be looking for private accommodation. Thus, demand has increased, and prices have risen. That is the market.
– The best performers are those who are hosts, who dedicate themselves to their guests by always being present but unobtrusive. A good host must compensate for many shortcomings of the destination with good service, such as a poor public transport system and information about attractions, lack of infrastructure for active recreation, poor availability of authentic local products, events, folk customs, cultural attractions, museums – warns Pinezić.

In the Tourism Sector of the Croatian Chamber of Commerce they tell us that the arrival of tourists in family households accounts for about 50 percent of total Croatian accommodation capacities, which is exactly 48.2 percent in the overall structure of the number of beds in private rooms compared to total Croatian accommodation capacities. The share of family accommodation traffic in total tourist traffic increases by an average of one percent per year.
– We already have quite a few family hotels of four-star quality. They have been established by the grandchildren of grandfathers and grandmothers who started the family tradition of providing simple overnight services or bed and breakfast services many years ago. There will be more such examples with the increasingly stronger incentives of national economic policy and regional administration and local government units – they conclude at the Croatian Chamber of Commerce.
It seems that the grandchildren who have taken over their grandparents’ businesses have thrown themselves into serious work. The Ministry of Tourism tells us that more and more renters are building pools. This year, 165 new pools have been built, and every year the Ministry announces a competition that supports construction with 40,000 kuna. For this year, the process has been completed, and it should be announced again in February. According to applications for this year, the most pools were built in Split-Dalmatia County (55 projects) and Primorje-Gorski Kotar and Istria County (31 projects in each county).

A project of the so-called diffuse hotel has also begun to be implemented, for example in Šibenik. The hotel reception is in one place, while the accommodation is dispersed across several locations. This form of organization is suitable for old city centers that are threatened with extinction, but additional effort is needed to find a model suitable for the destination while respecting all legal and fiscal norms. An international team of experts is currently working on such a model for Vrbnik on the island of Krk.
– The right extension of business can be expected when tourist destinations and the public sector are included in the business model, which should also first examine the needs of its customers in different seasons and according to target groups. After that, it is necessary to establish infrastructure for the desired type of well-organized tourist offer and finally bring such an offer closer to every loyal guest who will further take on the role of promoter. It is more important to work on the product than on promotion because a good product will be gladly promoted by every guest today in their social group, on social media, and so on. Such promotion exceeds the possibilities of all forms of paid promotion. And the foundation of its effect is a good product and a satisfied guest – concludes Pinezić.
Therefore, renters who want to work more and better, raise the quality of service, and thus earn more, must invest if they want their guests to return. Providers of accommodation services in households are Croatian citizens and citizens of other EU member states. Among them are lawyers, doctors, bankers, economists, IT specialists, builders, caterers, fishermen, journalists, engineers, housewives, and PhDs. The time of stereotypes about uneducated owners of semi-built properties who grab people by the arm and ‘lead’ them into their homes is over. Such occurrences are exceptions; the majority of the offer consists of the mentioned structure of second, third, and fourth generation hosts and property owners who have turned to tourism.
Some of them, however, will still be satisfied with the current demand and the number of guests who come to them by inertia, because why would they work more than two months when seasonal income can cover most of the year? But such a stance is short-lived. And that is classic rent-seeking, not tourism.