Cappelli: We Expect 800 Million Euros in Investments, Considering 200 Levies in Tourism

We will do everything to ensure that 2017 is as successful in tourism as this year, and we expect continued investments, which, according to initial estimates, will rise to 800 million euros next year, said Tourism Minister Gari Cappelli on Thursday at the hoteliers’ congress.

Cappelli arrived at the 19th hoteliers’ congress, organized by the Association of Employers/Entrepreneurs in Hospitality of Croatia (UPUHH), with Minister of Labor and Pension System Tomislav Ćorić. Both participated in a panel on investments and workforce in hospitality and tourism, highlighting that they are working together to address the labor shortage in the sector, which escalated this year.

Creating conditions for better business as well as changes in promotion, with a greater emphasis on the continent and health tourism, Cappelli identified as some of the most important tasks for the Ministry of Tourism and the Croatian National Tourist Board for the coming year, underscoring the role of hoteliers.

“Hoteliers are the biggest drivers of tourism development. In Lošinj, from where I come, I saw that practically everything in the destination revolves around them, so their plans are extremely important for the overall results of tourism in Croatia,” Cappelli emphasized and called for more coordination between the state and local levels, especially regarding hotelier investments.

He announced that the government will consider more than 200 parafiscal levies related to tourism and hospitality, and that guidelines for promotion for the next year should be completed within the next 15 days.

He pointed out that he is not happy that VAT on hospitality services is rising to 25 percent, but believes that this can be compensated, especially for hospitality providers, through other measures the government is working on, mentioning the recognition of representation for hospitality providers as an expense.

Next year, we will start with five competence centers

Regarding the labor shortage, he announced that next year preparations and implementation of five competence centers will begin, which could at least partially address this problem and already yield good results by 2018. He also mentioned that the import of labor is being considered, but that the problem will first be attempted to be solved with domestic personnel.

“With our entry into the EU, our workers have access to that large market and now find it easier to go work in Europe, even though they do not necessarily earn more there than in Croatia, so it is possible that this is also why we are lacking workers. The problem is also the high seasonality of our tourism, as well as the large number of unemployed who do not have the necessary qualifications to work in tourism,” Cappelli said.

He added that retraining for tourism professions is underway, which he believes will short-term solve the problem of the shortage of part of the workforce.

At the Congress, it was heard that there are nearly 40,000 unemployed with tourism professions at the employment office, but also that many of them do not want to work in tourism at all nor can they be forced to do so.

Poor educational system

Minister Ćorić highlighted the problem of the poor educational system in vocational schools, stating that it needs to be adapted to the needs of the sector.

“Tourism, like other sectors, is battling with insufficiently qualified workers, as we have enough qualified personnel, but unfortunately, the educational system is not focused on creating quality staff,” Ćorić assessed, emphasizing that since 2014 there has been a measure for permanent seasonal workers, which currently covers 1,300 individuals, meaning they receive some income and contributions throughout the year, whether they work or not.

Ivana Budin Arhanić from the Valamar hotel group says that hoteliers are burdened for the next year by announcements of higher VAT for hospitality and local property tax, which she believes will reduce hoteliers’ capacity for investment. This, along with the labor shortage, further complicates planning and outlook for the next year.

“We must not forget the activities of the competition, which will certainly not be idle and are looking for ways out of crisis situations and new motivations for attracting tourists by lowering prices, which all needs to be considered in planning,” said Budin Arhanić. She believes that for Croatian tourism, it is most important to catch the current favorable direction given the events in the region, and it would certainly be good if the VAT rate, if it cannot be lower, is not higher.

A stable environment is needed

The president of the national association of hoteliers UPUHH, Ronald Korotaj, who is also the president of the management board of Istraturist in Umag, emphasized that Croatia is too small to engage in low-quality tourism and that we must not relax or stop, as tourism is a very dynamic activity where competition does not sleep.

“Give us a stable environment and we will continue to invest. Let us work, because we are best when no one interferes with us, and whenever someone engages with us, we lose time and other resources in discussions like this one about VAT instead of focusing on serious business,” Korotaj told the attending ministers and the government.

The president of the management board of Maestra in Rovinj, Tomislav Popović, emphasized that hoteliers will have to cope with the higher VAT and compensate for it with whatever they can.

Kristian Šustar from the Zagreb hotel company HUP-Zagreb emphasized that despite good results in tourism and its share in the national GDP of nearly 20 percent, Croatia is still very low on the rankings related to investments in personnel, tax burdens, administrative barriers to business, and more, assessing that Croatian tourism is most trusted in walls.

“We still talk the most about new walls, increasing capacities and facilities in tourism, which is the physical component of the tourist product. We believe in that the most, but we talk the least about people and personnel, the quality of work processes, and ultimately revenues, and that is certainly not the direction Croatian tourism must take,” Šustar emphasized.