November 1, 2020 — According to the latest report, and despite the COVID-19 crisis, Valamar Riviera generated 2.2 million overnight stays in the first three quarters of 2020. They also successfully implemented a program which pays non-working employees 60 percent of their salaries.
The resort chain reported a 673 million HRK (88,733,705 EUR) profit or 33 percent of last year’s revenue. At the end of the business year, Valamar Riviera expects a net loss according to Glas Istre. However, the resort chain has a positive cash flow with an operating profit of 100 to 115 million HRK (13,184,800 to 15,162,520 EUR).
‘Pause, Restart’ Program Preserved Jobs With Croatian Government Subsidies
With stakeholder support, Valamar has been actively managing the crisis and the tourist season since the beginning of the pandemic. Back in March, they cancelled a decision to pay a dividend for 2019. Members of the Supervisory Board also waived their fees, and management gave up to 30 percent of their salaries. Then the company implemented “Pause, Restart” a program for preserving jobs in cooperation with social partners. The program pays non-working employees 60 percent of their salaries (i.e. a minimum of 4,250 HRK [560 EUR] per month). The Croatian government supported this job preservation program through subsidies.
Furthermore, Valamar reduced operating expenses by 59 percent over last year. They also postponed investment plans until 2021. Also, loan rescheduling provided additional medium-term liquidity. This was sufficient to amortize the crisis for the upcoming period. In addition to implementing austerity measures and increasing liquidity, Valamar is preparing for the 2021 season. They are modifying their products and services to welcome guests safely and securely.
Valamar Reallocated Investments, Postponed Projects, Reduced Operating Expenses
The resort chain also partially reallocated 2020 investments, which total 800 million HRK (105,478,401 EUR). Additionally, they extended implementation over a two year period. During autumn and winter, they will complete the projects which are already underway. These investment projects include the renovation of the Valamar Parentino Hotel in Poreč and the Valamar Meteor Hotel in Makarska. During the next 12 to 24 months, all other major investments will be put on hold. Those include the construction of the Valamar Pinea Hotel in Poreč, which is the largest tourism project in Croatia, and worth 790 million HRK (104,159,921 EUR). As tourism stabilizes, Valamar will focus on preparing future development projects, digitalization and transforming the business for new growth.
“The crisis has shown us that companies which excelled and invested in good stakeholder relations before the crisis will continue to do so during the crisis. This approach strengthens stakeholder trust and enables a faster economic recovery. Valamar has actively managed the crisis in 2020 and positioned itself well to successfully resume growth and development during 2021 and 2022, when business normalization is expected. We wish to thank all stakeholders for their support, especially our employees, shareholders, suppliers, contractors, banks, and the government who partnered with us in overcoming this demanding business year,” said Željko Kukurin, the CEO at Valamar Riviera.
Follow our Travel page for insight on how businesses are responding the challenging tourism market due to COVID-19. For vacation offers in Croatia, check out the Valamar website here and their Facebook page here.