Annual Report • Aug 28, 2020
Annual Report
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INTEGRATED ANNUAL REPORT AND CORPORATE SOCIAL RESPONSIBILITY Valamar riViera d.d. 2019
GUSTAv WURmBöCk, Supervisory Board Chairman
I am glad to present the Valamar Integrated Annual Report for 2019 our fifth integrated report, which attests to our company's long-term commitment to sustainability and business excellence. This report presents an integrated review of our business and sustainability efforts in 2019 in accordance to GRI standards, a globally recognized practice of business and sustainability reporting on a range of economic, environmental and social impacts.
Valamar takes pride in our transparent and trustworthy relationships with our key stakeholders. The report before you supports us in continuously improving those relationships and creating value for our guests, employees, destinations, suppliers and shareholders. Furthermore, the report is one of the ways in which Valamar Riviera actively promotes responsible business practices.
The year 2019 was a very successful year for Valamar as a company as measured in financial, social, human, environmental and corporate culture indicators. Simultaneously we also successfully grew our nine CSR umbrella programs in terms of their value and their impact. In 2019 Valamar launched the largest environmental initiative in Croatian tourism, "1000 Valamar trees" to put more public focus on sustainable tourism development as a key prerequisite for long-term value creation in Croatia's tourism. We are committed to planting at least 1,000 trees each year and continue to care for the preservation and restoration of native plant species in our destinations. More than a thousand trees and over 50,000 different seedlings have been planted in Valamar hotels, resorts and camps in 2019.
In 2019 Valamar Riviera has once again recorded a growth in revenue, investment and profits. Business growth is a testament to the success of Valamar's business strategy which is driven by continuous investment in employees, products, services and innovation and recognized by our guests who report high levels of satisfaction. In 2019 Valamar was voted the 7th most desirable employer in Croatia and the most desirable employer in tourism, confirming that we are recognized for providing employees with the best salaries, knowledge, training and working conditions in the industry. In turn, I am always impressed and thankful for the dedication and hard work of all of our employees who are without exaggeration the key to Valamar's success.
Since the beginning of 2020 we have all witnessed the rise of a global pandemic which has had a profound effect on many lives and industries having especially disrupted the travel industry in a way that we could not have previously imagined. Valamar's corporate governance and risk management capabilities allowed the company to react to the crisis swiftly and responsibly. After closing all properties and ceasing business mid-March, Valamar took less than two weeks to announce a job saving program under the name "Pause, Restart" ensuring that all Valamar employees keep their employment and receive payouts when they are not working. The program was supported by the unions and defined the framework for Valamar to protect employment levels until spring 2021 when we expect the beginning of business normalization. Valamar has reached similar agreements with other key stakeholders to preserve liquidity and ensure that capabilities and resources are in place to restart once travel begins to reopen. This has proven to be the right strategy that has allowed Valamar to successfully reopen properties in May and June and to ensure that the summer season is safely underway.
Valamar Supervisory Board has given its full support to the Management Board crisis management programs and action plans as well as the cancellation of dividend payment for 2019 to Valamar shareholders.
Valamar's sustainable business practices which are detailed in this report are critical in ensuring that value is created for all stakeholders. Likewise, during the times of crisis sustainability practices are critical in ensuring that value is preserved. Given our full commitment to building a sustainable and responsible business I am confident that Valamar will weather the current situation and return to the path of growth over the next year.
ŽELjkO kUkURIN, Management Board President and CEO
After many years of successful growth, investment and development, the fifth integrated report of Valamar Riviera for the year 2019 will be published in challenging times for the global economy, especially for the travel industry. The global crisis caused by the COVID-19 pandemic has had a negative impact on our business and our stakeholder groups, highlighting even more the necessity for corporate and social responsibility and a sustainable long-term approach. The integrated annual report before you details our achievements and activities in 2019. Last year was a successful year of growth and development for the company confirming the validity of Valamar's approach to continuously invest in employees, products and destinations, with a high focus on sustainable development and corporate social responsibility. We have significantly increased salaries and improved working conditions, and an independent survey has once again rated us as the best employer in Croatian tourism. All our permanent employees, as well as employees who worked at least 10 months a year, received a 13th salary of HRK 5,000 net and a Christmas bonus of HRK 2,000 net.
In 2019 Valamar has grown to be able to accommodate over 58,000 guests per day in 36 hotels and resorts and 15 camping resorts served by more than 7,000 of our employees. Valamar hosted almost 1.2 million guests in 2019 and once again achieved a very high level of guest satisfaction due to the continued investment in the knowledge and skills of employees. Valamar's carefully designed education and training programs were expanded in 2019 in collaboration with the academic community, to launch the Valamar Excellence educational program.
Despite the increasing competitiveness of certain Mediterranean destinations and a season marked by declining growth in arrivals, Valamar has grown revenues almost 10% in 2019. This is particularly evident in newly invested properties. Valamar has invested close to HRK 6 billion in Croatian tourism so far, out of which HRK 826 million was invested in 2019 alone.
Valamar consistently implements high environmental protection standards, as the environment and our destinations are a key resource in tourism. Our commitment in 2019 was rewarded when six Valamar Riviera campsites received EU Ecolabel, which promotes environmental excellence and helps identify products and services that have a reduced environmental impact.
In 2019 Valamar began with the construction of the Pinea Valamar Collection Resort in Poreč, worth HRK 790 million. However, due to the current situation, construction works are temporarily halted and the completion of this investments is postponed. This is the largest single investment in Croatian tourism which will hold the largest hotel event center in Istria. The center will be able to host up to 1.200 people, bringing new quality to Poreč's tourism, strengthening its position as one of the most prestigious destinations on the Adriatic, and prolonging the tourist season.
In 2019 Valamar Riviera participated in the recapitalization of Imperial Riviera worth a total of HRK 426 million together with AZ pension funds. Imperial Riviera's capital increase marked the beginning of a five-year business plan of estimated investments in tourism in the amount of HRK 1.5 billion, with focus on reconstructing and renovating owned properties and the further expansion of Imperial Riviera's portfolio under Valamar's management. Increasing the share capital of a joint undertaking for the management and investment in hospitality assets is a logical continuation of Valamar's successful collaboration with institutional investors. Stakeholders who have participated in the recapitalization believe in the growth potential of Croatian tourism and the long-term sustainability of the hotel industry which invests in employees, destinations and quality tourism.
In 2020, the focus of Valamar's efforts has shifted from achieving sustainable growth to crisis management. In order to ensure the stability of the company and preserve the resources and skills needed to restart operations, Valamar established the Risk Management Committee in February, which actively and responsibly managed business. Valamar was the first tourism company in Croatia to create a job savings program at the onset of the crisis. Valamar implemented the "Pause, Restart Program" with the support of social partners. The program ensures continued payouts to all "paused" employees waiting for work in the amount of at least 60% of their regular salary, but not less than HRK 4,250 net. Management salaries are reduced up to 30% until all employees return to work. After suspending their fees from March to August, the Supervisory Board has reduced member fees by 30%. In the period from March to June, over 90% of Valamar's employees were on "pause", the cost of which was jointly borne by shareholders and the state, which subsidizes salaries of employees waiting for work. The program will continue during the fall and winter in order to preserve jobs until the spring of 2021 when business is expected to normalize. Despite the crisis, Valamar Riviera confirmed its status as the best employer in tourism this year, ranking sixth on the list of best employers in Croatia.
A crisis is a test of a business model, values, resilience, and the ability of a company to respond to crisis. Although the 2020 COVID-19 crisis is unprecedented, Valamar has created and executed strategic action plans that are driven by Valamar's relationships and commitment to all key stakeholders – employees, guests, partners, suppliers, creditors, shareholders and destinations. The achieved financial stability and ownership-operational management model will enable full business restart and resume development during 2021.
Croatia has a unique opportunity to promote itself as the most desirable destination in the Mediterranean and achieve strong growth in 2021 given its high safety level, geographical and political position in Europe. As a leader in Croatian tourism, Valamar is competent and ready to encourage the responsible and sustainable re-start and growth of Croatian tourism. I am confident that, with the support of our stakeholders, we will do our utmost to resume development in the following year.
| MESSAGE FROM THE CHAIRMAN | 2 | |
|---|---|---|
| MESSAGE FROM THE CEO | 3 | |
| 1 | ABOUT THIS INTEGRATED REPORT | 6 |
| 2 | ABOUT VALAMAR RIVIERA | 8 |
| 3 | THE HOSPITALITY INDUSTRY IN CROATIA 2019 | 20 |
| 4 | ENGAGEMENT OF KEY STAKEHOLDERS AND MATERIAL ASPECTS | 28 |
| Communication with Key Stakeholders | 30 | |
| Communication with Associated Stakeholders | 30 | |
| Valamar Riviera Key Stakeholders and Associated Stakeholders | 31 | |
| Valamar Riviera Contribution to Economic Development in 2019 | 32 | |
| Identification of Material Aspect and Boundaries | 33 | |
| 5 | REPORTS | 34 |
| Business results 2019 | 34 | |
| Investor relations and Valamar Riviera share | 43 | |
| Sales Performance | 46 | |
| Service Excellence | 48 | |
| Employees and Organization | 50 | |
| Responsibility to the Local Community and the Environment | 58 | |
| Corporate Governance | 62 | |
| 6 | ACHIEVEMENTS IN CORPORATE SOCIAL RESPONSIBILITY 2019 | 76 |
| INNOVATION AND DIGITALIZATION | 82 | |
| AWARDS AND RECOGNITIONS | 84 | |
| OPINION OF THE MANAGEMENT BOARD COMMITTEE OF THE CROATIAN BUSINESS COUNCIL FOR | ||
| SUSTAINABLE DEVELOPMENT ON THE 2019 INTEGRATED REPORT OF VALAMAR RIVIERA | 88 | |
5
This integrated report refers to the reporting period from the 1st of january to the 31st of December 2019 It is based on the Annual Report of valamar Riviera Group* published on the 28th of February 2020
For the fifth consecutive year, Valamar integrated business reporting with sustainability reporting i.e. non-financial information on the company's environmental and social impacts, using the new GRI Standards (core option) as general guidelines. The report presents information on how the company affects its natural, social and economic environment and how this impact is managed in the long term. Corporate social responsibility is approached comprehensively with key stakeholders in mind. The company develops continual communication with them as part of Valamar strategy where sustainable destination development,
support to the local community and care for the environment are included in everyday business operations.
As the largest employer in Croatian tourism, Valamar focuses on investing in the constant development of human resources to maintain its leadership and status as a company providing the best conditions and overall care for its employees.
According to an independent 2019 survey by MojPosao, a Croatian job search web portal, Valamar is the only tourism company among the Top 10 employers in
Croatia offering such working conditions to its employees and was voted best employer in tourism. The report is available at www.valamar-riviera.com. We invite all stakeholders to submit their comments and suggestions at [email protected]. To make the presented data more relevant, the end of the report contains the opinion and recommendations for future reporting given by the Croatian Business Council for Sustainable Development (HR PSOR).
* Valamar Riviera Group (hereinafter: company, group, Valamar Group, Valamar, Valamar Riviera) in 2019 included the following entities: Valamar Riviera d.d., Valamar hotels & resorts GmbH, Magične stijene d.o.o., Palme turizam d.o.o., Bugenvilia d.o.o., Imperial Riviera d.d., Valamar A GmbH, Valamar Obertauern GmbH.
Valamar Collection Marea Suites, 5*, Poreč
valamar Riviera is Croatia's leading tourism company operating hotels, resorts and camping resorts in prime destinations – Istria, the islands of krk, Rab and Hvar, makarska, Dubrovnik, and Obertauern in Austria.
Valamar's 36 hotels and resorts and 15 camping resorts can welcome around 58.000 guests daily and provide perfect holidays and authentic experiences for each guest.
The company believes in a growth-driving strategy focused on investments in high added-value products, talents, innovative services and destination development. Valamar Riviera is a responsible and desirable employer and one of the top Croatian and regional investors in tourism with over HRK 6 billion invested so far.
Steered by sustainability and social responsibility, Valamar leads the innovative management of leisure tourism and creates new value for guests, employees, shareholders and local communities in partnership with its destinations.
Istra Premium Camping Resort by Valamar 5*, Poreč
Stancija Kaligari 1, 52440 Poreč, Croatia
Business activity: Hospitality and tourism (core activities) and other associated activities related to the performance of core activities.
Primary brands: Valamar All you can holiday Valamar Collection Hotels Valamar Collection Resorts Valamar Hotels & Resorts Sunny by Valamar Camping Adriatic by Valamar
Portfolio: 36 hotels and resorts and 15 camping resorts.
Land surface: 589 hectares, 47% owned and 53% under concession
Maritime domain: 37 km.
| Germany | 30% |
|---|---|
| Austria | 15% |
| Slovenia | 7% |
| United Kingdom | 7% |
| Italy | 6% |
| Netherlands | 5% |
| Czech Republic | 4% |
| Other | 26% |
* Only includes commercial overnights.
| 2018/ | 2019/ | |||||
|---|---|---|---|---|---|---|
| 2017 | 2018 | 2017 | 2018 | 2019 | 2018 | |
| Total revenues (HRK bn) | 1.84 | 2.05 | 11% | 2.02 | 2.2 | 10% |
| EBITDA (HRK mn) | 606 | 694.5 | 15% | 693.2 | 769.0 | 11% |
| Net debt / EBITDA | 2.92 | 3.1 | 6% | 3.1 | 2.9 | -6% |
| Employees (peak season)* | 5,924 | 6,739 | 13.10% | 6,739 | 7.068 | 5% |
| Capital investments (HRK mn) | 877.7 | 703.6 | -20% | 703.6 | 954.6 | 36% |
| Guests** | 1,013,873 | 1,077,697 | 6.2 | 1,077,697 | 1,179,832 | 9% |
| Beds** | 56,662 | 58,023 | 2% | 58,023 | 58,216 | 0.3% |
| Overnights** | 6,173,142 | 6,459,734 | 5% | 6,459,734 | 6,775,709 | 5% |
| Keys** | 20,852 | 21,371 | 2% | 21,371 | 21,266 | -0.5% |
| Book value of long-term assets (HRK mn) | 4.63 | 5.31 | 14 | 5.3 | 5.9 | 11% |
| Market capitalization as at 31/12 (HRK bn) | 5.42 | 4.47 | -18% | 4.5 | 4.7 | 6% |
| Shareholders as at 31/12 | 21,835 | 21,759 | -0.30% | 21,759 | 21,164 | -3% |
* Peak season employment data include Hoteli Makarska d.d.
** Valamar House – Staff Residence - Valamar House accommodation is included.
| 2016 | 2017² | 2018³ | 2019⁴ | 2019/2018 | 2019/2017 | 2019/2016 | |
|---|---|---|---|---|---|---|---|
| Hotels and resorts | 1,119 | 1,319 | 1,453 | 1,565 | 8% | 19% | 40% |
| Camping resorts | 303 | 400 | 467 | 539 | 15% | 35% | 78% |
| Other¹ | 45 | 49 | 47 | 47 | 1% | -3% | 6% |
| ukupno | 1,467 | 1,767 | 1,967 | 2,151 | 9% | 22% | 47% |
¹ Leasing, laundry, and other operating revenues included.
² Imperial Riviera d.d. included.
³ Hoteli Makarska and Valamar Obertauern Hotel included.
⁴ Valamar Riviera d.d., Imperial Riviera d.d. and Valamar Obertauern Hotel included.
* Imperial d.d. and Hoteli Makarska d.d. are included as of 2017 and August 2018, respectively.
| Destination | keys | |
|---|---|---|
| Poreč | 10,404 | RABAC Zagreb POREč |
| Rabac | 2,133 | 2,133 10,404 C R O A T I A KRK ISLAND |
| Krk Island | 3,357 | 3,357 Vienna |
| Rab Island | 2,455 | RAB ISLAND A U S T R I A |
| Makarska | 716 | 2,455 OBERTAuERN |
| Dubrovnik | 2,100 | Zadar 82 |
| Hvar Island | 601 | Split MAKARSKA HVAR |
| Austria | 82 | 716 ISLAND 601 |
| TOTAL | 21,848 | DuBROVNIK 2,100 TOTAL 21,848 |
| Keys | Capacity share | No. of properties | |||
|---|---|---|---|---|---|
| Valamar riViera – TOTal | 21,848 | 100% | 51 | ||
| vALAmAR RIvIERA – NON COmmERCIAL | 1,021 | 4 .6% | |||
| vALAmAR RIvIERA – COmmERCIAL | 20,827 | 95.4% | 51 | ||
| HOTelS aND reSOrTS | 9,259 | 42.4% | 36 | ||
| vALAmAR COLLECTION | 536 | 2.5% | 3 | ||
| Valamar Collection Marea Suites | ★★★★★ | Poreč | 108 | 20% | 1 |
| Valamar Collection Imperial Hotel | ★★★★ | Rab Island | 136 | 25% | 1 |
| Valamar Collection Dubrovnik President Hotel | ★★★★★ | Dubrovnik | 292 | 54% | 1 |
| vALAmAR COLLECTION RESORTS | 725 | 3.3% | 2 | ||
| Isabella Valamar Collection Island Resort | ★★★★★ (4/5) | Poreč | 334 | 46% | 1 |
| Girandella Valamar Collection Resort | ★★★★★ (4/5) | Rabac | 391 | 54% | 1 |
| vALAmAR HOTELS & RESORTS | 4,055 | 18.6% | 17 | ||
| Valamar Riviera Hotel & Residence | ★★★★ | Poreč | 133 | 3% | 1 |
| Valamar Tamaris Resort | ★★★★ | Poreč | 507 | 13% | 1 |
| Valamar Parentino Hotel | ★★★★ | Poreč | 289 | 7% | 1 |
| Valamar Crystal Hotel | ★★★★ | Poreč | 223 | 5% | 1 |
| Valamar Diamant Hotel & Residence | ★★★★ (3/4) | Poreč | 372 | 9% | 1 |
| Valamar Pinia Hotel | ★★★ | Poreč | 170 | 4% | 1 |
| Valamar Sanfior Hotel & Casa | ★★★★ | Rabac | 242 | 6% | 1 |
| Valamar Atrium Baška Residence | ★★★★★ (4/5) | Krk Island | 64 | 2% | 1 |
| Valamar Zvonimir Hotel & Villa Adria | ★★★★ | Krk Island | 113 | 3% | 1 |
| Valamar Koralj Hotel | ★★★ | Krk Island | 194 | 5% | 1 |
| Valamar Carolina Hotel & Villas | ★★★★ | Rab Island | 176 | 4% | 1 |
| Valamar Padova Hotel | ★★★★ | Rab Island | 175 | 4% | 1 |
| Valamar Meteor Hotel | ★★★★ | Makarska | 268 | 7% | 1 |
| Valamar Argosy Hotel | ★★★★ | Dubrovnik | 308 | 8% | 1 |
| Valamar Lacroma Dubrovnik Hotel | ★★★★ | Dubrovnik | 401 | 10% | 1 |
| Valamar Club Dubrovnik Hotel | ★★★ | Dubrovnik | 338 | 8% | 1 |
| Valamar Obertauern Hotel | ★★★★ | Austria | 82 | 2% | 1 |
| Keys | Capacity share | No. of properties | |||
|---|---|---|---|---|---|
| SUNNY BY vALAmAR | 3,571 | 16.3% | 13 | ||
| Rubin Sunny Hotel by Valamar | ★★★ | Poreč | 253 | 6% | 1 |
| Pical Sunny Hotel by Valamar | ★★ | Poreč | 0 | 0% | * |
| Lanterna Sunny Resort by Valamar | ★★ | Poreč | 606 | 15% | 1 |
| Miramar Sunny Hotel & Residence by Valamar | ★★★ | Rabac | 178 | 4% | 1 |
| Allegro Sunny Hotel & Residence by Valamar | ★★★ | Rabac | 180 | 4% | 1 |
| Corinthia Baška Sunny Hotel by Valamar | ★★★ | Krk Island | 431 | 11% | 1 |
| San Marino Sunny Resort by Valamar | ★★★ | Rab Island | 457 | 11% | 1 |
| Eva Sunny Hotel & Residence by Valamar | ★★ | Rab Island | 284 | 7% | 1 |
| Dalmacija Sunny Hotel by Valamar | ★★★ | Makarska | 190 | 5% | 1 |
| Rivijera Sunny Resort by Valamar | ★★ | Makarska | 258 | 6% | 1 |
| Tirena Sunny Hotel by Valamar | ★★★ | Dubrovnik | 208 | 5% | 1 |
| Lavanda Sunny Hotel by Valamar | ★★★ | Hvar Island | 179 | 4% | 1 |
| Arkada Sunny Hotel by Valamar | ★★ | Hvar Island | 262 | 6% | 1 |
| Trim & Helios Sunny Apartments by Valamar | ★★ | Hvar Island | 85 | 2% | 1 |
| CO-BRANDING / OUTSOURCED BRANDS | 372 | 1.7% | 1 | ||
| TuI Blue Bellevue Resort | ★★★★ | Rabac | 372 | 9% | 1 |
| CamPiNG reSOrTS | 11,568 | 53% | 15 | ||
| CAmPING ADRIATIC BY vALAmAR – PREmIUm RESORTS | 5,350 | 24% | 5 | ||
| Istra Premium Camping Resort by Valamar | ★★★★★ | Poreč | 869 | 21% | 1 |
| Lanterna Premium Camping Resort by Valamar | ★★★★ | Poreč | 2,931 | 72% | 1 |
| Krk Premium Camping Resort by Valamar | ★★★★★ | Krk Island | 500 | 12% | 1 |
| Ježevac Premium Camping Resort by Valamar | ★★★★ | Krk Island | 632 | 16% | 1 |
| Padova Premium Camping Resort by Valamar | ★★★★ | Rab Island | 418 | 10% | 1 |
| CAmPING ADRIATIC BY vALAmAR – RESORTS | 4,558 | 21% | 6 | ||
| Orsera Camping Resort by Valamar | ★★★ | Poreč | 596 | 15% | 1 |
| Solaris Camping Resort by Valamar | ★★★ | Poreč | 1,824 | 45% | 1 |
| Marina Camping Resort by Valamar | ★★★★ | Rabac | 328 | 8% | 1 |
| Baška Beach Camping Resort by Valamar | ★★★★ | Krk Island | 593 | 15% | 1 |
| Bunculuka Camping Resort by Valamar | ★★★★ | Krk Island | 408 | 10% | 1 |
| San Marino Camping Resort by Valamar | ★★★★ | Rab Island | 809 | 20% | 1 |
| 1,660 | 8% | 4 | |||
| CAmPING ADRIATIC BY vALAmAR – SUNNY Brioni Sunny Camping by Valamar |
★★ | Poreč | 740 | 18% | 1 |
| Tunarica Sunny Camping by Valamar | ★★ | Rabac | 160 | 4% | 1 |
| Škrila Sunny Camping by Valamar | ★★★ | Krk Island | 342 | 8% | 1 |
| Solitudo Sunny Camping by Valamar | ★★★ | Dubrovnik | 418 | 10% | 1 |
* Investment in construction.
To be the leader in leisure tourism and create authentic guest experiences in partnership with our destinations.
To create unforgettable guest experiences by using innovative services in leisure tourism. To develop a stimulating corporate culture where guests and employees come first. To deliver new value for shareholders through corporate responsibility by promoting sustainable development and supporting local communities.
We make our guests feel very welcome and highly appreciated.
We set challenging goals and strive for excellence in everything we do.
We are a responsible business partner, a caring employer, supportive towards the community and committed to preserving the environment.
We engage in collaborative innovation to improve our performance, stay alert and open to change.
We take pride in our destinations and being part of the Valamar family.
opening of the Riviera hotel (the company was named after it)
1950
Tourism developing along the Croatian Adriatic coast
Public bathing areas became favorite spots for the first tourists
Riviera established, the company-predecessor of Valamar Riviera d.d.
20 people employed in the first season of operation
1965
Management of hotels, bungalows and restaurants in Poreč and on Sveti Nikola Island
Kristal hotel built
Dynamic growth in tourism and intensive construction of hotels, apartments and campsites
— 1990
1979 – Pical hotel (the first high-category hotel in Poreč)
1986 – Fortuna hotel built on Sveti Nikola Island
establishment of Dom fond, the largest privatization investment fund
— 2000
Privatization and ownership transformation: economic processes in the war's aftermath
2015 —
2018
| 2019 | |
|---|---|
| — | |
| 2020 |
Introduction of the first brands for hotels and campsites: Valamar Hotels & Resorts and Camping on the Adriatic
Management and portfolio
consolidation
Valamar hoteli i ljetovališta starts managing hospitality operations
Business growth and portfolio investments: improving the quality of properties and services
2011 – Zlatni otok d.d. (est. 1956), Rabac d.d. (est.1961)
2013 – Dubrovnik-Babin Kuk d.d. (est. 1971)
2014 – Valamar Adria holding d.d. (est. 2003), Valamar grupa d.d. (est. 2005)
2015 – Hoteli Baška d.d. (est. 1949)
2016 – Imperial d.d. (est. 1965) in partnership with AZ pension fund
2018 – Hoteli Makarska d.d. (est.1952) in partnership with AZ mandatory pension funds
Valamar acquires a hotel in Obertauern, Austria as its first step in internationalization
Repositioning Valamar Argosy Hotel in Dubrovnik and renovating Valamar Collection Imperial Hotel on Rab; the first Kinderhotel in Valamar's portfolio – Valamar Girandella Maro Suites opened in Rabac
Further investments in the camping segment focusing on camping resorts in Istria and Krk Island; Valamar recognized as the best employer in tourism and the only tourism company among the top 20 employers in Croatia
Valamar Riviera's 65th anniversary ceremony
The merger of Hoteli Makarska and Imperial, Rab - generating Imperial Riviera d.d. s with the aim of further expansion of business in Croatia and region
Acquisition of Helios Faros on the island of Hvar partnership between Valamara and PBZ CO pension funds
Investments in Pical Riviera – HRK 1.5 billion investment by 2021, includes hotel Pinea ( HRK 790 million)
Valamar Riviera found Best Employer in Croatian tourism
Achieved three-year strategic growth, development and investment plan worth HRK 2.402 billion.
Opening of Isabella Valamar Collection Island Resort 4*/5*
Opening of the largest investment in Croatian tourism: Girandella Valamar Collection Resort 4*/5* and TUI Blue Bellevue Resort 4*
2018
Valamar presented the new brand strategy and brand identity named "All you can holiday" featuring five new product brands
2019
Opening of Istra Premium Camping Resort 5* –
Opening of Valamar Collection Marea Suites 5* – expanded offer of premium family holiday in Poreč
Valamar timeline
Valamar manages the complete guest experience. It includes the development and maintenance of our hospitality assets, operating management of hotels, campsites and resorts and the improvement of the tourism offering at a destination.
We manage the entire destination value chain; our business excellence and destination partnerships produce high quality service, optimize operations and secure a high return on investment.
Valamar Riviera manages assets on 589 hectares of land, which includes 37 km of maritime domain.
| LONG-TERM ASSETS | HRK 5,86 bn |
|---|---|
| Hotels and resorts | 59% |
| Campsites | 25% |
| Other 1 | 16% |
| Shoreline | 37 km |
| Land surface | 589 h |
| Investment maintenance | 5% |
¹ HQ building and non-core assets included.
Competition on the mediterranean tourism market grows stronger, while key source markets record a slowdown or a decrease in economic growth. In leading tourism companies profitability grows at slow rates. In 2020, a moderate increase in tourist arrivals is expected in Europe and the mediterranean, with a moderate increase in hotel prices.
The global tourism and travel industry deliver a strong economic performance in 2019. The sector of tourism grows faster than the economy average, employing over 10% of total employees and creating one in five jobs in the world.
The exceedingly high importance of tourism for Croatia's overall national economy has been confirmed by the Croatian Tourism Satellite Account. Croatia's tourism industry generates 320,000 jobs, of which 137,000 directly in the sector, while the remaining 182,000 are tourism-related activities.
Tourism generates
11.4% of Croatia's total GDP
Tourism directly employs
Travel & Tourism Council, March 2019.
1/10 workers in Croatia Tourism directly and indirectly contributes
16.9%
to Croatia's gross added value
Tourism generates
11% of total investments in Croatia
Tourism directly and indirectly employs
Sources: Croatian Tourism Satellite Account for 2016, Institute for Tourism Zagreb, Central Bureau of Statistics, Ministry of Tourism of the Republic of Croatia, 01/15/2019; Travel & Tourism Economic Impact 2018 Croatia, World
Valamar Argosy Hotel 4*, Dubrovnik
The decelerating economic growth continues in Croatia's key source tourist markets. The European economy has entered a prolonged period of slow economic growth and low inflation. Mid-2019, this slowdown was caused by uncertainties associated with increased trade tensions and geopolitical conflicts.
According to the European Commission's February forecast, in 2020 the European economy will continue to grow steadily at moderate growth rates.
In 2020, most of Croatia's key source markets are expected to experience slow economic activity or stagnation. However, Germany, Croatia's most significant source market, expects a recovery of its economic growth rate (from 0.6 percent in 2019 to 1.1 percent in 2020).
European Commission forecast
| 2019 | 2020 | 2021 | |
|---|---|---|---|
| Euro areas | 1.2% | 1.2% | 1.2% |
| EU | 1.5% | 1.4% | 1.4% |
| World (w/o EU) | 3.1% | 3.3% | 3.4% |
Source: European Economic Forecast, Winter 2020, February 2020. Source: European Economic Forecast, Winter 2020, February 2020.
In 2019, 1.5 billion international tourist arrivals were generated worldwide. This is an increase of 3.8 percent compared to the previous year, and the same is forecasted for 2020, which confirms that tourism is the leading economic sector, especially given current uncertainties.
According to UNWTO World Tourism Barometer, 2019 is the tenth consecutive year that records tourist volume growth. All the world's macro-regions recorded an increase in international arrivals in 2019.
However, the uncertainty surrounding Brexit, the collapse of the Thomas Cook company, geopolitical and social tensions, and the slowdown in the global economy contributed to slower growth in 2019 compared to exceptional growth rates in 2017 and 2018.
The aforementioned slowdown mainly affected the more advanced economies: Europe, Asia and the Pacific in particular. International tourist arrivals are projected to grow by 3 to 4 percent in Europe in 2020 and on average worldwide.
Source: uNWTO, January 2020.
The 2019 season has shown that tourist demand is shifting towards Eastern Mediterranean destinations that offer greater value for money, taking into account the total holiday cost (travel, accommodation, out-ofboard services). Thus, for example, Turkey, Greece and long-distance travel recorded a significant increase in the share of German travel in 2019. Furthermore, the hotel industry of Turkey, Tunisia and Egypt continue to achieve above-average revenue growth of hotel accommodation per room (up 10% to 20% compared to the previous year) in 2019. In contrast, the western Mediterranean hotel industry recorded significantly lower growth rates (up to 5 percent compared to the previous year) and some destinations even recorded a drop in
accommodation revenue per hotel room. The current economic situation as well as forecasts for the future period influence the population's travel preferences. The psychological impact of the expected recession affects the choice of holiday destinations that offers better value for money. Additionally, the climatic conditions that caused warmer and nicer weather in northern and central Europe in recent years discourage a part of the population from spending holidays abroad.
The expected continuation of the complex competitive situation in the Mediterranean in 2020 will be based on the value for money concept. Investing in quality and raising the value of the overall guest experience is a
strategy that has already shown success in Croatian tourism companies in 2019, as they have managed to reach price levels with adequate capacity utilization.
Despite a stagnation on the most important market, Germany (-0.2 percent in 2019 compared to the previous year), as well as on the Austrian (-0.4 percent) and Slovakian source markets (-0.8 percent) Croatia maintained a stable position on main source markets in 2019. A significant drop in overnights in Croatia (from 2 to 3.5 percent) was recorded by the UK, Slovenia, Italy and Hungary, while the number of overnights from the Polish, Czech and Dutch markets increased.
PlaNNeD DeSTiNaTiONS OF GermaNS FOr maiN HOliDay 2019 aND 2018
Source: www.stiftungfuerzukunftsfragen.de, 2019; Tourist impulse Q4 2019, Croatian Tourism Assocciation.
The number of overnights in Croatia increased by 2.4% compared to the previous year, however, in the same period the number of beds in total commercial accommodation increased by 4.6%.
In the last few years, accommodation capacities in Croatia have increased faster than the volume of overnights, resulting in a decreasing occupancy rate in most types of accommodation annually.
Source: eVisitor, Croatian Tourism Board, 31/12/2019, 31/12/2018, 31/12/2017.
The Croatian Tourism Association (HUT) surveyed its members - the leading hospitality companies in Croatia - on key business indicators achieved in the first nine months of 2019 compared to the same period last year. The survey indicates that for the first nine months of 2019, total operating expenses increased significantly more than operating revenues, resulting in a 3.9 percent increase in earnings before interest, taxes, depreciation and amortization (EBITDA), well below the growth rate of operating income (5.3 percent). In the same period, a lower gross income from operating activities (decrease of -0.3 percent) was recorded.
According to the analysis of the Croatian Tourism Association, operating revenue from sales in hotels grew at a slower rate than the growth of actual demand. This is due to strong competition in the Mediterranean, as well as to investments in product development made by the leading hospitality companies in Croatia in 2019. The analysis of total capacities suggests that the growth rate of sales revenue exceeds the overnight growth, due to large investment projects in the repositioning of certain campsites and other capacities. As a consequence of job market conditions, in the first nine months of 2019, compared to the same period last year, the average cost of labor increased by 10.5% and in some companies more than 17.8%. This increased the share of labor costs in operating income from 22.4% to 23.5%.
In the aforementioned period, material costs (+ 7.3 percent) increased more than operating income (+ 5.3 percent), depreciation and amortization increased by 16.5 percent due to investments made.
The rate of return (profit for the period relative to total assets) decreased from 8.8 percent in 2018 to 7.9 percent in 2019, or 10 percent in just one year, in the first nine months of 2019. Given that the rate of return is one of the deciding factors in making investment
Source: Survey of leading hospitality companies in Croatia, HuT - November 2019.; Tourist impulse Q4 2019, Croatian Tourism Assocciation.
Source: Survey of leading hospitality companies in Croatia, HuT - November 2019; Tourist impulse Q4 2019, Croatian Tourism Assocciation.
decisions, this information is a matter of concern. Specifically, the 7.9 percent rate of return for Croatia's leading tourism companies marks a return on investment of 12.65 years. The rate of return in Croatia's tourism is lower than in competing Mediterranean countries, where the leading investors in tourism achieve a 10 to 12 percent rate of return, or a return of investment period of 8 to 10 years.
According to the HUT analysis, as a consequence of these cost developments, the EBIT margin was reduced from 31.6 percent in the first nine months of 2018, to 28.7 percent in the first nine months of 2019, or 10 percent in a year. All data refer to the first nine months of 2019 compared to the same period of the previous year.
Source: Survey of Leading Hospitality Companies in Croatia, HuT - November 2019.; Tourism impulse Q4 2019.
According to market forecasts, hotel prices in the world and Europe are expected to grow moderately in 2020 (from 1 to 3 percent compared to 2019), with increasing competition on the hotel market.
Analysts predict that the European hotel market will meet with more challenging business conditions next year: a general workforce shortage, health security crises, continued global trade conflicts, rising fuel prices, climate change protests and the possibility of regional terrorism.
In 2020, competition in the Mediterranean hotel market is expected to further intensify, namely competition based on the value for money ratio, which tourists will focus on when choosing a holiday destination due to slow economic growth.
According to the research of "Croatian Hotel Benchmarking", key performance indicators of hotels in Croatia increased in 2019 compared to the previous year. The highest growth rate of total room revenue was achieved in 5-star hotels and regionally in hotels in Dalmatia.
| Annual occupancy |
Average room rate |
TRevPAR | |
|---|---|---|---|
| Croatia | 52.9% | 93.44 € | 78.47 € |
| Istria | 51.7% | 92.42 € | 75.62 € |
| Kvarner | 43.0% | 84.71 € | 56.16 € |
| Dalmatia | 54.3% | 113.98 € | 89.98 € |
| Continent | 70.6% | 68.92 € | 91.44 € |
Source: Croatian Hotel Benchmarking in 2017, 2018 and 2019, Tourism and Management Faculty in Opatija.
| Annual occupancy |
Average room rate |
TRevPAR | |
|---|---|---|---|
| Croatia | 52.9% | 93.44 € | 78.47 € |
| 5-star | 60.5% | 154.62 € | 131.08 € |
| 4-star | 54.0% | 86.21 € | 76.93 € |
| 3-star | 45.9% | 57.46 € | 45.13 € |
Source: Croatian Hotel Benchmarking in 2017, 2018 and 2019, Tourism and Management Faculty in Opatija.
According to research "Camping Benchmarking", revenue per accommodation unit in campsites in Croatia stagnated in mobile homes in 2019 if compared to the previous year, and has increased in camping plots and camping spots. The largest decrease in revenue per mobile home was recorded in Kvarner, while the revenue per camping plot and spot increased the most in Istria.
| mobile homes |
Plots and spots |
|
|---|---|---|
| Croatia | 325.72 € | 87.62 € |
| Istria | 393.89 € | 89.65 € |
| Kvarner | 233.91 € | 83.44 € |
| Dalmatia | 288.15 € | 95.77 € |
| Continent | 309.41 € | 49.68 € |
Source: Croatian Camping Benchmarking reports for 10/2017, 10/2019, Tourism and Management Faculty in Opatija.
Although Croatia has improved its overall ranking of tourism competitiveness over the last two years, according to a study by the World Economic Forum, it still falls significantly behind the countries that represent the main tourism competitors in the Mediterranean. Croatia is particularly low on the business environment competitiveness ranking, as well as human resources and the labor market, where it has significantly lowered its competitiveness ranking since previous research.
According to the Ministry of Tourism's survey on investments in the tourism sector, a total of EUR 1.76 billion will be invested in Croatia in 2020, while investments according to the same survey in 2019, amounted to EUR 1.05 billion. The survey covers investments in tourism in the private and public sectors.
The challenges of the business environment that significantly affect investment decisions in Croatian tourism include the so-called tourist land used by tourism companies that is not registered in the share capital, although a legal solution to this issue is expected in 2020.
As of January 1st 2020, the value-added tax rate on the preparation and serving of meals in hospitality properties has been reduced to 13 percent, which strengthens the competitiveness of the hospitality and restaurant industry. However, with a 13 percent value added tax rate Croatia still has an above-average VAT rate in the Mediterranean, where the average VAT rate on accommodation and hospitality services is 10 percent. In addition, the increasingly challenging situation on the Croatian labor market, characterized by the decreasing number of available workforce, presents a challenge in the business of tourism companies. The increased work permit quotas for foreign nationals to 30,000 in 2019, and the expected adoption of a new Law on Foreign Nationals in 2020 that will abolish work permit quotas for foreign nationals, are measures that create the preconditions for greater availability of workforce. Given the state of the global economy and the slowdown in Croatia's key source markets, as well as the increasing competition from eastern Mediterranean countries, tourism turnover rates in Croatia in 2020 are expected to be slightly lower than in previous years, with a less to moderate price growth rate, as well as continued dispersion of tourism turnover and revenues in the pre- and postseason.
| INDICATORS | RANkING 2019 (2017) | TOTAL COmPETITIvENESS | |||
|---|---|---|---|---|---|
| Competitiveness of business environment | 123 | (114) | RANkING OF | ||
| Tax impact on promoting employment | 134 | (132) | mEDITERRANEAN COmPETITORS |
||
| Cost of obtaining construction permits | 126 | (120) | 2019 (2017) | ||
| Tax impact on promoting investments | 122 | (130) | 27 / 140 |
Spain | 1 (1) |
| Human Resources and labour market | 103 | (85) | (32 / 136) | France | 2 (2) |
| Recruitment and redundancy practice | 135 | (124) | Total | ||
| Employees' scope of education | 131 | (120) | competitiveness ranking of Croatia |
Italy | 8 (8) |
| Ease of employing foreign work force | 139 | (126) | 2019 (2017) | Greece | 25 (24) |
Source: The Travel & Tourism Competitiveness Index 2019 World Economic Forum.
valamar Riviera business success is based on long-standing partnerships and open communication with its key stakeholders. valamar continuously improves its communication with stakeholders as an important part of its corporate social responsibility integrated into long-term sustainable growth.
During the preparation of this report, we have consulted the Croatian Business Council for Sustainable Development (HR PSOR). A continuous dialogue with stakeholders is an important part of Valamar's corporate social responsibility efforts integrated into our business strategy. We have established policies at the company level that represent our commitment to being the hospitality market leader in Croatia in terms of service quality, guest and user satisfaction, caring for the
interests of our employees, company and the local community, environmental protection and resource management.
Hence, Valamar Riviera has adopted the Quality and Sustainable Business Policy that focuses especially on the following aspects:
▸ promoting professional interests as a member of various professional organizations (Croatian Tourism Association, Croatian Employers' Association, Croatian Chamber of Economy, Croatian Business Council for Sustainable Development, American Chamber of Commerce in Croatia and others)
▸ collaboration in the development and preparation of investment projects, student scholarships and dialogue related to legislative initiatives
Domestic production and local products that make Valamar's services and products more authentic represent a large share in the food and beverage segment at Valamar Riviera. By promoting local products, Valamar enriches its offering and develops a long-term collaboration with local producers.
| Croatian products that may contain imported raw material | 9% |
|---|---|
| Croatian products that contain only domestic raw material | 66% |
| Imported product | 25% |
Valamar is involved in the activities of organizations and institutions which contribute to destination development, and the increase of service standards in general.
Valamar has its representatives in all assemblies, tourist councils and/or supervisory boards in the following tourist boards:
In addition to tourist boards, Valamar is a member of the following organizations:
▸ Croatian Association of Corporate Treasurers
▸ Croatian Employers' Association
* 30.49% of Valamar Riviera revenues go into fiscal and parafiscal payments to the public administration annually.
| Direct economic value generated | HRK 2,247 mn |
|---|---|
| Economic value distributed | HRK 1,990 mn |
| Economic value retained | HRK 257 mn |
| Total investments | HRK 826 mn |
By identifying and quantifying the impact that our business operations have on the environment, the local community, our employees and society, we can thoroughly consider our operations in order to achieve long-term efficiency and socially responsible business. In 2019 the determined material aspects were confirmed according to the sustainability principle and taking into account Valamar's impact on the environment, the local community, its employees and the general public. Through joint workshops and selective in-depth interviews with the company's key internal stakeholders and the top management, we carried out a joint determination of the material aspects within the organization that are not only key for the company but are also part of our corporate strategy. Valamar's Business Experience
Committee led the process of reaffirming the previously approved materiality matrix. Key indicators at Valamar Riviera level were confirmed for each division and sector. In 2019, we particularly consulted our employees as key stakeholders of the company. Through consultations carried out in all sectors, and through the annual corporate culture and climate survey, discussions during workers' meetings and meetings with the Workers' Council, we determined the areas that we will improve further and continually monitor their results through annual surveys for all employees. In addition, we continued developing two-way communication with other key stakeholders to additionally improve the quality of integrated reporting, which will be among our concerns in the forthcoming period.
In accordance with the process of identifying and prioritizing material aspects within the organization regarding business operations, a materiality matrix was defined at the level of all Valamar Riviera organizational units. With the materiality matrix, the environmental, social and economic material aspects were identified and prioritized with regard to their effect on the company's operations and the importance for the identified key stakeholders.
IMPACT ON STAKEHOLDERS
Low
High
32 Local communities
33
Valamar Riviera Group continues to assert its leading position through outstanding business results. The Group recorded excellent results in 2019 with over two billion and two-hundred million kuna in operating income.
Valamar Riviera owes its continued success to the concept of sustainable growth and development led by the principles of corporate social responsibility. It is reflected in: a) continuous
¹ June 28th 2019 Hoteli Makarska d.d. merged with Imperial Riviera d.d.
portfolio investments (close to HRK 800 million were invested in the preparation for the 2019 tourist season, while planned investments for the year 2020 amount to HRK 823 million), b) acquisitions and partnerships (the processes of acquiring Hoteli Makarska¹ d.d. in Croatia, investments in the shares of Helios Faros d.d. and the first Valamar hotel in Austria were completed in 2018 and 2019) and c) the development of our employees and destinations.
Girandella Valamar Collection Resort 4/5*, Rabac
| 2018 | 2019 | 2019/2018 | |
|---|---|---|---|
| Total revenues | 2,016,117,541 | 2,218,828,166 | 10.1% |
| Operating income | 1,982,740,515 | 2,207,678,790 | 11.3% |
| Sales revenues | 1,961,413,631 | 2,139,319,744 | 9.1% |
| Board revenues (accommodation and board revenues)³ | 1,628,991,417 | 1,781,619,705 | 9.4% |
| Operating costs⁴ | 1,267,087,843 | 1,385,486,291 | 9.3% |
| EBITDA⁵ | 693,159,210 | 768,955,392 | 10.9% |
| Extraordinary operations results and one-off items⁶ | -8,451,565 | 10,853,838 | / |
| Adjusted EBITDA⁷ | 701,610,775 | 758,101,554 | 8.1% |
| EBIT | 282,252,398 | 293,853,214 | 4.1% |
| Adjusted EBIT⁷ | 290,703,962 | 282,999,376 | -2.7% |
| EBT | 258,081,503 | 232,471,771 | -9.9% |
| Net profit | 239,187,507 | 305,851,680 | 27.9% |
| EBT margin | 13.0% | 10.5% | -250 bp |
| EBITDA margin | 35.0% | 34.8% | -20 bp |
| Adjusted EBITDA margin⁷ | 35.4% | 34.3% | -110 bp |
| 31/12/2018 | 31/12/2019 | 2019/2018 | |
|---|---|---|---|
| Net debt⁸ | 2,168,602,934 | 2,195,286,284 | 1.2% |
| Net debt / Adjusted EBITDA | 3.09 | 2.90 | -6.2% |
| Cash and cash equivalents | 261,842,353 | 550,142,638 | 110.1% |
| Capital investments (details in chapter "2019 Investments") | 703,559,000 | 954,590,000 | 35.7% |
| ROE⁹ | 8.5% | 8.8% | 30 bb |
| Adjusted ROCE¹⁰ | 5.9% | 5.2% | -70 bb |
| Market capitalization¹¹ | 4,468,823,546 | 4,728,031,913 | 5.8% |
| EV¹² | 7,039,419,545 | 7,654,341,409 | 8.7% |
| EPS¹³ | 1.90 | 2.32 | 22.1% |
| DPS¹⁴ | 0.90 | 1.00 | 11.1% |
² Classified according to the Annual Financial Statement (GFI POD-RDG). EBIT, EBITDA and their adjusted values and respective margins are recorded based on operating income.
³ In compliance with the classification under the uSALI international standard for reporting in the hotel industry (uniform System of Accounts for the Lodging Industry).
⁴ Operating costs include material costs, staff costs, other costs, and other operating costs reduced by extraordinary expenses and one-off items.
⁵ EBITDA refers to earnings before interest, taxes, depreciation and amortization; calculated as: operating income - total operating costs + depreciation and amortization + value adjustments
⁶ Adjustments were made for (i) extraordinary income (in the amount of HRK 63.9 million in 2019 and HRK 23.8 million in 2018), ii) extraordinary expenses (in the amount of HRK 50.7 million in 2019 and HRK 28.7 million in 2018) and iii) termination benefit costs (in the amount of HRK 2.4 million in 2019 and 3.5 million in 2018).
⁷ Adjusted by the result of extraordinary operations and one-off items. ⁸ Net debt: non-current and current liabilities to banks and other financial institutions + liabilities for loans, deposits and other + other liabilities in compliance with MSFI 16 (loans) - cash and cash equivalents – long-term and short-term investments in securities – current loans given, deposits, etc
⁹ ROE refers to return on equity; calculated as: profit for the period / (capital and reserves).
¹⁰ Adjusted ROCE refers to return on capital employed; calculated as: adjusted EBIT / (capital and reserves at the end of the period + noncurrent and current liabilities to banks and other financial institutions+ liabilities for loans, deposits and other + other liabilities in compliance with MSFI 16 (loans) - cash and cash equivalents - longterm and short-term investments in securities - loans given, deposits, etc.).
¹¹ The number of shares as at 31 December 2019 net of treasury shares amounts to 121,887,907, while per 31 December 2018 amounts to 122,904,938.
¹² EV refers to enterprise value; calculated as market capitalization + net debt.
¹³ EPS refers to earnings per share calculated on the basis of net profit. Weighted average number of shares as at 31 December 2019: 122.507.835. Weighted average number of shares as at 31 December 2018: 12,.968,146.
¹⁴ DPS refers to dividends per share.
| 2018 | 2019 | 2019/2018 | |
|---|---|---|---|
| Number of accommodation units (capacity) | 21,371 | 21,266 | -0.5% |
| Number of beds | 58,023 | 58,216 | 0.3% |
| Full occupancy days | 132 | 139 | 4.7% |
| Annual occupancy (%) | 36% | 38% | 200 bb |
| Accommodation units sold | 2,827,338 | 2,946,626 | 4.2% |
| Overnights | 6,459,734 | 6,775,709 | 4.9% |
| ADR¹⁶ (in HRK) | 576 | 605 | 4.9% |
| RevPAR¹⁷ (in HRK) | 76,224 | 83,778 | 9.9% |
OPeraTiONal eFFiCieNCy¹⁸ (HRK mn)
2009
2010 2011 2012 2013 2014 2015
2018
2019
ADR 528
769
34.8%
2017
2016
¹⁵ In 2018 key business indicators include data of Hoteli Makarska and Valamar Obertauern as of 1 August 2018, that is 1 November 2018. Data of Helios Faros are not included.
¹⁶ Average daily rate is recorded on the basis of board revenues (accommodation and board's food and beverage revenues)
¹⁷ Revenue per accommodation unit is recorded on the basis of cumulative board revenues (accommodation and board's food and beverage revenues).
¹⁸ Financial data until the year 2014 refer to the consolidated financial statements of Valamar grupa d.d., and as of 2014, to the consolidated financial statements of Valamar Riviera d.d.
In 2019, total revenues were HRK 2,218,8 million, up by 10.1% (HRK +202,7 million). The total revenues were affected by:
a) growth in sales revenues, up by 9.1% (HRK +177,9 million) amounting to HRK 2,139,3 million driven by higher board revues (+9.4%; HRK +152,6 million). Despite the negative impact of moving Easter to the second quarter, the preparation of many interesting events and guest experiences, as well as this year's business consolidation of Valamar Obertauern Hotel 4*, a 30.5% growth in board revenue was recorded in the first quarter. A strong growth of 12.4% in board revenue was recorded in the second quarter despite the opening of newly invested resorts Valamar Collection Marea Suites 5* and Istra Premium Camping Resort 5* in June. The Easter holidays in April resulted in a growth of all marketing segments, while May achieved the planned revenue level despite the rainy weather. June recorded revenue growth due to the excellent response of the individual and M.I.C.E. segment. Even though the stagnation in peak season months (July-September) in Croatian tourism reflected on a slight decrease in Valamar's allotment and group channel, the same was successfully compensated by individual O.T.A. and M.I.C.E. segment and an 8% growth in board revenue was achieved. Shoulder season (October-December) recorded a successful group segment in Dubrovnik, higher individual numbers in Poreč and growth in winter operations in Valamar Obertauern. Market feedback during the Christmas/New year period resulted in an 8% growth in board revenue in the fourth quarter. A
total of 6,775,709 overnights were recorded in 2019, which is a 4.9% growth, while the average daily rate grew by 4.9% to HRK 605.
Domestic sales revenues were HRK 199,6 million and represented 9.0% of total revenues (9.0% in 2018). They grew by 10.5% compared to the previous comparable period. International sales revenues were HRK 1,939,7 million, up by HRK 158,9 million and represented by 87.3% of total revenues (88,3% in 2018).
b) other operating revenues¹⁹ with the increase from HRK 47,0 million to the amount of HRK 68,4 million primarily as a result of: a) this year's consolidation of Hoteli Makarska¹ and b) one-off revenues from outside-groups sale of long-term material and non-operational assets.
c) financial income fell in the amount of HRK 22,7 million to HRK 10,7 million mainly due to a decrease of positive foreign exchange differences of long-term loans due to the lower appreciation of HRK vs. EUR in the first quarter of 2019 because of an unusually low EUR/HRK exchange rate at the end of 2018.
d) year-round consolidation of Hoteli Makarska¹ and Valamar Obertauern with a 3 percentage point contribution to the Group's total revenues, respectively. Other operating and financial income represented 3.6% of total revenues (2.7% in 2018).
Total operating expenses were HRK 1,913,8 million and grew by 12.5% (HRK +213,3 million). The operations of Hoteli Makarska and Valamar Obertauern were included for reasons of comparability, total operating expenses grew by 9%. Breakdown of total operating expenses:
i) material cost represented 31.8% (32.4% in 2018). Up by 10.4% (HRK+57,5 million) to HRK 609,2 million due to a) consolidation of Hoteli Makarska¹ and Valamar Obertauern, b) increase in direct costs of raw materials and consumables driven by a larger business volume c) increase of the unit price of energy products (electricity and waste disposal).
ii) staff costs decreased in the share in the total operating expenses (30.5%) compared to the previous comparable period (31.9% in 2018). They grew by 7.7% (HRK +41,8 million) to HRK 583,4 million due to a) year-round consolidation of Hoteli Makarska¹ and Valamar Obertauern which accounts for 4% of growth, and b) securing competitive salaries and other material and non-material working conditions (total increase of 4% from June 2018 under the Collective agreement) as well as new staff hired to ensure service quality for the new Premium and Upscale products.
iii) amortization costs represented 24.8% (24.1% in 2018). Its 15.6% growth (HRK +64,0 million) to HRK 474,5 million is mainly due to the earlier large investment cycle and consolidation of Hoteli Makarska¹ and Valamar Obertauern.
iv) other costs represented 10.3% (10.2% in 2018). The 13.4% growth (HRK+23,3 million) to HRK 197,4 million is mainly due to a) the consolidation of Hoteli Makarska¹ and Valamar Obertauern operations, b) securing competitive material working conditions (a 13th salary of HRK 5,000 and the awards for good business results and a good start of the season), c) increase in public utility charges, d) increase in the costs of lodging and meals for employees, e) increase in the costs of scholarships for students and pupils and the education of professional staff (Valamar Riviera is the largest scholarship provider in tourism) and f) increase of labour cost expenditure through the student service
v) provisions and value adjustments with a share of 0.5% (0.4% in 2018). An increase of HRK 1,9 million to HRK 9,4 million is due to higher-scale provisions of Valamar Riviera litigations.
vi) other operating expenses represented 2.1% (0.9% in 2018). An increase of HRK 24,9 million to HRK 39,8 million is due to a) the consolidation of Hoteli Makarska¹ and b) net book value of disposed assets (demolition and write-off of assets due to investments).
| 2018 | 2019 | 2019/2018 |
|---|---|---|
| 1,267,087,843 | 1,385,486,291 | 9.3% |
| 1,700,488,117 | 1,913,825,576 | 12.5% |
| 551,752,686 | 609,249,061 | 10.4% |
| 541,614,164 | 583,409,043 | 7.7% |
| 410,21,539 | 474,514,405 | 15.6% |
| 174,094,246 | 197,392,249 | 13.4% |
| 7,511,545 | 9,415,580 | 25.3% |
| 14,993,937 | 39,845,238 | 165.7% |
Operating costs amounted to HRK 1,385,5 million. The 9.3% planned and achieved growth is due to a) an increase in material costs (previously explained), b) increase in total staff costs of 9.5% (from HRK 623 million to HRK 682 million; previously explained), c) increase in other costs (previously explained) and iv) consolidation of Hoteli Makarska¹ and Valamar Obertauern. Adjusting the operations of the aforementioned companies for reasons of comparability, operating costs grew by 6%.
Unadjusted EBITDA marked by strong double-digit growth reached HRK 769,0 million (HRK 693,2 million in 2018). The increase of HRK 75,8 million (+10.9%) in operating profit is due to the continuation of the large investment cycle focused on improving competitiveness and the quality of properties and services, the acquisition of Hoteli Makarska¹ in Makarska and Valamar Obertauern in Austria, the management of operating costs, the optimization of distribution and price management in line with increased demand, particularly for properties in which new investments were made.
Stronger operating results reflected on an 8.1% increase in adjusted EBITDA²² to HRK 758.1 million. The consolidation of Hoteli Makarska¹ and Valamar Obertauern was initiated in August 2018 and November 2018, respectively, resulting in a 2 percentage point growth in EBITDA, while the one-off impact of MSFI 16 amounts to HRK 4,9 million. The growth of adjusted and unadjusted EBITDA are under the negative impact of this year's lower seasonal EUR/HRK exchange rate.
Compared to the previous comparable period, profit before tax fell by HRK 25,6 million to HRK 232,5 million due to lower financial results (HRK-37,8 million; details on the next page) and increased amortization (HRK+64,0 million). As a result, EBT margin fell by 250 basis point to 10.5% (13.0% 2018).
In 2019 the Group's net profit amounted to HRK 305,9 million. The HRK 66,7 million growth was mainly a result of higher tax revenues (HRK +88,3 million) reflecting a higher one-time recognition of deferred tax assets²³.
²⁰ According to the classification of forms GFI POD-RDG.
²¹ Operating costs include material costs, staff costs, other costs and other operating expenses decreased by extraordinary expenses and one-off items.
²² Adjustments were made for i) extraordinary income (in the amount of HRK 63,9 million in 2019, or HRK 23,8 million in 2018), ii) extraordinary expenses (in the amount of HRK 50,7 million in 2019, or HRK 28,7 million in 2018) and iii) termination benefit costs (in the amount of HRK 2,4 million in 2019, or HRK 3,5 million in 2018).
²³ In 2019 deferred tax assets were recognized mainly due to tax incentives prescribed by the Act on Investment Promotion and Investment Improvement which amounted to HRK 114,1 million, compared to HRK 25,8 million in 2018.
During 2019 the financial result amounts to HRK -61,9 million (HRK-24,0 million in 2018). This financial result, down by HRK 37,8 million compared to the previous comparable period, is due to: a) lower net foreign exchange differences amounting to HRK 29,4 million mainly on long-term loans due to the absence of the appreciation of HRK vs. EUR in the first quarter of 2019 because of an unusually low EUR/HRK exchange rate at the end of 2018, b) an increase in financial expenses related to interest on long-term loans of HRK 6,6 million for financing large investments, c) higher unrealized losses from financial assets amounting to HRK 7,0 million driven by spreading the scope of protection and increased liabilities related to the fair value of interest rate swaps, d) an increase of other financial income of HRK 1.8 million driven by the sale of financial assets and e) decrease of other financial expenses in the amount of HRK 3,1 million.
As of 31 December 2019, the total value of the Group's assets was HRK 6,495,3 million, up by 14.6% compared to 31 December 2018.
Total share capital and reserves totaled HRK 3,219,1 million and grew by 16.7% as a result of achieved profit (HRK +284,5 million) and the increase of non-controlling interests due to the recapitalization of Imperial Riviera (HRK +329,0 million). Total long-term liabilities grew from HRK 2,281,6 million to HRK 2,546,9 million due to loans contracted to finance this year's investment cycle. A large portion of the loan portfolio (87%) is comprised of long-term fixed-interest loans, loans hedged by derivative instruments (IRS) for protection against interest rate risk.
²⁴ Net debt: non-current and current liabilities to banks and other financial institutions + liabilities for loans, deposits and other + other liabilities under MSFI 16 (leases) – cash and cash equivalents – long-term and short-term investments in securities – current loans given, deposits, etc.
| 2018 | 2019 | 2019/2018 | |
|---|---|---|---|
| EBITDA margin | 35.0% | 34.8% | –20 bb |
| Adjusted EBITDA margin | 35.4% | 34.3% | –110 bb |
| EBIT margin | 14.2% | 13.3% | –90 bb |
| Adjusted EBIT margin | 14.7% | 12.8% | –190 bb |
| EBT margin | 13.0% | 10.5% | –250 bb |
| Net profit margin | 12.1% | 13.9% | 180 bb |
| ROA | 4.2% | 4.7% | 50 bb |
| ROE | 8.5% | 8.8% | 30 bb |
| Adjusted ROCE | 5.9% | 5.2% | –70 bb |
| 31/12/2018 | 31/12/2019 | 2019/2018 | |
|---|---|---|---|
| Average share price per (in HRK) | 36.36 | 38.79 | 6.7% |
| Market capitalization (in HRK) | 4,468,823,546 | 4,728,031,913 | 5.8% |
| EV (in HRK) | 7,039,419,545 | 7,654,341,409 | 8.7% |
| EPS (in HRK) | 1.90 | 2.32 | 22.1% |
| DPS (in HRK) | 0.90 | 1.00 | 11.1% |
| EV / Sales revenues | 3.6x | 3.6x | -0.3% |
| EV / EBITDA | 10.2x | 10.0x | -2.0% |
| EV / Adjusted EBITDA | 10.0x | 10.1x | 0.6% |
| EV / EBIT | 24.9x | 26.0x | 4.4% |
| EV / Adjusted EBIT | 24.2x | 27.0x | 11.7% |
Total short-term liabilities were HRK 526,3 million, up by 24.0% compared to 31 December 2018. The aforementioned is mainly a result of larger repayment of long-term debt (HRK +58,1 million) higher trade payables (HRK +32,8 million) due to the large investment cycle in 2020.
Cash and cash equivalents as at 31 December 2019 amount to HRK 550,1 million and grew by 110.1% mainly as a result of the recapitalization of Imperial Riviera. The contracted credit lines for investments and the strong cash potential from business activities ensure a smooth continuation of future investments and potential acquisitions.
In partnership with PBZ Croatia osiguranje d.d. for managing mandatory pension funds, PBZ Croatia osiguranje and Valamar Riviera completed the process of acquiring the majority of the share capital in Helios Faros d.d. from Stari Grad on the island of Hvar, which went bankrupt in 2017.
Upon completion of the recapitalization process and the payment of insolvency creditors, PBZ Croatia osiguranje acquired 70.83% and Valamar Riviera 23.61% of Helios Faros' shares.
The contract relating to the management services including business functions and sales that Valamar will provide for Helios Faros' hotel and tourist properties is effective from September 2019.
Based on the decision of Helios Faros' General Assembly, partners have recapitalized the group in the additional amount of HRK 139,4 million for the realization of the group's investments.
Valamar Riviera participated with HRK 24,4 million and after the entry of changes in share capital, now holds 20.0% of shares, while PBZ Croatia osiguranje holds 77.73% of Helios Faros' shares.
PBZ Croatia osiguranje and Valamar will jointly continue to design a strategy for the development of Helios Faros' hospitality assets and business.
The implementation of Imperial Riviera's five-year business plan began after the merger of Hoteli Makarska d.d. with Imperial Riviera d.d. in June 2019, following the decision of the General Assemblies of both companies.
Strengthened by a recapitalization of HRK 426 million, with the participation of AZ mirovinski fondovi in the amount of HRK 296 million, Valamar Riviera in the amount of HRK 106 million, Allianz Croatia in the amount of HRK 18 million, and Allianz Invest in the amount of HRK 6 million, Imperial Riviera has begun its planned HRK 1,5 billion investment in the reconstruction and renovation of properties owned by Imperial Riviera, as well as the expansion of its tourism portfolio to new destinations. Increasing the share capital of Imperial Riviera as a joint
undertaking for the management and investment in hospitality assets is a logical continuation of Valamar's successful collaboration with institutional investors.
In addition to strengthening the capital base for investing in Imperial Riviera's current destinations, the backdrop of such action by Valamar Riviera and institutional investors such as retirement funds, is the long-term consideration on these partners. They view Imperial Riviera as a functional platform for their development activities where they cumulate their individual strengths, shape and follow joint strategic development interests beyond the existing destinations in which Imperial Riviera operates today.
The first project of the described regional expansion of Imperial Riviera was the
investment project Valamar Parentino Hotel 4 * in Poreč, which was acquired by Imperial Riviera from Valamar Riviera in October 2019 at the price of HRK 182,15 million.
Imperial Riviera has announced that it will invest more than HRK 100 million during the 2019/2020 investment season in raising the quality of the aforementioned hotel with additional Maro services for families.
Our investor relations are based on quality and high transparency in business and financial communication when promoting Valamar Riviera as the leading Croatian share and one of the leading shares in the CEE region. This is how we actively support liquidity, growth in share value and the involvement of investors who can contribute to Valamar Riviera further value growth for all stakeholders.
We strive to increase the transparency of Valamar Riviera business as well as the quality of communication with analysts and investors through regular corporate presentations on conferences in Croatia and abroad, group and individual meetings, conference calls and comprehensive, publicly available financial and business reports.
The objectives of Investor Relations:
After integrating Valamar Riviera management, portfolio and shareholder structure in October 2014, we created the leading share on the Croatian capital market, offering considerable exposure to the growing tourism sector. On 17 November 2014, the
General Assembly of Valamar Riviera decided to list Valamar Riviera shares on the Official Market of the Zagreb Stock Exchange. The first day of trading was 17 December 2014.
On 26 April 2019 the Zagreb Stock Exchange approved Valamar Riviera's request of transitioning 126.027.542 of the Group's ordinary shares from the Official to the Prime Market of Zagreb Stock Exchange. Valamar Riviera values a high level of transparency and quality of business and financial communication. Admission to the most demanding listing of the Zagreb Stock Exchange, Valamar Riviera will aim to increase the share's recognition and positively influence the price and liquidity as the best example of market practice. The first day of the Group's trading on the Prime Market was 29 April 2019.
As Croatia's leading share and company with around 22,000 shareholders, Valamar Riviera organized it's forth Investors Day on 27 June 2019. Institutional investors attended a presentation where Management Board President Željko Kukurin and Management Board Member Marko Čižmek presented Valamar's formula of sustainable and socially responsible investments in employees, products and destinations. The event was marked by the presentation and revealing of the model of future luxurious five-star resort, Valamar Collection Pinea Resort 5* in Poreč.
In the period from 1 January to 31 December 2019, the highest achieved share price in regular trading on the regulated market was HRK 40.80, while the lowest was HRK 32.60. Following the strong growth and solid fundamentals, Valamar Riviera share price grew by 10%, in line with the growth of indices CROBEX and CROBEX 10 in the period under review. Valamar Riviera share was the second most traded share on the
Zagreb Stock Exchange during 2019, with the average daily turnover of HRK 0.9 million.
As of 31 December 2019, the HRK 4.7 billion market capitalization accounts for nearly 3% of the total market capitalization of shares traded on the Zagreb Stock Exchange. In addition to the Zagreb Stock Exchange, the joint stock index of the Zagreb and Ljubljana Stock Exchange ADRIAprime, the share is also listed in the Vienna Stock Exchange indices (CROX²⁶ and SETX²⁷) and Warsaw Stock Exchange (CEEplus²⁸), SEE Link²⁹ regional platform indices (SEELinX and SEELinX EWI) and the world's MSCI Frontier Markets Indexes. Zagrebačka banka d.d. and Interkapital vrijednosni papiri d.o.o. are responsible for the market making in ordinary Valamar Riviera shares and provide support Valamar's share turnover, which in the period under review averaged 26.5%³⁰.
Valamar Riviera share is the most monitored Croatian share by financial analysts. Analysts specify a target value for shares based on their assessments of future company performance by applying various financial models such as discounted cash flow, peer group approach, precedents, etc. The key prerequisite for a good assessment of future performance is high transparency and the quality of business communication by the management.
Valamar Riviera analyst coverage is provided by:
²⁶ Croatian Traded Index (CROX) is a capitalization-weighted price index and is made up of the 12 most liquid and highest capitalized shares of the Zagreb Stock Exchange. ²⁷ South-East Europe Traded Index (SETX) is a capitalization-weighted price index consisting of blue-chip stocks traded on stock exchanges in the region of South East Europe (shares listed in Bucharest, Ljubljana, Sofia, Belgrade and Zagreb).
²⁸ CEEplus is a stock index that will be composed of the highest liquid shares listed on stock exchanges in countries of the Visegrad Group (Poland, Czech Republic, Slovakia, and Hungary) and Croatia, Romania and Slovenia.
²⁹ SEE Link is a regional platform for securities trading. It was founded by the Bulgarian, Macedonian, and Zagreb Stock Exchange. SEE LinX and SEE LinX EWI are two "blue-chip" regional indices composed of the ten highest liquid regional companies listed on three stock exchanges: five from Croatia, three from Bulgaria, and two from Macedonia. ³⁰ Period: 1 January – 31 December 2019; block transactions are excluded from the calculation.
Business paper Poslovni dnevnik and the Zagreb Stock Exchange awarded Valamar Riviera The Best Investor Relations award in Croatia.
In 2019, meetings were held at the following venues: NASDAQ in New York, London Stock Exchange, conferences in Raiffeisen Centrobank in Zürs, City bank in Londonu, Zagreb and Ljubljana Stock Exchange conferences in Zagreb, Wood&Co in Bucharest, Belgrade and Prague, Erste Consumer Conference 2019 in Warsaw, Erste Group in Vienna, and Auerbach Grayson in New York.
Meeting locations:
| 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|
| Families | 34% | 35% | 35% | 35% |
| Adults and couples | 29% | 29% | 30% | 30% |
| Seniors | 13% | 13% | 12% | 11% |
| Active guests | 13% | 14% | 14% | 15% |
| MICE | 7% | 5% | 5% | 5% |
| Leisure groups and tours | 4% | 4% | 4% | 4% |
Valamar Riviera loyalty program is a process of creating added value for returning guests to increase revenues and the share of direct booking. The share of returning guests in Valamar Riviera in 2019 is 26 percent.
During 2019 Valamar Riviera achieved 44.7 percent of revenues via direct distribution channels: call center, direct online booking, mobile platform, and loyalty program.
The loyalty program will continue to develop to create added value for clients, along with the development of websites, e-marketing, and technology.
| Valamar marKeT SeGmeNTS: CAMPSITES |
|---|
| ------------------------------------ |
| 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|
| Families | 42% | 40% | 39% | 38% |
| Adults and couples | 20% | 20% | 19% | 18% |
| Luxury camping | 18% | 20% | 22% | 25% |
| Active guests | 7% | 7% | 7% | 7% |
| Seniors | 7% | 7% | 7% | 6% |
| Short stay | 6% | 6% | 6% | 6% |
| aNNUal OCCUPaNCy HOTelS aND reSOrTS 2019 |
The share of loyalty member revenue in total |
|
|---|---|---|
| Premium | 50.1% | direct booking in |
| Upscale | 47.1% | 2019 reached: |
| Midscale | 46.0% | hotels 86% |
| Economy | 36.9% | campsites 60% |
* Non-commercial accommodation excluded, Makarska, Obertauern, Girandella Maro.
* Board revenues net of agency comissions.
Valamar Riviera was focused on further portfolio positioning to efficiently address the target groups in 2019. Along with optimal portfolio differentiation, it is also necessary to have a clear strategy for brands and service concepts, designed to meet the specific needs and desires of market segments. This will increase market reach, boost guest loyalty and drive sustainable, strong growth in all key performance indicators. This strategy was best reflected in the product development covered by the brands of Valamar Collection and Valamar Collection Resorts, where we created a range of features targeting families, adults-only as well as V Level services.
We have fully integrated some of Valamar signature programs into the camping segment and we have developed specific products for luxury camping such as premium camping home villages and glamping. These advancements can best be seen in the products covered by the brand of Premium Camping Resorts.
* 2018 includes Hoteli Makarska (as of August 1) and Valamar Obertauern hotel (as of November 1).
Data for 2018 include VR + IMP + HM 8-12 + OT November-December, data for 2019 include VR + IMP + OT.
The strategic model of quality management at Valamar is designed to enable the success of the whole organization through our focus on the guest and our consistent provision of unbelievable service.
The quality management model enables a 360 degree approach that is primarily focused on measuring guest satisfaction, the successful implementation of top internal and external industry standards, and building Up!Lifting service excellence culture towards guests and employees alike.
Valamar Riviera services comply with the highest standards of quality, safety and health, and have the following standards and certificates:
Complying with regulations and voluntary codes is the company's priority when communicating with guests, including marketing communication such as advertising, promotion and sponsorships. Valamar has not registered a single instance of violation regarding regulations or voluntary codes.
The up!Lifting index in Valamar is 94 percent, in hotels 95 percent and 93 percent in campings.
In 2019, there were over 7,000 training sessions organized at our properties – 1,000 more compared to 2018, with 18 different training topics. Over 1,500 employees attended orientation presentations for new employees and there were 400 Up!Liftingawarded ValamArtists and 5 Up!Lifting ambassadors. Last year, over 300 managers participated in the Up!Lifting training program and the internal training program named "Train the Trainer".
Unbelievable Index – the percentage of guests who gave our staff the best rating possible – "unbelievable".
In 2019 Unbelievable Index was 67%.
Overall guest satisfaction is based on 205.549 submitted surveys and online posts made by our guests.
The total result for hotels was 87% and 85% for campsites. Collection properties reported the best results (93%).
The online guest satisfaction average refers to the overall online score in the last 24 months on all web portals.
It was 86% in 2019, an increase of 1pp compared to 2018.
In 2019, Valamar Riviera ranked 7th on the list of top employers in Croatia, which is five places higher compared to last year.
According to research conducted by MojPosao web portal on almost 20.000 subjects in 2018 and 2019, Valamar Riviera was the only tourism company among the top 20 employers in Croatia. The significant
factors in the selection were harmonious workplace relationships, job security, the employer's social responsibility, as well as sector leadership, salary levels and other benefits. Also, Valamar's status as the top employer in tourism is well-founded by its salary competitiveness, motivation and reward system, career development opportunities, as well as employee wellbeing.
Valamar regards investing in its employees as one of its primary business goals. In terms of seasonality as one of the important characteristics of holiday tourism and the tourism sector in general, Valamar addresses various initiatives and programs to extend the tourist season in its destinations, as well as securing year-round income through permanent contracts and the permanent seasonal worker measure. In addition to excellent working conditions, the possibility of career development and permanent employment, another significant benefit is the staff residence Valamar House, where all employees from different parts of Croatia are provided with accommodation and three meals a day.
The company has also launched its training programs when a shortage of certain needed occupations occurred on the labor market. Valamar believes that such practices can have the effect of reducing workforce outflow and thus creating a positive work environment for young and promising people who want to work and live in Croatia.
Employee health and safety is one of the company's key priorities and Valamar Riviera fully complies with all legal requirements and internal health and safety standards of its employees, contract partners and guests. The company has an Occupational Safety and Health Service and helps monitor, collect feedback and provide advice regarding occupational safety programs.
Freedom of association is a human right set in international declarations and conventions, and collective bargaining alone is an important form of involvement of all stakeholders who help create institutional frameworks. The Valamar Riviera Collective Agreement covers all its employees, excluding two members of the Management Board. For all significant business changes related to employees, there is a legal regulation that sets a time-limit for informing and obtaining the approval of the Workers' Council, trade unions and other social partners. The employer is required to inform the Workers' Council about the business results and the state of business, the organization of work, the expected development of business activities, changes in salaries, number and type of workers and labor costs, as well as other issues of particular importance for the workers' economic and social position.
Valamar guarantees a minimum net income of between HRK 5.000 and 7.500 for all employees working fulltime during the month. In 2019, Valamar paid all its employees with permanent contracts and all workers with a permanent contract who had worked at least 10 months in 2019 a 13th salary of HRK 5.000.
Seasonal workers who worked all their contracted hours under the employment contract and worked between 4 and 7 months were paid a season bonus of HRK 700, while those who worked between 7 and 10 months gained a bonus of HRK 1.500. Also, all
One of the key goals and priorities at Valamar Riviera is building an entire management team that is equipped with the necessary knowledge, skills and capacities to attain the strategic goals of the company.
In 2019, there were 583 managers*, or 9,61% of the total number of employees, of which 244 female managers.
employees who worked for at least half a month in July were paid a season bonus of HRK 500.
Based on the collective agreement, Valamar Riviera employees received a reward in kind in the maximum non-taxable amount of HRK 600, as well as a child bonus ( for parents of children under 15 years of age) in the same amount. Thus, a total of 3.722 employees received the HRK 600 reward in kind, and 1.172 employees with children
under the age of 15 received a child bonus of HRK 600.
Women and men are equally paid in Valamar for the same positions and task complexity. In 2019, Valamar continued to increase the salaries of its employees.
At a yearly level, salaries in Valamar were 2% higher than the Croatian average and 25% higher than the industry or sector average.
The average gross 1 salary in Valamar Riviera for 2019 was HRK 8.945, while the average salary in the Republic of Croatia was HRK 8.766 and HRK 7.149 in the tourism industry. Since 2013, the growth of the average gross 1 salary has been a high 22%.
In comparison to 2018 the gross 1 salary has not increased because there were more hours worked on Company level which affected the average. In addition, because of amendments made in the income tax regulation and the possibility of paying employees non-taxable rewards, Valamar paid all its employees with permanent contracts and all workers with a permanent contract who had worked at least 10 months in 2019 a 13th salary of HRK 5.000 which affected the net salary increase. The aforementioned increased by 10% vs 2017.
| Total | 7,068 | |
|---|---|---|
| Students | 778 | |
| Seasonal | 3,056 | |
| Employees with year-long income | 1,342 | |
| Permanent employees | 1,892 | |
* Average number of employees based on full-time equivalent in Valamar Riviera and Imperial Riviera is 4,716.
The employee turnover rate for permanent employees is 5% for Valamar Riviera, and 6% for Valamar Group.
| m | F | Total | Permanent employees | Turnover rate | |
|---|---|---|---|---|---|
| Baška | 3 | 0 | 3 | 92 | 3% |
| Dubrovnik | 17 | 14 | 31 | 331 | 9% |
| Krk | 0 | 1 | 1 | 78 | 1% |
| Poreč | 20 | 19 | 39 | 802 | 5% |
| Rabac | 6 | 3 | 9 | 255 | 4% |
| Rab | 7 | 5 | 12 | 214 | 6% |
| Makarska | 9 | 7 | 16 | 106 | 15% |
| Grand Total | 62 | 49 | 111 | 1878 | 6% |
| 31/07/ 2019 |
31/08/ 2012 |
variation 2019-2012 |
% increase |
|
|---|---|---|---|---|
| Permanent employees | 1,892 | 1,087 | 805 | 74% |
| Employees with year-long income | 1,142 | 131 | 1,011 | 772% |
| Seasonal | 3,056 | 1,709 | 1,347 | 79% |
| Fixed-term work/other | 200 | 62 | 138 | 223% |
| Students | 778 | 474 | 304 | 64% |
| Total | 7,068 | 3,463 | 3,605 | 104% |
Average number of Valamar Riviera employees based on full-time equivalent
Valamar is the largest employer in Croatian tourism and one of the TOP employers, which employed 7.068 people during peak season in 2019 in destinations from Istria and Kvarner to Dubrovnik, which is a 400 employees increase compared to 2018.
Year-long employment index in 2019 was 45.8%.
* Imperial Riviera included.
Last year, Valamar launched a major project called "My Benefits", which provided employees with the largest system of material and non-material benefits to date, covering all aspects of business and personal life. The Valamar benefits program rewards the best results and innovations, balances business and private life, and provides employees with numerous discounts on products and services they use in their daily lives. In cooperation with more than 40 partners in its destinations, Valamar has provided employees with discounts on various services ophthalmologists, dentists, cosmetic and hairdressing services and the like.
All Valamar employees or ValamArtists receive their ValamArtist cards, with the option of using catering services at a discount of 30 percent at certain restaurants in Valamar's destinations. The list of benefits includes more favorable terms of credit and banking services with Valamar's partner banks, as well as discounts in travel agencies and numerous experiences in Valamar's destinations.
Valamar Riviera has an elaborate reward program, and as many as 5873 employees were awarded in 2019. Valamar rewards its employees via various rewards and incentives:
The ViV Monthly (Valamar News) is one of the favorite tools for sharing Valamar information among employees and business partners.
Every year, ViV readership is analyzed, and the results regularly confirm the satisfaction of all ViV readers. In addition to the popular internal magazine, Valamar Riviera communicates with its employees via the new internal communication platform - ValamArtist app. Valamar has created this application for employee internal communication, regardless of the employee's type of work or destination. Valamar is not only the largest tourism company in Croatia, but also a company which highly values innovation and digital development. The
ValamArtist application is the fastest way to communicate with colleagues and a platform where all the important information about Valamar, developments in destinations and within the company can be found. The ValamArtist App enables all ValamArtists to create content that is important to them and share it with colleagues. Among other things, the ValamArtist App is also an upgrade of the entire Good job at Valamar platform, thus further strengthening the image of the top employer in Croatia. We keep in touch with our seasonal employees who have returned to their homes after the season via the ValamArtist app.
Valamar organizes its already traditional Family Day when employees' children can spend a day at work with their parents. This year, about 300 Valamar employee's children spent a day with their parents in Poreč, learning about their jobs.
This year the children were joined by other family members and Valamar Family Day was enjoyed by more than 500 people.
Also, Valamar provided parents of children who started the first grade of primary school in early September 2019 with a paid day off for the first day of school, thus enabling its employees to spend such a special day in full with with their children.
Valamar Riviera aims at increasing overall customer service as well as creating a motivating work environment.
From fundamental occupations in tourism to professionals in IT, controlling, marketing, sales and a number of other fields, one of the Company's strategic goals is to develop educated and satisfied employees who can have a successful career in tourism. All employees are involved in annual performance and potential assessments,
regardless of whether they work in operation or in corporate functions. Such an approach enables timely planning of promotions, rotations and succession of key positions within the company.
Individual development plans allow employees to plan the long-term development of their careers. Valamar Riviera consistently monitors the work of its employees to fully utilize their potential. Based on the results, the company invests
in their education and guides them in further work depending on their capabilities, knowledge and affinities. Valamar Riviera recruits candidates of different profiles and experience, giving everyone the opportunity to thrive and grow within their company. Particular attention is given to career development, education and training.
Providing numerous opportunities for personal and professional growth and development, and a commitment to developing employee competencies are just several of many standards that have earned us the trust of our employees and partners. All Valamar Riviera employees have equal education and training opportunities and more than HRK 6.9 million and 160 hours of education have been invested in education programs and training in 2019. Career opportunities in Valamar are very high, regardless of work place.
In 2019, Valamar launched a life-long learning program, Valamar Excellence and Valamar provided a number of 160.751 hours of education for its employees.
It is an in-house life-long education program for gaining professional knowledge and skills in the tourism and hospitality industry. It is divided into two main parts:
1. V-Executive is a two-year modular tourism education program designed to learn about trends, gain new professional knowledge, understand the application of innovation, and promote an organizational culture that is driven by knowledge and progress. The program is implemented in cooperation with five faculties in Croatia - Faculty of Economics Zagreb, Faculty of Economics Split, Faculty of Tourism and Hospitality Management Opatija, Faculty of Economics and Tourism Pula and the University of Dubrovnik. The V-Executive program contains 27 modules divided into 8 tracks ("Current and Future Trends in Tourism and Hospitality", "Strategy, Organization and Context", "Innovative Product Development and Sales Management", "Branding and Communication", "Service Excellence and
invested in educational programs in 2019
Quality Management, Managing Operations, Finance and Legal Issues, and Sustainability and Responsibility). Classes and lectures will generally be held once a month - Thursdays and Fridays, and will include Valamar's experts in addition to lecturers from the aforementioned faculties.
2. V-Professional is a professional training program designed to acquire and refine the skills needed in everyday work. It includes professional work-related training such as foreign language education, sommelier training, Coffee academies and the like. Within the framework of V-Professional we cooperate with many institutions in Croatia (such as HUP, AZZRI, HUH, employment services), but also with numerous suppliers who strive to make all employees familiar with the products we offer within Valamar Riviera. In addition to the opportunity to attend one-day and multi-day seminars and various courses, employees can attend professional conferences, fairs, exhibitions and conferences.
1. V-LEAD - This in-house professional development program for future profit center/sector managers/directors and potential successors to senior management positions in operations and corporate departments, was launched in 2019. This one year program has enrolled 23 colleagues. Employees attend a program tailored to their individual needs and in addition to professional and strategic education they engage in a
mentorship project which they eventually present to the Board. The applicants were nominated by their superiors and passed the assessment before enrolling. In addition to training and mentoring, our colleagues will also have the opportunity to visit certain successful Croatian companies, thus sharing their experiences with colleagues in the industry and beyond.
2. V-ACADEMY - In 2019, V-Academy welcomed a new generation of students. The program counted 102 attendees, 84 from hotel operations and 18 from corporate departments in its first year. V-Academy has welcomed its new generation with many innovations in compliance with the management strategy of human resources and the needs that follow the company's growth, development, and acquisitions. The program has been improved and in the number of applicants has been redefined as it includes employees from all sectors in corporate departments. Also, all employees who want to acquire valuable corporate knowledge, other skills and competencies can now apply independently. The Academy is further divided into six sections and after general education and training, the attendees focus on education and training in their field of work. The in-house workshops were preceded by presentation skills mentoring workshops, where we included a number of corporate department colleagues to create a pool of mentors who will monitor, support and impart their knowledge. Also, all employees who wish to expand their corporate knowledge and other competencies can now apply independently.
54
of education in the Valamar Excellence program, 2019
Valamar is the largest single scholarship provider in Croatia, offering unique opportunities each year for scholarships, internships and first-time employment, resulting in high student interest.
Valamar's human resources offers an attractive scholarship program for jobs in hospitality (chefs, waiting staff, pastry chefs) for the 2019/2020 academic year. The scholarship provides students with HRK 1.200 monthly, for 10 months during the academic year until graduation. In 2019, Valamar provided scholarships for 288 students.
Most scholarship recipients came from the continental part and 73% came from outside Valamar's destinations. Of the total number of scholarship recipients, 46% are Valamar's future chefs.
Valamar has a long-standing tradition of providing scholarships to young people training for high-demand jobs in hospitality and has been the largest partner to the Ministry of Tourism so far.
Students have the opportunity to gain work experience in Valamar hotels, camps and resorts, and are offered a job with the leading employer in tourism in Croatia upon graduation. All scholarship holders are required to attend classes regularly, enroll in the school year and duly graduate, while scholarship holders from other destinations are provided with housing and meals at the expense of the employer. This approach contributes to encouraging and supporting young people to enroll and complete education for hospitality professions, better connecting Valamar as an employer with secondary vocational and hospitality schools across Croatia, raising the overall quality of Croatian tourism, as well as the quality of staff in the hospitality and tourism industry.
| Local | From other regions |
Total | |
|---|---|---|---|
| Graduates | 26 | 99 | 125 |
| Other grades | 86 | 77 | 163 |
| Total | 112 | 176 | 288 |
* Valamar Riviera and Imperial Riviera.
The European Social Fund (ESF) is fundamental for the European union's cohesion policy and supports investing in human capital and the strengthening of competitiveness of the European economy. Activities funded by the European Social Fund help people improve their skills and integrate into the labor market with ease.
The Ministry of Tourism has recognized centers of vocational competence in the tourism and hospitality sector as a medium to improve the quality of vocational education for tourism and hospitality jobs and adapt it to the needs of the labor market in order to strengthen the competitiveness of human resources in tourism and hospitality. At the end of 2019, Valamar Riviera signed the Strategic
Partnership Agreements with the Regional Competence Centers in Pula, Opatija and Dubrovnik for a 4-year project "Establishing Regional Competence Centers in the Tourism and Hospitality Sector". The partnership commits us to collaboration and engagement on three priority project tasks:
strengthening vocational education and training systems and their quality, including mechanisms for anticipating skills, adapting curricula and introducing and developing work-based learning systems, including dual learning systems and apprenticeship programs, modernizing and improving the quality of vocational training with the purpose of increasing student employability as well as opportunities for further education and lifelong learning.
According to the Vocational Education Act from 2018, Competence Centers are work-based vocational education and training locations, which also propose and select their partners like businessmen and tourism companies that are the leaders in creating service excellence as well as programs and practices for the development of human resources. In partnership with Valamar and other partners in the tourism sector, the Centers of Competence, carry out specialized and differentiated activities
for the development of new curricula, the adaptation of the curriculum to the needs of the labor market, and the professional development of teachers, teaching assistants and mentors as well as training mentors in the workplace. The 2020-2023 Strategic Partnership will also enable Valamar to exchange knowledge and practice with similar centers in other countries, as well as increase its corporate competence through the mobility of students, grantees, mentors and specialists.
Valamar Riviera guarantees the best conditions for seasonal employment in Croatian tourism. Three departments at the company – Operations, Human Resources and Quality – are responsible for organizing orientation presentations to welcome the new employees into the Valamar team and to make their integration process simpler. The presentations are divided by destinations and clusters and provide extensive information on numerous topics, exemplify the meaning of "good job at Valamar" and present Valamar's core values, mission and vision, service excellence and rewarding system.
Valamar Riviera secures the stability and continuity of year-long income through the Permanent Seasonal Worker measure and Valamar + 3 program, as part of an active employment policy implemented since 2016.
The terms of permanent seasonal workers and permanent employees are closely matched through the Valamar +3 program. The number three in the title indicates job security for three
Seasonal work is the first step towards a permanent year-round job at Valamar. Due to the increase in the number of employees, the share of returning seasonal workers has decreased from 63% in 2016 to 52% in 2019. However, the total number of returning seasonal workers is increasing and 2019 was marked by a 9% increase in returning seasonal workers compared to 2018.
seasons, offering workers a minimum of nine months of work a year and many other benefits. Throughout the three-year contract period, permanent seasonal workers enjoy employment status and priority for employment at Valamar. Valamar Riviera aims to increase the permanent index in the near future, that is, the number of permanent contracts and contracts that provide yearlong income through the permanent seasonal worker measure to 50 percent.
At Valamar employees come first, which is evident from the company's effort to hire local employees as part of its stimulating corporate culture.
Valamar Riviera provides all its employees who work in Valamar destinations but are from other parts of Croatia and the region with quality accommodation and warm meals. Valamar has invested between HRK 80 and 100 million in staff accommodation so far. The construction of the fifth Valamar House in Dubrovnik is well underway.
total investments in Valamar House
Staff accommodation in destination Rabac is a hotel with swimming pool, which has three facilities with accommodation units and numerous amenities.
The main property has a check-in desk and a restaurant serving breakfast, while the other two facilities are equipped with a shared kitchen with all the equipment needed for self-catering.
For socializing and relaxing after work, employees are provided with video and board games space equipped with a game console, table football, table hockey, darts and board games, a lounge with a shared TV, and outdoor barbecue areas. The hotel also features a bicycle storage area and laundry facilities.
In addition to Rabac, seasonal workers already have secured accommodation in hotels for employees (Valamar House) at two locations in Poreč and Krk.
The annual Valamar survey on employee satisfaction contained a new category, "Work Environment and Team Relations," in 2019. This year 88 percent of employees completed the survey or three percent more than last year.
This year, the survey also had a humanitarian side, as we donated HRK 5 for each completed survey to kindergartens in our destinations.
SATISFACTION RATING
are categories: work environment and relationship, superiors and life - work balance
A significant number of investments along with raising service quality implies a continuous increase in the number of employees, which is an ongoing trend in Valamar. At times when Croatia lacked manpower, such employment dynamics could only be realized with the strategic planning of new recruitment that Valamar Riviera has been implementing for the last ten years.
In 2019, the number of employees in Valamar Riviera increased by more than 400, bringing the total number of employees to 7,068. The Good Job at Valamar campaign was launched to promote the image of top employer and attract as many job applicants as possible.
The goal of the campaign is to strengthen Valamar's position as an employer that offers career opportunities and guarantees the best working conditions, the highest quality accommodation for employees in Croatia, as well as securing the number of candidates for each seasonal position. Valamar is one of the first companies in Croatia to launch such
an integrated communication campaign. Valamar received the Grand Prix award from the Croatian Public Relations Association (HUOJ) for the campaign's quality, launched to promote Valamar's top employer image and attract quality employment candidates. Valamar received this professional award in the Grand Prix public relations category for large companies.
In addition to the Good Job at Valamar Facebook page, Valamar upgraded the platform in 2019 by launching the dobarposaouvalamaru.com website, providing all the information on: job applications, working conditions, employee benefits, detailed job descriptions by sectors, internships, scholarships and work opportunities for students and a whole host of other news updates related to all segments of human resources. The site offers a number of novelties such as newsletter signup for all visitors interested in a job at Valamar.
7th place 7th place in the list of top employers in Croatia
400 new jobs in the 2019 season from Istria and Kvarner to Dubrovnik
more than 7,000 employees in 36 hotels and resorts and 15 camping resorts
HRk 5,000 up to HRk 7,500 minimum net income for the full monthly hours worked
HRk 80 - 100 million invested in Valamar House, quality accommodation for employees
Green valamar: HRK 36.4 million
Little Tourism: preschool and school children visited our destinations
Our Retired Colleagues: support and organization of social gatherings in destinations
market positioning, the environment, and the community as well as employee relations.
5.8% share of CSR in 2019 revenues Valamar Riviera has developed nine CSR umbrella programs and is committed to investing at least 2.5% of annual revenues in them.
In 2019 it invested 5,8% (HRK 129 million) of revenues or HRK 28 million more than in 2018.
Natural resources are limited and the activity of each individual and organization should be directed towards their safeguarding. The environment represents the key resource in tourism, so environmental awareness is crucial in this sector due to its volume and intensity.
As the leading tourism company in Croatia, Valamar Riviera is aware of its responsibility to systematically apply high standards to safeguard the environment – the key resource in tourism. Responsibility towards the environment is one of the pillars of sustainability, which Valamar Riviera has incorporated into its Quality and Sustainable Business Policy as well as Strategic goals.
▸ HRK 17.2 million – invested in energy efficiency projects in 2019
Valamar Sanfior Hotel & Casa ★★★★★
Valamar Koralj Hotel ★★★
Valamar Collection Dubrovnik President Hotel
★★★★★
Valamar Parentino Hotel
★★★★
TUI Blue Bellevue Resort by Valamar ★★★★
Valamar Padova Hotel ★★★★
Valamar Carolina Hotel & Villas ★★★★
| kg/overnight | (t) | CHANGE VS. PREVIOuS yEAR kg/overnight |
|
|---|---|---|---|
| 2015 | 4.29 | ||
| 2016 | 1.27 | ↓ 67.96% | ↓ 70.46% |
| 2017 | 1.24 | ↓ 0.02% | ↓ 2.40% |
| 2018 | 1.32 | ↑ 8.90% | ↑ 6.66% |
| 2019 | 1.21 | ↓ 5.54% | ↓ 8.27% |
| CHANGE VS. PREVIOuS yEAR | |||
|---|---|---|---|
| kg/overnight | (t) | kg/overnight | |
| 2016 | 1.68 | ||
| 2017 | 1.72 | ↑ 2.47% | ↓ 0.25% |
| 2018 | 1.84 | ↑ 9.22% | ↑ 7.16% |
| 2019 | 1.35 | ↓ 24.84% | ↓ 26.63% |
* Since 2017 the calculations include Valamar Obertauern Hotel.
iN BUSiNeSS Valamar iS FOCUSeD ON:
▸ Reducing electric energy consumption
3 new charging stations
| Consumption in unit of measurement | kWh | GWh | kWh/overnight | |
|---|---|---|---|---|
| Electrical energy | 82,647,463 | 82,647,463 | 82.65 | 12.2 |
| Heating oil | 901,384 | 9,013,841 | 9.01 | 1.33 |
| Motor fuel | 325,224 | 3,252,244 | 3.25 | 0.48 |
| Natural gas | 11,632,414 | 11,632,414 | 11.63 | 1.72 |
| Propane-butane | 613,380 | 7,851,267 | 7.85 | 1.16 |
| TOTAL | 114,397,230 | 114.4 | 16.88 |
| Total water consumption (m³) | 1,796,735 |
|---|---|
| Amount of recycled water for irrigation (m³) | 7,696 |
| Poreč laundry facility (m³) | 28,582 |
| % of used recycled water (out of total consumption) | 2.02% |
| Groundwater supply system (m³) | 25,764 |
|---|---|
| Local or other water supply systems (m³) | 1,770,971 |
| WATER DISCHARGE PER DESTINATION | |
| Public sewage system (m³) | 1,542,654 |
| Sea (m³) | 85,492 |
The total volume of wastewater is based on an estimate of delivered water minus the percentage used for irrigation and watering sports fields. There are no wastewater flow meters. Wastewater is tested 2-4 times a year for every profit center; tests are carried out by authorized laboratories (public health institutes).
Discharge of water to surrounding terrain (m³) 8,441
Wastewater is treated before being discharged: mechanically (FOG separators – all the hotels and campsites), biologically and mechanically (Poreč laundry facility) and biologically (Krk and Škrila campsite, Carolina and Eva resorts on the peninsula of Suha Punta on Rab Island).
* The specific water consumption increase is the result of investments in new pools and irrigated green areas.
| 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|
| NON-HAZARDOUS | ||||
| Paper and cardboard | 459 | 598 | 671 | 661 |
| Glass | 211 | 285 | 312 | 319 |
| Plastic | 160 | 255 | 285 | 283 |
| Wood | 478 | 469 | 42 | 45 |
| Biodegradable waste | 625 | 1,533 | 1,759 | 2,527 |
| Used cooking oil | 20 | 32 | 28 | 21 |
| FOG separator waste | 712 | 758 | 691 | 480 |
| Metals | 35 | 14 | 12 | 7 |
| Bulky waste | 139 | 306 | 102 | 246 |
| Other non-hazardous waste | 45 | 6 | 13 | 6 |
| TOTAL | 2,884 | 4,256 | 3,915 | 4,595 |
| HAZARDOUS WASTE | ||||
| Asbestos | - | 22 | - | - |
| Electric and electronic waste | 7 | 6 | 18 | 7 |
| Contaminated packaging | 5 | 9 | 8 | 4 |
| Other hazardous waste | 7 | 2 | 14 | 11 |
| TOTAL | 19 | 39 | 40 | 22 |
| MIXED MUNICIPAL wASTE | 4,292 | 5,117 | 5,013 | 5,080 |
| TOTAL wASTE GENERATED | 7,195 | 9,412 | 8,967 | 9,697 |
As a joint-stock company with more than 21 thousand shareholders, Valamar Riviera is committed to the highest principles of good corporate governance and regulatory compliance.
A well-defined and clear corporate structure is the foundation for the effective strategic and operational management of the company. The key governing bodies of Valamar Riviera d.d. are the General Assembly, the Supervisory Board with its corresponding delegate committees and the Management Board led by the President of the Management Board or CEO of Valamar Riviera. The specific governance authorities and responsibilities of these governing bodies are regulated by the relevant Croatian legislation, Company Statute and other corporate governance codes, regulations or prescribed procedures.
The Supervisory Board consists of 7 members, of whom 2 are independent and one is an employee representative.
The Supervisory Board meets at least 4 times per year. The Supervisory Board is actively engaged in key management decisions through corresponding delegate committees
that meet more often to manage key strategic initiatives and support the Supervisory Board in the decision-making process.
| engaged in key management decisions through corresponding delegate committees |
Investment Committee ▸ |
Supervisory Board |
Board Presidium Supervisory |
Committee Audit |
Investment Committee |
|
|---|---|---|---|---|---|---|
| Term of office from 7/7/2019 to 6/7/2021 | ||||||
| Gustav wurmböck | Chairman | Proprietary | n | n | n | n |
| Franz Lanschützer | Deputy Chairman | Proprietary | n | n | n | n |
| Mladen Markoč | Deputy Chairman | Independent | n | n | n | |
| Franz Lanschützer | Deputy Chairman | Proprietary | n | n | n | n |
|---|---|---|---|---|---|---|
| Mladen Markoč | Deputy Chairman | Independent | n | n | n | |
| Georg Eltz Vukovarski | Member | Proprietary | n | n | n | |
| Vicko Ferić | Member | Proprietary | n | n | n | |
| Hans Turnovszky | Member | Independent | n | n | n | |
| Valter Knapić | Member | Employee Representative | n | |||
| Meetings held in 2019 | 16* | 10 | 5 | 2 |
* The Supervisory Board held sixteen (16) meetings in the course of 2019, out of which twelve (12) were held via correspondence, according to the Company's Statute.
The Management Board President is primarily responsible for formulating and managing the company's strategic, operating and financial activities. In addition, the President individually leads the following areas: hotel operations, marketing & sales, human resources, destination management, purchasing, investment and asset
development, external affairs and public relations, quality management, internal audit and project management, controlling, legal and general affairs. Marko Čižmek, Management Board Member, is primarily and individually responsible for finance, accounting, treasury, IT and institutional investor relations.
The strategic corporate business functions are organized in 4 divisions that are led by four vice presidents:
implementing the corporate strategy and providing management support to the CEO. Hence, the senior management team works closely with the Management Board and performs relevant corporate functions through business committees that are focused on those strategic activities at the Company that require a high degree of cross-functional involvement:
corporate social responsibility, human resource strategies and policies)
| The senior management team or division vice presidents are responsible for managing specific functional business areas and activities. In addition, the senior management team is tasked with cross-functional steering and leadership, |
Position | Project Committee (steering the project ▸ management organization) Business Experience Committee ▸ (business expansion, loyalty and CRM, quality management & service excellence, |
Committee CAPEX |
Committee Project |
Business Experience Committee |
Partnerships Committee Purchasing & |
HR Development and Business Excellence Committee |
|---|---|---|---|---|---|---|---|
| Željko Kukurin | Management Board President | n | n | n | n | n | |
| Marko Čižmek | Management Board Member | n | n | ||||
| Alen Benković | Vice president | n | n | n | n | n | |
| David Poropat | Vice president | n | n | n | n | n | |
| Davor Brenko | Vice president | n | n | n | n | ||
| Ivana Budin Arhanić | Vice president | n | n | n | |||
| Sebastian Palma* | Director of Strategic Planning and Controlling | n | |||||
| Andrea Štifanić | Director of Asset Management and General Affairs | n | n | ||||
| Marko Vusić | Director of Internal Audit and Project Management | n | |||||
| Dragan Vlahović | Director of Purchasing | n | |||||
| Ines Damjanić Šturman | Director of Human Resources | n | |||||
| Tea Cergna | Director of Human Resource Development | n | |||||
| Dario Kinkela | Director of Food&Beverages | n | |||||
| * Sebastian Palma held the position fod Director of Strategic Planning and Controlling in Valamar Riviera d.d. until February 1, 2020 and is since then a Management Board member in Imperial Riviera d.d. |
Željko Kukurin, Committee President
Ivana Budin Arhanić, Committee Vice President
David Poropat, Member
Davor Brenko, Member
Alen Benković, Member
Ines Damjanić Šturman, Member
Željko Kukurin, Committee President
Alen Benković, Committee Vice President
David Poropat, Member
Davor Brenko, Member
Andrea Štifanić, Member
Sebastian Palma, Member
Željko Kukurin, Committee President
Marko Vusić, Committee Vice President
Marko Čižmek, Member
Ivana Budin Arhanić, Member
David Poropat, Member
Davor Brenko, Member
Alen Benković, Member
Željko Kukurin, Committee President
David Poropat, Committee Vice President
Marko Čižmek, Member
Dragan Vlahović, Member
Alen Benković, Member
Andrea Štifanić, Member
Dario Kinkela, Member
Željko Kukurin, Committee President Tea Cergna, Committee Vice President Ivana Budin Arhanić, Member David Poropat, Member Davor Brenko, Member Alen Benković, Member
Gustav Wurmböck graduated from the Universities of Vienna and Innsbruck in Business and Finance. Before founding EPIC in 1991, Mr. Wurmböck has held various positions in prestigious companies such as IFC in Washington D.C. (International Finance Corporation - World Bank Group), DEG (Deutsche Investitions und Entwicklungsgesellschaft) in Cologne, Germany, and was head of the International Department of
Länderbank in Vienna (today's Bank Austria).
Mr. Wurmböck is one of the co-founders and managing partners of EPIC in Vienna, which is one of the leading investment and advisory firms in CEE. At EPIC, he has led many large privatization and corporate finance transactions in the areas of energy, telecommunications, brewing and the hotel industry.
Mr. Wurmböck was management board president at Valamar grupa d.d. from 2005 to 2010, and is Chairman of the Supervisory Board of Valamar Riviera d.d since 2014.
Franz Lanschützer received his MBA from the Vienna University of Economics and his Ph.D. from the University of Budapest. He has gained extensive experience in the areas of corporate finance and asset management in Central and Eastern Europe.
Dr. Lanschützer is a managing partner at EPIC Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H. from Vienna. For the last thirty years, Dr. Lanschützer has been
working in the field of mergers, acquisitions and corporate finance, as well as providing consulting services in Austria, the Czech Republic, Poland, Croatia, and some other countries of the former Yugoslavia. He has also set up and run investment privatization funds in the Czech Republic and Croatia.
Dr. Lanschützer held executive positions at major financial advisory and auditing companies such as Ernst&Young and Price Waterhouse before joining EPIC. He has also held executive positions at Valamar Group since 1999, including CEO and management board president at Valamar Group d.d. (2011-2014) and holds the position of Supervisory Board deputy chairman at Valamar Riviera d.d. since June 2015.
Georg Eltz Vukovarski was educated in Switzerland and Germany where he majored in economics, history and philosophy. He graduated from the University of St. Gallen with a degree in Business Administration. Before moving to Croatia in 1994, he was a management board member and marketing chief of a major Swiss corporation, as well as CEO of its Canadian subsidiary. He co-founded Valamar Adria holding (as PIF Dom fond d.d.) in 1998 and served as
president of its management board before it was merged to Valamar Riviera d.d. in 2014. In the years between, he served as president and member of management boards and supervisory boards of several affiliated companies. Currently, he is managing director of SATIS d.o.o. and of its parent company ELADCO Invest GmbH. Apart from being a member of Valamar Riviera supervisory board, he served on the boards of both the German-Croatian Chamber of Industry & Commerce, and the Croatian-Austrian Chamber of Commerce. As co-founder of "Zaklada znanje na djelu - Stiftung Wissen am Werk", he also is a member of its supervisory board.
Hans Dominik Turnovszky was educated in Austria and Germany and has a degree from the renowned Cornell School of Hotel Administration. He has built a long and successful career as a manager in the hotel industry with more than forty years of experience in the operational, development, and administrative sectors. He has gained basic professional knowledge and experience in his home country as well as Great Britain, Ireland, Africa, Asia,
and the United States. He has held executive positions in various companies, such as Kempinski, Regent, Rafael Hotels, Mandarin Oriental, Austria Hotels International, ANA Grand Hotel in Vienna, the Lodge at Vail in Colorado and the Phoenician Resort in Scottsdale, Arizona. Mr. Turnovszky was a member of the management board and several committees at the Austrian Hotel Association. He currently serves as member of the Five-star Commission of the Austrian Federal Chamber of Commerce. He was a member of the supervisory boards at Valamar Grupa d.d. and Valamar Adria holding d.d. and is currently a Member of the Supervisory Board of Valamar Riviera d.d.
Mladen Markoč graduated from the Faculty of Law of the University of Zagreb. He specialises in company law, securities law, and commercial law. Mr. Markoč has been a consultant in numerous important transactions in the Croatian and foreign capital markets and has been a regular speaker at the Zagreb Stock Exchange Academy and, occasionally, at the Judicial Academy. He started his career in law in 1988 as a legal apprentice. He was a corporate secretary at the pharmaceutical
company PLIVA d.d. from 1990 to 1997, partner at the law firm Bogdanović, Dolički & Partners from 1997 to 2007, and management board member at ICF Grupa d.o.o. in 2008. He served as an attorney at the Mladen Markoč law office from 2010 to 2013, then at the joint law office of Mladen Markoč and Ivan-Krešimir Tomić, which is today known as the joint law office of Mladen Markoč, and Relja Pećina. He is vice president of the Association of Business Lawyers of Zagreb. He was also a supervisory board member at Valamar Adria holding d.d. (2011 – 2014), and is currently a member of the supervisory boards of Valamar Riviera d.d., Imperial Riviera d.d., Helio Faros d.d., Ingra d.d., ICF d.d., Hotel Laguna d.d. and Proficio d.d. He is member of the management board of the Magdalena Clinic for Cardiovascular Diseases at the Faculty of Medicine of J.J. Strossmayer University in Osijek.
Valter Knapić graduated from an electrical engineering vocational school. He has been with Valamar Riviera since 1986 and has held various positions in the company.
He currently serves as the front office assistant manager. He has been a member of the Workers' Council for the last 22 years. He has served as the head delegate of the Tourism and Services Trade Union of Croatia (STUH) at Valamar
Riviera d.d. since 2008, with a new term of office from 2016 to 2021. He has also been a member of the STUH Presidium since 2011 and has been re-elected for the new 2016-2021 term of office.
Valter Knapić is a member of the Business Premises, Public Areas and Real Estate Sales Committee and of the Spatial Planning, Municipal Economy, Ecology and Environmental Protection Board and also councilman of the Municipality of Tar-Vabriga – Torre-Abrega.
vICkO FERIć, Supervisory Board Member
Vicko Ferić graduated from the Faculty of Economics and Business at the University of Zagreb in 1974. He started his professional career working for the Organic Petrochemical Company (currently Dioki d.d.), and then he joined INA d.d. where he held management positions in the finance department and later became assistant chief financial officer until 1998. By the end of 1998, he joined EPIC.
From 2003 until 2005 he was appointed management board president of SN holding d.d. From 2005 until 2011 he was a management board president at Valamar Adria holding d.d. (former Dom holding d.d.), as well as an executive manager at EPIC Zagreb d.o.o. From 2011 until 2014 he was a management board member at Valamar Grupa d.d. He has also been involved in numerous important investment projects in the oil and tourism industries, the gasification process in Croatia, privatizations of Hrvatske telekomunikacije d.d., Croatia osiguranje d.d., Dresdner Bank Croatia d.d., and the restructuring and sale of several companies from the Dom Fond d.d portfolio. He has been involved in the operation of numerous companies, such as Petrokemija d.d., Poljoopskrba d.d., Svetice građenje d.d., Instrumentaria d.d., Rabac d.d., Vrboska d.d., Koestlin d.d., Belvedere d.d., Brodospas d.d., etc., either as a supervisory board member or president. He is currently a member of the supervisory boards at Končar - Elektroindustrija
Željko Kukurin was born in 1974 in Zagreb. He graduated from the Faculty of Economics and Business in Zagreb where he received his Master of Science degree in Marketing. In 2010 he received his EMBA degree in International Management from the Bocconi University in Milan in 2010. In 2020, he received his Doctor of Economics degree at the Faculty of Economics and Business in Pula on the topic Profitability of Investments in the Hospitality Industry.
In 2000 he began his career as an intern at Riviera Poreč, a member of Valamar Group. From 2003 to 2009, he held various managing positions in Sales and Marketing, and he was responsible for developing several strategic projects within the group. From 2010 to 2014 he was the management board president at Istraturist d.d., owned by Zaba Unicredit Group and cooperated with Meliá Hotels International in managing the hospitality portfolio in Umag. After restructuring business operations and increasing enterprise value, in 2014 he participated in the EUR 120 million sale of the company.
In June 2015, Mr. Kukurin was appointed President of the Management Board of Valamar Riviera where he has led a strong development and investment cycle over the past 5 years, worth a total of HRK 4 billion. During this period Valamar Riviera portfolio has been repositioned towards higher quality products, expanded through acquisitions in Croatia and the first international acquisition in Austria, various strategic partnerships with pension funds have been established for joint investments in tourism, while enterprise value grew. Valamar Riviera is the best employer in tourism for the third consecutive year, and Mr. Kukurin was business of the year in 2017.
He also serves as Supervisory Board Chairman at Imperial d.d. Rab, and holds numerous important positions in Croatian tourism; he is chairman of the Hospitality and Tourism branch of the Croatian Employers' Association, deputy chairman of the Croatian Tourism Association and member of the Croatian National Tourist Board Council and the Istrian Tourist Board Council. In addition, he is involved in various national professional associations.
mARkO čIŽmEk, Management Board Member
Marko Čižmek graduated from the Faculty of Economics and Business in Zagreb. He has qualified as a broker and investment advisor.
He started his career in 1996 at the Croatian National Bank. He spent several years working in corporate finance at Investmentbank Austria and ICF. In the period from 2001 to 2004, he was a management board member at EURO Invest, an investment fund management company.
Mr. Čižmek has held numerous managing positions at companies that have been merged to the present Valamar Riviera: he was management board member at Rabac d.d. (2004-2011), management board member at Dubrovnik-Babin kuk d.d. (2009-2013) and a management board member at Valamar Adria holding d.d. (2008-2013), general manager at Epima d.o.o. (2008-2014), supervisory board member at Zlatni otok d.d. (2002-2011) and Rabac d.d. (2000-2004). Mr. Čižmek started serving as Management Board Member at Valamar Riviera in 2011 where he is responsible for finances, accounting, the treasury, capital markets and investor relations, as well as information technology.
He is also a management board member at the Croatian Association of Financial Analysts and the Croatian Association of Corporate Treasurers, and the deputy chairman of the supervisory board at Helios Faros d.d. since 2019.
Vice President of Asset Development, Maintenance & Technical Services
After graduating from the Faculty of Economics in Pula, Alen Benković began his career in 1999 as an intern at the former Riviera, where he held several important positions including assistant general manager at Funtana campsite, assistant general manager at Lanterna campsite and
general manager at the Neptun Hotel – today's Valamar Riviera 4* in Poreč. He continued his career at the municipal company Parentium, which manages investments for the Town of Poreč, where he worked on the construction project of the Žatika Sport Hall (the largest investment in the city of Poreč in the last decade). From 2011 till 2015 he was the director of asset development, maintenance and technical services in Istraturist and managed the investments in tourism assets worth over HRK 350 million. In 2015, he joined Valamar Riviera d.d. as Vice President of Asset Development, Maintenance and Technical Services, where he is responsible for managing portfolio investments and planning further asset development. One of the largest investment projects in the history of Valamar was finished in merely 7 months – the reconstruction of hotels Bellevue and Girandella with a total of 763 keys, worth nearly EUR 60 million repositioned destination Rabac towards high added value tourism. In 2019, Valamar began the construction of hotel Pinea in Poreč's Pical zone. It is the largest investment in Croatian tourism worth over EUR 100 million, planned for completion in 2023.
Davor Brenko graduated from the Faculty of Economics in Rijeka and began his professional career in 2000 at the former Riviera hoteli i ljetovališta, in Sales and Marketing. In 2002 he became project manager for research into guest satisfaction and guest relations management, while in 2004 he oversaw Direct
Sales, which quickly became the strongest sales channel in Valamar. In 2009, Mr Brenko was promoted to the position Head of Direct Sales and Marketing at Valamar and as such has participated in creating developmental projects, which resulted in upgrading sales, marketing and business development. At the beginning of 2010, he joined Istraturist Umag d.d., where he headed Business Development and implemented strategic marketing and destination management initiatives, aimed at raising the quality and competitiveness of the company and its destination. As of 2015, Davor Brenko has been appointed Vice President of Sales and Marketing at Valamar Riviera d.d. where he achieved a double-digit growth in sales income by leading the development strategy of Valamar direct sales channel (an increase of 44% in total sales) and by concluding partnerships with certain global tour operators and specialized tourist agencies thus creating new tourism markets and niches. He has re-branded the portfolio under the umbrella brand Valamar All you can holiday and is responsible for numerous projects aimed at strengthening tourism services and products, destination management and enriching Valamar destinations with events such as Poreč Open Air, Rabac Open Air, as well as with the Valamar Experience Concierge platform.
IvANA BUDIN ARHANIć, Vice President of Business development and Corporate affairs
Ms. Budin Arhanić received her economics degree from Middlebury College (USA) in 1999 and an MBA from Harvard Business School in 2007. After completing her studies, she spent three years as a strategy management consultant in Boston and New York. Following
this, she successfully led Lura d.d. group expansion on the Serbian market. In 2007, she joined Valamar Group where she served as a management board member at Valamar grupa d.d., Valamar Adria holding d.d. and Valamar Riviera d.d. Ms. Budin Arhanić became Vice President of Business Development and Corporate Affairs at Valamar Riviera in 2015. At Valamar she is responsible for acquisitions and expansion, strategic development through digitalization and innovation, service quality management, corporate social responsibility, corporate communications and relations with industry associations and the public sector. In 2013, she developed a framework for achieving high quality service at Valamar that enabled a continual growth in guest satisfaction and the creation of a unique service excellence culture. She also led a number of initiatives to grow the tourism portfolio through acquisitions, including Valamar's first international acquisition in Austria. Since 2015, Valamar has received numerous awards for corporate social responsibility practices such as Ponos Hrvatske and CSR Index and two Grand PRix awards for excellence in corporate communication.
David Poropat, D.Sc. graduated in 1993 from the University of Rijeka's Hotel Management Faculty in Opatija. In 2007, he completed his postgraduate study at the Faculty of Tourism and Hotel Management in Opatija, where he completed a doctoral course in 2013. He started his career in 1993 as Sales and Marketing intern at the former
Jadran turist d.d. in Rovinj, where he continued his career in charge of the western market in Sales, and then as planner and analyst in the Controlling Department. From 1996 to 2002, he was the general manager of Sol Park, one of Jadran turist's hotels, managed at the time by the Spanish company Sol Meliá. In March 2002, he joined the company Riviera Holding d.d. in Poreč as Head of Operations and until 2006 he was in charge of all Valamar tourism properties. From 2007 to 2011, he served as a management board member at Valamar hoteli i ljetovališta d.o.o., and from 2012 to 2014 he headed Valamar poslovni razvoj d.o.o. At the end of 2014 he became Vice President of Operations at the leading Croatian tourism company Valamar Riviera d.d. where he manages 36 hotels and 15 campsites which can accommodate up to 58,000 guests daily. He is responsible for service management and operations including accommodation, food and beverage, sport, pools, beaches, wellness, entertainment and animation in which Valamar implemented numerous innovations through new service concepts for which Valamar has received a number of guest and trade awards. He is also responsible for service management and operations in destinations Rab, Hvar, Makarska and Obertauern. Mr. Poropat has also held various important positions in trade associations, and actively participated in dozens of business projects that particularly broadened his business experience. He has published a number of expert and scientific papers.
The company conducts its business in an open, and ethical manner, recognizing the importance of protecting its entire human, financial, physical, informational, social, environmental and reputational assets.
Valamar Riviera Internal Audit and Control and the Audit Committee are focused on maintaining the highest standards of integrity and corporate governance practices in order to maintain excellence in its operations and promote trust in its governance systems. The Project Management Office (PMO) supports the Project Committee and continually works on the standardization of the reporting process and the management of the project portfolio. PMO supported the project organization at the company in 2019 through the permanent standardization of ongoing project reporting, with a special focus on change management and process digitalization. There were about 40 projects at the company in 2019 and they included various business segments. They were mostly related to hotel operations, sales and marketing, human resources, finance, and IT.
The Audit Committee assists the Supervisory Board in overseeing the adequacy and integrity of the company's financial reporting processes and procedures, the integrity of the company's financial statements, the company's compliance with legal and regulatory requirements. Valamar's Audit Committee is an independent, internal body that ensures the enforcement of internal audits and controls, as well as the increase of business efficiency. The Audit Committee meets four times per year or more frequently if circumstances dictate.
Internal Audit collaborates with Internal Control and performs ad hoc financial-material examinations, as well as examinations of processes and procedures in properties. The Audit plan is based on the systematic assessment of key risks, which are then separately quantified and ranked through a corporate risk matrix. During 2019,
each risk suggested by a business stakeholder, especially Management or Audit Committee has been evaluated by assessing the probability of an event occurring an affecting business, thus creating the base of the revision plan. Although every audit project is unique, the audit process is similar for most engagements and usually consists of four stages:
We continued analyzing, reviewing, and testing the IT system safety in 2019, as well as testing the awareness level among employees about the safety of the IT system in order to raise further awareness about related risks in both corporate departments and at properties. During 2020, Internal Audit and PMO will continue with the processes of digitalization.
Internal audit activities are performed within organizations that vary in purpose, size, complexity, and structure and involvement by persons within or outside the organization.
Key documents regulating the area of Internal Audit at Valamar are:
▸ internal controls
▸ human
technologies
▸ accounting & reporting
The key audited business segments during 2019 were related to operations and processes of corporate acquisition, hotel operations, finance, marketing and sales, and especially the risks related to the IT segment of operations.
During 2019, more attention through audit engagements was given to the processes related to individual key investment projects (especially in the camping segment). This was due to their financial and operating importance and overall impact on the company's operations in the current year as well as in the future. Also, during 2019, the suggestions of Internal Audit, through ad hoc engagements, and especially for investment projects, as well as the possibility of continuous audit on individual, and key investment projects were taken into account. As in previous years, the benchmarking cost analysis for acquiring key items in operations was conducted, as well as a comparison of market movements and trends, and their impact on direct operating costs. The Audit also maintained continuity in questioning compliance with the General Terms of Payment, securing applicable payment security instruments, with emphasis on early payment models, as well as exceptions to the general
terms of payment, required approvals and the inevitable analysis of the dynamics and content of write-offs. During 2019, new business risks, such as the impact of the monopsony influence of society on the local market, were taken into account. The risks arising from such a position were considered for both the company and business partners alike, while ensuring business continuity for all market stakeholders.
Furthermore, the process and risks related to the change of senior staff in business properties, the so-called change management process has been reviewed for the first time. The aim was to ensure the application of procedures and detecting opportunities arising from such changes, both for the Company and for employees.
Moreover, Internal Audit provided active support during the implementation of activities aimed at opening new communication channels, related to collecting complaints and suggestions of all stakeholders in the company's operations, as well as assistance in implementing the legal framework and instructions of the Audit Committee in this sense.
Tourism is a global industry, closely connected with the real and financial economy, geopolitical position and environmental sustainability. The integrity of this industry will determine its future growth.
Given the importance of tourism and its overall impact on society, the Company and the Group monitor and assess risks at micro and macro levels. Moreover, when defining the strategy, particular
attention is given to the short and medium–term risk impact in order to maintain business sustainability over time. When monitoring and assessing risks the Company and Group use a proactive approach thus assessing the potential impact of each individual risk. The Company and Group consider risk management to be a key factor of differentiation among competitors. Risk management aims at creating sustainable value, thus offering reliability and security to numerous stakeholders.
potential risks
ASSESSING
identified risks
DETERmINING actions and responsibilities for efficient risk management
mONITORING and overseeing preventive actions
information on risk management results conducted by the Management Board
In their day-to-day business activities, the Company and Group face a number of financial risks, especially:
The Company and Group have a proactive approach in mitigating interest rate and foreign exchange risks, by employing available market instruments. Internal risk management goals and policies aim at protecting foreign currency inflows during seasonal activity and partial interest hedging of the principal loan amount.
The Company and Group conduct their business operations across national borders and are exposed to foreign exchange risks. They mainly result from changes in the euro/ kuna exchange rate. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. Most of the sales revenue generated abroad is denominated in euros, and so is the major part of long-term debt. Hence, for the most part the Company and Group are naturally hedged from exchange rate risks. Since some liabilities are denominated in kunas, the Company and Group actively manage risks by using derivative instruments available on the financial market. The instruments are used according to operating assessments and expected market trends.
In this way the Company and Group's assets, liabilities and cash flow are protected from the risk impact. Due to the extraordinary circumstances caused by the COVID-19 pandemic in the first
quarter of 2020, potentially stronger depreciation pressures on the kuna against the euro affect the value of long-term credit debt denominated in euros and contracted forward transactions whose potential negative effects are sought to be controlled through proactive management of concluded derivative financial instruments.
In case of an exceptional reduction of euro inflows, the Company and the Group will use existing euro liquidity reserves to service long-term debt repayments and access adequate use of financial hedging instruments, following the current situation and future assessment of the Company's and Group's foreign exchange position, the expected movements in value of the kuna/euro currency pair, as well as other intercurrency relations among world currencies.
Variable rate bank loans expose the Company and Group to cash flow interest rate risk. The Company and the Group actively resort to derivative instruments in order to hedge cash flow and interest rate by applying interest rate swaps. The economic effect of such swaps is the conversion of variable interest rate loans into fixed interest rate loans for a pre-committed hedged part of the loan principal.
The Company and Group have interest-bearing assets (cash assets and deposits) so their revenue and cash flow depend on changes in market interest rates. This becomes evident especially during the season when the Company and Group have significant cash surpluses at their disposal.
The Company and the Group expect a limited impact of increased interest rate volatility due to the recent Coronavirus pandemic, given that a large part of the Group's loan portfolio (87% as at 31 December 2019) is comprised of long-term fixed interest loans or, respectively, loans hedged by a derivative instrument (IRS).
Credit risk arises from cash assets, time deposits and receivables. According to the Company and Group sales policy, business transactions are conducted only with customers with suitable credit history, i.e. by agreeing advances, bank securities and (for individual customers) payments made through major credit card companies.
The Company and Group continuously strive to monitor their exposure towards other parties and their credit rating as well as obtain security instruments (bills of exchange, promissory notes and guarantees) in order to reduce bad debt risks related to services provided. Given the negative consequences of COVID-19 on the Company and Group's customers, especially tour operators and travel agencies, special attention is paid to the impact of currently unfavorable circumstances on related parties with active verification of creditworthiness and their potential to overcome current challenges.
The Company and Group hold equity securities and are exposed to equity price risk due to security price volatility on the stock market. The Company and Group are not an active participant in the market trade in terms of trading in equity and debt securities. However, with investments in buying Imperial and Helios Faros shares, the Company is exposed to the said risk to a certain extent.
The Company and Group have a sound liquidity risk management. Sufficient funds for meeting liabilities are available at any given moment through adequate amounts from contracted credit lines and by ensuring credit line availability in the future. Liquidity risk is managed by generating strong positive net operating cash flows, while capital investments are financed by credit lines. Credit lines in 2020 were arranged with reputable financial institutions, while the repayment of the major credit lines coincides with periods of strong cash inflows from operations.
The Company and Group monitor the level of available funds through daily cash and debt reports. Long-term cash flow forecasts as well as annual (monthly) forecasts are based on the set budget. After meeting the needs of working capital
management the surplus is deposited in the treasury. From there the funds are invested in interest-bearing current accounts, time deposits, money market deposit accounts and marketable securities. Only instruments with suitable maturities and sufficient liquidity are selected, according to the forecast needs for liquid funds. This year's COVID-19 pandemic, as an external stressor to the Company and the Group's business activities, will create uncertain pressures on operating cash flow. Following the sound management of the now increased liquidity risk, escalation plans have been developed and activated to minimize costs, preserve liquidity and solvency, and maintain business continuity as well as applying for measures of support and assistance in the economy and tourism sector, including immediate payment deferral of due principal on long-term loans by the given possibility of a moratorium on loan repayment.
The Treasury invests surplus cash in accounts that bear interest, fixed-term deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity in accordance with demand projections for liquidity resources.
The market value of shares is the riskiest asset class due to its volatility resulting from the volatile nature of the whole capital market, macroeconomic trends on markets where the Company and Group operate and discrepancies between the expectations of financial analysts and the actual results. Furthermore, other contributing factors are also changes in the dividend policy, various activities in the segment of consolidations, mergers, acquisitions and forming of strategic partnership, the instability of the business model of the Company and Group as well as the fluctuations in the financial results for the Company and Group.
In case any negative implications happen to be associated with these factors there is a considerable risk of market value drop that will in turn prevent investors from selling their shares at a fair market price.
The Company and Group are constantly exposed to risks threatening its competitiveness and future stability. Since the Company and Group own real estate, this business model requires a large amount of capital in order to maintain high product and service standards.
Various large capital investments in the upgrade of products and services can surpass budget expectations, delay the end of construction works, as well as the town-planning regulations and fiscal policy may be changed. These risks can increase costs for the Company and Group, and have a negative impact on the cash flow and revenues. In the previous period, the company and Group's
business decisions improved their results and operating efficiency in the demanding Mediterranean market. These positive trends are expected to continue in the future through prudent long-term strategic management. Over 95% of Valamar Riviera guests come from other countries and they are very careful when choosing their vacation destination in the competitive Mediterranean environment. Stable domicile countries' macroeconomic indicators are important decision-making factors especially those relating to exchange rates and the price of goods and services because they directly affect the guests' purchasing power. However small, the share of domestic guests is also important; it is a segment directly influenced by various other macroeconomic indicators:
employment/ unemployment rate, GNP rise/fall, industrial production and others. They all have a direct impact not only on the purchasing power of Croatian residents but they also determine whether they will choose to spend their vacation on the Adriatic.
When considering risks related to the tourism and hospitality industry, in previous years, the Croatian economy has been afflicted by the consequences of a global financial crisis and economic standstill. In this period, the tourism and hospitality industry has been among the rare growing industries in Croatia. Moreover, the marked seasonality of this industry leads to insufficient use of the Company and Group's resources. After joining the European Union, the Croatian market became part of a large European market, while safety risks decreased after joining NATO. The Croatian Tourism Development strategy until 2020 (a government document published in the Official Gazette no. 55/13) defines the kind of tourism Croatia wants and needs to develop using the country's comparative advantages and expertise in order to improve the competitiveness of Croatian tourism. Maintaining
the current tourism growth rates in the following years is of vital importance. It can be achieved by strategically developing tourism products and investing in the creation of additional values, which will help distinguish Croatian tourism from its competitors by emphasizing its uniqueness, appeal and quality.
Good management of human resources is vital for the future growth of the Company and Group. Risks related to shortages of specific skills, expertise and jobs are connected with the opening and expansion of the labor market. Valamar Riviera is also the most desirable employer in Croatian tourism. It continually invests in employee education and training as well as the development of its employees. We determine the need for new skills and expertise by following emerging global trends in tourism. In this way, we are able to respond to challenges effectively. Through a continual dialogue with our social partners, we have ensured a high level of workers' rights in terms of competitive salaries, reward systems, career development, employees' wellbeing and cooperation with training institutions from all parts of Croatia.
Operational risks are risks connected with direct or indirect losses that arise from inadequate or wrong internal or external processes within the Company and the Group.
They include the creation and analysis of financial reporting data (also known as "financial reporting risk") and also the potential insufficient and inadequate internal and external information sharing. When implementing the system of operational risk management, the Company and Group focused on its continuity and complexity due to the size of the organization. The benefits of the system include i) defining and identifying the Company and Group risk profile in relation to the operating risk ii) identifying and managing the known risk occurrences in order to decrease the
Company and Group costs and iii) data analysis which indicates the business trends for the Company and Group and trends in the domestic economy.
The Company and Group are aware of the reliability of IT business solutions and safety in the cyber world. Hence, they continually upgrade, develop and implement new technologies in everyday business operations. A special focus is given to providing sufficient resources for the development and implementation of new technologies related to ICT, data protection, and upgrade of the current business systems and implementation of new ones.
Despite improved security and political conditions, which have encouraged certain extent investments into tourism and hospitality, there are challenges that the Croatian tourism has to face, such as:
Environmental risks can also have an adverse effect on the Company and Group's business results, primarily in terms of customer satisfaction with the whole experience while staying at one of Valamar's properties and this can affect the number of arrivals. The possible risks can include: sea pollution (caused by oil or chemical spillage), but also long-term water quality reduction and coast pollution due to inadequate waste disposal and wastewater
treatment as well as extensive use of agricultural fertilizers. Other environmental conditions typical for climate changes such as long drought periods or long rainy periods can directly influence the guests' length of stay in the hotels and campsites as well as increasing the operating costs.
A number of other natural disasters and calamities (earthquakes, fires, floods and rainstorms), air pollution caused by toxic gas emissions from industrial plants and vehicles, as well as excessive urbanization and the introduction of invasive species should also be taken into consideration.
Likewise, disease epidemics and pandemics can affect Valamar's business results. In order to minimize their impact, Valamar actively monitors the risk levels of epidemics and pandemics around the world, especially in leading source markets, and takes proactive steps in managing them.
Changes in tax laws and other regulations pose a very serious threat and represent a demanding segment in risk management because in this particular situation the possibilities for the Company and Group are limited. In previous years, there has been a number of important changes in tax and non-tax charging regulations, which have adversely affected the Company and Group profitability:
Such frequent changes in laws regulating taxes and para fiscal charges often take place only after the business policy and budget for the next financial year have been approved and commercial terms and conditions with partners agreed. All this jeopardizes the Company and Group financial position and future investment plans as well as credibility towards shareholders. The Company and Group are also threatened by changes in regulations governing concession fees for maritime domain and tourism land use, the latter still presenting unresolved legal issues. Given the nature of the Company and Group's business, the right to use parts of the maritime domain as well as land for tourism purposes is of vital importance for future growth, especially for campsite-related operations.
To minimize the risks to the environment, the local community and society, Valamar Riviera actively manages risks in all aspects of its business, which is a prerequisite for responsible tourism and destination development. According to the precautionary principle, Valamar Riviera meets very high standards of environmental protection, the protection of the local community and society and continuously monitors and manages the risks that affect the company's strategy of socially responsible business conduct.
The fundamental characteristics of corporate culture and everyday work and business management at Valamar Riviera are integrity and ethics. Transparent conduction of business is the company's highest priority. Valamar Riviera complies with the Zagreb Stock Exchange Corporate Governance Code to promote corporate governance culture and business transparency, as evidenced by the annual corporate governance survey. The fundamental approach of Valamar Riviera corporate culture includes protecting human rights, promoting fair employment conditions, safe working conditions, responsible environmental management and high ethical standards. Valamar Riviera also complies with its own Code of Ethics in everyday work. It determines conduct guidelines for all employees (including corruption prevention) to promote the common good and public interest.
The fundamental principles of Valamar Riviera business and everyday operations are ethical business, equal opportunities and conditions for all employees, equality and protection of human rights and fostering the culture of diversity. Basic human rights and their protection, including the protection of life, health, dignity and privacy, as well as the prevention of discrimination, have all been built into the existing legal employment regulations of the Republic of Croatia. Valamar Riviera complies with and implements them and they have been integrated into the collective agreement that Valamar concluded with the trade unions within the company. We are committed to implementing the UN principles for business and human rights as well as the fundamental conventions of the International Labor Organization. We are also determined to act in a way that will never have misuse of human rights as its consequence. Valamar Riviera basic values include responsibility and credibility towards business
partners, caring for employees, and support for the community and commitment to environmental preservation.
Valamar Riviera was among the first companies in Croatia to sign the Diversity Charter in October 2017 during an event organized by the Croatian Business Council for Sustainable Development. The Diversity Charter is a document signed by enterprises and other organizations that commit to enforcing workplace diversity and non-discrimination policies. Valamar Riviera has integrated these principles into its policies of diversity and non-discrimination. With diversity being among the most important values in modern society, Valamar Riviera adopted its Diversity policy in 2018 in line with the signed Charter, and in 2019, it was included in standard employee education held throughout the year. Diversity enables the achievement of one's full potential, and policies supporting workplace diversity and nondiscrimination are the precondition for developing individual talents, creativity and innovation. Valamar Riviera firmly believes that with their diversity, skills, creativity and innovation, female and male employees are the key to each organization's success in the long term.
The members of the Management Board of Valamar Riviera and division vice presidents are responsible for making decisions regarding Valamar Riviera economic, environmental and social impact. The Business Development and Corporate Affairs Division is tasked with the coordination of the CSR umbrella programs and reporting on them.
within its nine corporate social responsibility umbrella programs, Valamar supports various projects and initiatives in the destinations in which it operates, including employee development and training, destination development, investing in the local community and care for those in need.
Furthermore, they guide our consistent approach to environmental preservation and Adriatic Sea quality protection, as well as corporate transparency and accountability to our stakeholders, investors and shareholders.
The third edition of the "Rabac Open Air Festival" has brought a handful of concerts to the streets of Rabac and Labin as well as various shows, interactive plays, top jazz performances, films under the starry sky and other interesting contents. During the 78 days of the festival, more than 200 performers appeared on as many as 18 different locations and through 19 different programs, with 158 hours of music played. As many as 32.000 festivalgoers have had the opportunity to enjoy 95 different entertainment events, almost double the amount of content since the first festival in 2017.
The fourth "Poreč Open Air Festival", attracted more than 63.000 visitors in 2019, entertained by more than 230 performers. In addition to Valamar Riviera and MPG, the organizers of this festival also include its host, the City of Poreč, the Tourist Board of the City of Poreč, the Tourist Board of the County of Istria and the Tourist Board of Croatia, and numerous sponsors.
"Summer at Valamar" is a program that turns Babin Kuk in Dubrovnik into one of the most attractive locations on the Adriatic every year. This eventpacked Dubrovnik Summer Festival, held for the third time in 2019, brought 90 days of interesting events to Dubrovnik and their guests: more than 30 concerts, themed evenings, outdoor film screenings and performances by leading Croatian stand- up comedians on three locations. Last year, more
Valamar's first 5-star large campsite and one of the best campsites in the Mediterranean, Istria Premium Camping Resort 5 * in Funtana opened in the 2019 season. A total of HRK 280 million has been invested in this campsite in the last two years and this investment represents a continuation of Valamar's investment in the camping segment for developing a high value added offer.
In 2019, Valamar presented and launched the largest project in Croatian tourism, an investment in the Poreč Pical Zone - Hotel Pinea worth HRK 790. The project will create 500 full-time jobs, extend the tourist season and improve the quality of beaches and promenades in the Pical zone. Valamar Riviera, the City of Poreč Sports Community and the City of Poreč have signed an agreement allowing the citizens of Poreč and sports clubs to use the future pool facilities in the new Pical Riviera.
In 2019, a three-year development program for the Rabac Bike Park, a first-rate cycling
HrK 1.5 billion total investment in the Pical zone
destination for professional and recreational athletes and active families, has been completed. The Bike Park Rabac currently has a total of 14 trails of different difficulty levels, two family trails and two circular polygons.
total investment in one of the best campsites in the Mediterranean, Istra Premium Camping Resort 5*
Valamar, the largest scholarship provider in Croatian tourism, continued offering attractive scholarship programs for jobs in hospitality professions in 2019.
The scholarship holders can carry out their traineeship in one of Valamar's attractive destinations. When they finish school, they have their first employment secured with the leading employer in Croatian tourism. Those who have decided to start their professional career at Valamar, can find all the information about in-house development and education programs as well as career development opportunities in the Valamar Career Center.
Valamar continuously supports the work of local and international artists and numerous cultural initiatives and projects through the ValamART umbrella CSR program. The Poreč ArtColony was started in 1983 and is a longstanding project during which artists come from abroad and stay at Valamar's properties where they create their artwork, whilst promoting Poreč and Croatia as an imminent tourist destination.
During the period of 37 years painting colonies have hosted over 220 artists
In 2019 Valamar supported the 4 Islands MTB Stage Race, featuring 600 racers from 30 countries, and the Valamar Trail, which in 2019 featured 500 racers from 14 countries. Valamar also donated HRK 100.000 to the Poreč Sports Community for the project "Fund for Excellence in Sports",
founded in 2017 with the aim of raising funds for athletes and clubs that achieve excellent results and promote Poreč as a significant sports and tourist destination with their national and international success.
Valamar's donation to the Sports Community of the City of Poreč for the project "Fund for Excellence in Sports"
In 2019, Valamar launched the initiative "1,000 Valamar trees" and is committed to planting a minimum of one thousand new trees each year in its destinations along the Adriatic coast. With this largest green initiative in Croatian tourism Valamar stresses the importance of sustainable tourism development. In 2019, more than a thousand trees and over 50,000 different seedlings such as tall shrubs and perennials have been planted in Valamar hotels, resorts and camps.
Valamar's program "We love the Adriatic Sea", was carried out for the seventh
and more than 50,000 seedlings have been planted during 2019 at Valamar hotels, resorts and camps cosecutive year in to clean the seabed at Tunarica Sunny Camping.
More than 60 volunteers took part in the action, who pulled two garbage containers, mostly glass and plastic waste and tires, from the seabed of Tunarica Bay.
5,200 sqm of solar panels Valamar installed in the past six years
One of the most prominent projects is "A Thousand Days on the Adriatic Sea", providing summer holidays in Valamar hotels for children from many different associations from all over Croatia.
A number of 2500 children without adequate parental care, children with certain health problems, children with special needs and children from low-income families, years of this donation project, have spent their summer holidays in Valamar destinations in the last six years.
This year's fundraiser Valamar's Big Heart was also the most successful - carried out for the third consecutive year, guests have donated HRK 165.000 in Valamar's hotels and camps. As part of the destination development investment, Valamar donated the HRK 165.000 to kindergartens in 2019 to improve working conditions with kindergarten children in Poreč and Dubrovnik.
Valamar and its partners have participated in the procurement of equipment for the Poreč Health Center, specifically a diagnostic ultrasound device for the gynecological clinic
worth HRK 300,000. Valamar participated in the amount of HRK 100 thousand, the City of Poreč in the amount of HRK 150 thousand, and Plava Laguna with HRK 50 thousand.
donated for improving working conditions with children in kindergartens located in Poreč and Dubrovnik
children from all over Croatia spent their summer holidays in our destinations through the "A Thousand Days on the Adriatic Sea" program
Valamar's CSR program Our Retirees fosters long-term relations with retired employees, primarily as a gesture of gratitude for their years of services, but also to include former colleagues and exchange knowledge and experiences that could contribute to Valamar's growth and development. Numerous activities such as communal gatherings and excursions to Valamar's destinations have been organized in 2019.
This program has been carried out for the fourth consecutive year in 2019, through organized visits from kindergarten groups from Valamar's destinations.
In addition to being greeted by Valamar's employees who introduce them to the property, the children were also welcomed by an interesting entertainment program.
Agility, innovation and advanced technologies make Valamar Riviera and the Croatian tourism industry more competitive.
Valamar's digital vision implies providing quality personalized services and improving operational efficiency through continuous innovation and use of digital technologies. Valamar's digital strategy enables the transformation of the entire organization while maintaining focus on the guest. Major strategic guidelines through digital projects and pilot initiatives validating technology or technological solutions have been developing throughout 2019.
The new Valamar Digital Department (VALDI - Valamar Digital & Innovation) has continued to promote its digital strategy with the goals of providing practical support for digital projects, encouraging the implementation of Valamar's digital strategy, transforming the company and promoting a more agile work mode.
The first Valamar Digital Day, an in-house event, was organized to familiarize all Valamar employees with Valamar's digital strategy, new technologies and technological guidelines. This event was an opportunity for 12 Valamar's technology partners (Microsoft, SAP,
IBM, etc.) to demonstrate advanced digital solutions or the application of some new technology (such as artificial intelligence, AI) to tourism and tourism organizations.
The communication with guests before they arrive at our destinations and in our properties is of strategic importance for Valamar, so in 2019 we introduced a pilot
project in 26 Valamar properties.
The project included: online web-based guest check-in and payment before arrival, paperless check-in and direct integration with the PMS system, camera ramps that automatically allow license plate entry, self-check-in booth allowing guests to check-in without coming to the front desk.
The primary focus of setting up a RPA platform is to identify labor-intensive and repetitive processes and replace them with a digital robot, thus optimizing operating efficiency.
A pilot project has been launched to use the cloud platform for online collaboration on digital projects and among organizational teams. The project is currently in the phase of implementation. The introduction of such an online collaboration tool enables modern online communication, interaction and collaboration between teams and the sharing of documents, pictures, videos, the consolidation of all project documentation in one place, reducing the number of emails, physical meetings, travel and facilitates faster decision making and informing of all project members.
The redesigned website has been significantly upgraded in the areas of loyalty programs, booking optimization and the integration of camping resort to the main web site valamar.com.
A total of 46 digital and innovation projects were launched in Valamar in 2019, which can be divided into two groups:
Revolutionary projects create new value in the context of Valamar and introduce some novelty into the standard work mode. Evolutionary projects improve an existing solution or process, that is, upgrade an existing system or the use of a standardized tool.
Completion of the cloud CRM platform and performance optimization of their many new functionalities to better understand Valamar
guests, their needs and better reach new users.
ValamArtist application is a cloud platform for internal communication
with all Valamar employees. The application itself is a combination of Intranet and internal Facebook where employees can communicate with each other via messages, individually or in groups, publish content important to other employees, as well as find important documents, policies or decisions. It is a cloud platform accessible to all employees.
Valamar Riviera strategy is to continuously invest and improve its properties and service concepts, which is evident from the numerous awards and recognitions received in 2019.
At the Zagreb Stock Exchange and the Association of Pension Fund Management Companies and Pension Insurance Companies conference held in Rovinj, Valamar Riviera received the Best Relations with
A number of 23 Valamar hotels and resorts hold this prestigious and binding certificate in 2019. Travelife is an international certification system that promotes sustainability in the hospitality industry and helps tour operators, hotels and other accommodations manage and monitor their social and environmental impact, as well as inform their guests and partners about their achievements.
The Travelife Gold Award recognizes hotels that meet the strictest sustainability criteria to the fullest. The strategic goal of the certification project is to introduce green business practices, i.e. to achieve a balance between economic progress, environmental care in the broadest sense, and social inclusion in the wider community. In Valamar, 96% of accommodation units hold the ISO 14001 environmental management certification and 75% of hotel and resort accommodation units have one of the sustainable business certifications.
Investors award for the third time, by Poslovni dnevnik and the Zagreb Stock Exchange.
Valamar's properties are the proud laureates of the prestigious World Luxury Hotel Awards and World Travel Awards in 2019. Valamar also holds six awards from the annual TUI conference held in Turkey, and two national recognitions from the Istrian Tourist Board, Zlatna koza - Golden Goat.
Valamar's properties and employees accepted nine awards from the Croatian Chamber of Commerce and the Croatian Tourist Board at the Days of Croatian Tourism 2019. It is important to mention that Valamar has also received numerous certificates and quality labels like Travelife, ISO certificates, EU Ecolab, and many others.
| Allegro Sunny Hotel & Residence by Valamar | ★★★ | Rabac |
|---|---|---|
| Valamar Sanfior Hotel & Casa | ★★★★ | Rabac |
| Miramar Sunny Hotel & Residence by Valamar | ★★★ | Rabac |
| Valamar Argosy Hotel | ★★★★ | Dubrovnik |
| TuI Blue Bellevue Resort | ★★★★ | Rabac |
| Valamar Tamaris Resort | ★★★★ | Poreč |
| Valamar Crystal Hotel | ★★★★ | Poreč |
| Valamar Diamant Hotel & Residence | ★★★★ (3/4) | Poreč |
| Valamar Collection Dubrovnik President Hotel | ★★★★★ | Dubrovnik |
| Isabella Valamar Collection Island Resort | ★★★★★ (4/5) | Poreč |
| Valamar Koralj Hotel | ★★★ | Krk Island |
| Valamar Lacroma Dubrovnik Hotel | ★★★★ | Dubrovnik |
| Valamar Pinia Hotel | ★★★ | Poreč |
| Valamar Riviera Hotel & Residence | ★★★★ | Poreč |
| Rubin Sunny Hotel by Valamar | ★★★ | Poreč |
| Valamar Parentino Hotel | ★★★★ | Poreč |
| Valamar Club Dubrovnik Hotel | ★★★ | Dubrovnik |
| Tirena Sunny Hotel by Valamar | ★★★ | Dubrovnik |
| Girandella Valamar Collection Resort | ★★★★★ (4/5) | Rabac |
| Valamar Zvonimir Hotel & Villa Adria | ★★★★ | Krk Island |
| Valamar Collection Marea Suites | ★★★★★ | Poreč |
| Lanterna Sunny Resort by Valamar | ★★ | Poreč |
| HOTREC | Gaspart Bonet Foundation | Ivan Sabljić |
|---|---|---|
| ANwB | ANWB Top Camping 2019 | Lanterna Premium Camping Resort |
| Solaris Camping Resort | ||
| Krk Premium Camping Resort | ||
| ADAC | ADAC Superplatz 2019 | Lanterna Premium Camping Resort |
| Krk Premium Camping Resort | ||
| Baška Beach Camping Resort | ||
| world Travel Awards | Croatia's Leading Resort | Girandella Valamar Collection Resort |
| Croatia's Leading Boutique Hotel | Valamar Riviera Hotel & Residence | |
| Croatia's Leading Business Hotel | Valamar Lacroma Dubrovnik Hotel | |
| Croatia's Leading Hotel | Valamar Collection Dubrovnik President Hotel | |
| world Luxury Hotel Awards | Luxury Beach Resort | Valamar Collection Dubrovnik President Hotel |
| Luxury Island Resort | Isabella Valamar Collection Island Resort | |
| Luxury Historical Hotel | Valamar Collection Imperial Hotel | |
| TripAdvisor | 2019 certificate of excellence | Valamar Argosy Hotel |
| TUI | Best wi-fi (1st place), Sustainability (1st place), Best Interior Conditions (2nd place), | |
| Best Room quality (2nd place), Accommodation Overall (3rd place) | TUI Blue Bellevue Resort | |
| Culinarium Concept (1st place) | TUI Sensimar Carolina Resort by Valamar | |
| TUI Favourites - Overall winner | Valamar Argosy Hotel | |
| avtokamp.si | Najkamp Adria | Lanterna Premium Camping Resort |
| Solaris Camping Resort | ||
| Jet2holidays | Excellent service in accommodation | Valamar Argosy Hotel |
| Hotels.com | Loved by Guests | Valamar Argosy Hotel |
| Leading Campings of Europe | Leading Campings of Europe | Lanterna Premium Camping Resort |
| Krk Premium Camping Resort |
| Croatian Tourist Board | Anton Štifanić | Ivan Sabljić |
|---|---|---|
| HUm CROmA | Life's work award and professional recognition from HUM CROMA for personal contribution to the development of Croatian economy in tourism |
Ivan Sabljić |
| Croatian Culinary Days | 1st place in the category "Restaurant dish" | Dean Gluhak (Solaris Camping Resort) |
| Croatian Pastry Champion – 2nd place | Sanja Grahek Buršić (Rubin Sunny Hotel) | |
| Zlatna koza - Golden Goat | Tourism product | Valamar Collection Marea Suites |
| Istrian Tourist Board | Visual Communication | Balance Mediterranean Spa by Valamar |
| Croatian Camping Association | Inovacamp 2019 | Lanterna premium Camping Resort |
| Croatia's Best Campsite 2020 | Istra Premium Camping Resort Lanterna Premium Camping Resort Krk Premium Camping Resort Ježevac Premium Camping Resort Padova Premium Camping Resort Marina Camping Resort Orsera Camping Resort Solaris Camping Resort Baška Beach Camping Resort Bunculuka Camping Resort San Marino Camping Resort |
|
| moj Posao | Best Employer in Tourism and 7th most desirable company in Croatia | Valamar Riviera d.d. |
| Poslovni dnevnik & Zagreb Stock Exchange | Best Relations with Investors | Valamar Riviera d.d. |
| Infosit | Infosit digitalization Award | Leonida Štemberga |
| Lider | Lider Invest | Istra Premium Camping Resort |
| Croatian Chamber of Commerce | Hotel of the Year | Girandella Valamar Collection Resort |
| Best Family Hotel hotel | Girandella Valamar Collection Resort | |
| Best Restaurant | Spinnaker | |
| Best Congress Hotel | Valamar Lacroma Dubrovnik Hotel | |
| Best Naturist Camping | Solaris Camping Resort | |
| Best Family Hotel (3rd place) | TUI Blue Bellevue Resort | |
| Croatian Tourist Board zajdnica | Employee of the Year in Hotel or Camping | Loredana Načinović |
| Best Employee in Maritime Transport | Fredi Stojnić | |
| Best Employee in Road Transport | Dragan Tomašević | |
| SGS | HACCP | Valamar Diamant Hotel & Residence, |
|---|---|---|
| Valamar Crystal Hotel, Rubin Sunny Hotel, | ||
| Isabella Valamar Collection Island Resort, | ||
| Valamar Collection Marea Suites, | ||
| Valamar Riviera Hotel & Residence, Valamar Tamaris Resort, | ||
| Solaris Camping Resort, Valamar Sanfior Hotel & Casa, Girandella Valamar Collection Resort, TUI Blue Bellevue Resort, |
||
| Valamar Koralj Hotel, Valamar Parentino Hotel, | ||
| Valamar Lacroma Dubrovnik Hotel, Valamar Argosy Hotel, | ||
| Valamar Collection Dubrovnik President Hotel, | ||
| Bunculuka Camping Resort, Marina Camping Resort, | ||
| Valamar Padova Hotel, Valamar Collection Imperial Hotel, | ||
| Valamar Carolina Hotel & Villas, Eva Sunny Hotel & Residence, | ||
| San Marino Sunny Resort, San Marino Camping Resort, | ||
| Valamar Zvonimir Hotel & Villa Adria, Valamar Atrium Baška Residence, | ||
| Corinthia Baška Sunny Hotel, Restoran La Pentola, Lanterna Premium Camping Resort | ||
| SGS | ISO 14001 | 96.4% properties |
| TUV, QUALITY AUSTRIA | ISO 9001 | All Valamar properties |
| ISO 50001 | All Valamar properties | |
| FEE | Blue Flag | Val Marea Family Sandy beach, Brulo beach, |
| (Foundation for | Val Maro Family Sandy beach, Val Sunrise Family beach, | |
| Environmental Educational) | Val Riviera Relax beach, Galeb beach, | |
| Val Adria Sandy Family beach, Val Maro Family beach, | ||
| Orsera Camping Resort beach, Crnika beach, Val Levant Family beach, | ||
| Val Veja Family beach, Val President Relax beach, | ||
| Valamar Sanfior Hotel & Casa beach / VAL Sunrise Relax beach , | ||
| Val Carnerolo V-level Family beach, Val Maro Family beach, | ||
| Val Sundance Sandy Family beach, Bellevue Natural beach, | ||
| Bellevue Family beach, Krk Premium Camping Resort, | ||
| Coral Beach Club beach, Ježevac Premium Camping Resort, | ||
| Valamar Collection Dubrovnik President Hotel, Cava beach | ||
| Ministry of Tourism | "q" quality Label | Valamar Lacroma Dubrovnik Hotel |
| Valamar Riviera Hotel & Residence | ||
| Ministry of Environment and Energy | EU Ecolabel | Istra Premium Camping Resort |
| Ježevac Premium Camping Resort | ||
| Krk Premium Camping Resort | ||
| Lanterna Premium Camping Resort | ||
| Solaris Camping Resort |
Orsera Camping Resort
The expert committee for non-financial reporting of The Croatian Business Council for Sustainable Development has reviewed the new fifth Integrated report of Valamar Riviera d.d. for 2019, which contains business reports sustainability reports including the company's impact on the environment and society. We confirm that the Report contains all the elements required by the core options of GRI Standards. In addition to meeting the requirements of the Global Reporting Initiative Standard on Sustainability, the Integrated Annual Report of Valamar Riviera d.d. for 2019 also satisfies the legislation of the Republic of Croatia prescribing the scope, content and deadlines of the annual report (Companies Act, Capital Market Act and Accounting Act). The Integrated Report for 2019 is structured differently from the previous Report. The structure is simpler, which eases reading and understanding, and contributes to unit clarity. Each unit is separated and marked by key achievements and challenges concerning each topic.
The report is aimed at presenting the adopted business model, the state of global tourism and the tourism and hospitality industry in Croatia, achieved business results, responsible human resources management and achievements in corporate social responsibility for the period from 1 January to 31 December 2019.
The Report states that 96% of Valamar's accommodation units hold the ISO 14001 environmental management certification and 75% of hotel and resort accommodation units have one of the sustainable business certifications. Six camping resorts hold the EU Ecolabel. Valamar has launched a commendable initiative "1,000 Valamar trees" by which Valamar is committed to planting at least 1,000 new trees in its destinations per year. In the first year, more than 1,000 new trees and more than 50,000 different seedlings such as tall shrubs and perennials were planted. In the reporting year, Valamar's program "We love the Adriatic Sea" organized the cleaning of the seabed in Tunarica bay.
The chapter Responsibility to the Local Community and the Environment provides an overview of investments made through nine corporate social responsibility programs, an overview of greenhouse gas emissions, data on energy consumption, water recycling and waste generated. Environmental responsibility is one of the pillars of sustainability that Valamar Riviera has incorporated into its Quality and Sustainable Business Policy and strategic goals. In its business, Valamar is focused on reducing the consumption of fossil fuels, especially fuel oil, reducing drinking water consumption and reducing electricity consumption. In 2019, there was a significant decrease in greenhouse gas emissions per night, which at the level of Valamar Riviera d.d. amounts to 26.63% compared to the previous year. The reduction in greenhouse gas emissions is the result of investments in increasing energy efficiency projects (HRK 17,2 million), the purchase of new electric vehicles, scooters and carts (HRK 4,2 million) and the project of replacing classic street lamps with LED lighting (HRK 3 million). They have installed 3 new charging stations for electric vehicles and the consumption of fuel oil has been reduced. The total energy consumption from all energy sources was also reduced and the amount of separately collected non-hazardous waste was increased by individual components of non-hazardous waste, which reduced the amount of mixed municipal waste that is disposed of in landfills. The rate of selective separation of biodegradable waste, which is one of the most common components of municipal waste in the hotel sector, has increased significantly. Water consumption per night has increased, as a result of investing in new pools and an increase in irrigated areas.
Continuous care for guest satisfaction concerning tourism services is manifested in the high level of guest satisfaction. Thus, during 2019, 205,549 guests completed the guest satisfaction survey. The number of submitted surveys in 2019 was 25%, which means that every fourth guest of Valamar Riviera participated. Among the results of measuring guest satisfaction, the "Unbelievable" index should be emphasized, as it represents the highest satisfaction category concerning Valamar staff, which the survey participants marked in 67% of cases. According to an independent survey conducted by the MojPosao portal in 2019, Valamar is the only tourism company among the top 10 employers in Croatia and was again rated the most desirable employer in the tourism sector. At the annual level, salaries in Valamar were 2% higher than the average of the Republic of Croatia and 25% higher than the average of the industry, i.e. the tourism sector. Valamar has an elaborate reward program for employees whose efforts and dedication contribute to better business results and therefore receive numerous rewards and incentives. Investing in employees is one of the Valamar's primary goals.
Valamar applies various initiatives and programs to extend the season in its destinations and to provide year-round income for as many workers as possible. Seasonal employees who do not reside in the destination will find accommodation in a Valamar House. Due to an occupational deficit on the labor market, Valamar has launched a number of training programs for its employees. In 2019, a complete platform for the development and education of employees called "Valamar Excellence" was launched, which provided over 160,000 hours of training. It is an in-house program of lifelong learning in tourism and hospitality through education and training.
In 2019, Valamar also launched a project called "My Benefits", which provided employees with the largest structure of material and non-material benefits to date. The goal of the Valamar benefits program is to reward the best results and innovations and to enable the balance between work and private life. Employee health and safety is one of the company's key priorities and Valamar Riviera fully complies with all legal requirements and internal health and safety standards of its employees, contract partners and guests. The company has an Occupational Safety and Health Service and helps monitor, collect feedback and provide advice regarding occupational safety programs. In addition to investing in current employees, Valamar also invests in future staff and the promotion of tourism professions and is the largest individual scholarship provider in Croatia. Valamar offers
numerous opportunities for scholarships, internships and first employment every year.
The company has adopted a diversity policy and the share of women in the company's management is 42%, although this share does not include the highest governing bodies. We hope that in the coming years Valamar will successfully introduce diversity at the highest management levels, in accordance with the Non-Financial Reporting Directive.
Many awards and recognitions also marked the 2019 excellent business results. For the third time, Valamar Riviera received the award for best investor relations awarded by Poslovni dnevnik and the Zagreb Stock Exchange. In 2019, Valamar's properties won the prestigious World Luxury Hotel Awards and World Travel Awards. The company won as many as six awards at the annual TUI conference in Turkey, and holds two Golden Goat - Capra d'oro awards.
Valamar is making progress in the application of the GRI Standards, especially in presenting the strategy for managing the organization's non-financial impacts on the environment and society. There is room for improvement, and we propose to align the material aspects of the organization with the thematic-specific standards proposed by the Global Reporting Initiative to make the organization's impact monitoring more readable.
We thank Valamar Riviera for the enormous effort invested in creating this report as well as for the continuous progress that is visible over the years. We hope that next year Valamar will continue the trend of improving non-financial impact monitoring and management despite the challenges brought by 2020.
and Message from the Chairman
GRI STANDARD REPORT CHAPTER
| ORGANIZATIONAL PROFILE | |
|---|---|
| Disclosure 102-1 Name of the organization | About Valamar Riviera |
| Disclosure 102-2 Activities, brands, products, and services | About Valamar Riviera |
| Disclosure 102-3 Location of headquarters | About Valamar Riviera |
| Disclosure 102-4 Location of operations | About Valamar Riviera |
| Disclosure 102-5 Ownership and legal form | About Valamar Riviera |
| Disclosure 102-6 Markets served | About Valamar Riviera |
| Disclosure 102-7 Scale of the organization | About Valamar Riviera |
| Disclosure 102-8 Information on employees and other workers | Employees and Organization |
| Disclosure 102-9 Supply chain | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-10 Significant changes to the organization and its supply chain | About Valamar Riviera |
| Disclosure 102-11 Precautionary Principle or approach | Corporate Governance |
| Disclosure 102-12 External initiatives | Corporate Governance |
| Disclosure 102-13 Membership of associations | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-14 Statement from senior decision-maker | Message from the CEO |
|---|---|
| Disclosure 102-16 Values, principles, standards, and norms of behavior | Corporate Governance |
|---|---|
| ------------------------------------------------------------------------ | ---------------------- |
| Disclosure 102-18 Governance structure | Corporate Governance |
|---|---|
| Disclosure 102-19 Delegating authority | Corporate Governance |
| Disclosure 102-20 Executive-level responsibility for economic, environmental, and social topics | Corporate Governance |
| Disclosure 102-21 Consulting stakeholders on economic, environmental, and social topics | Corporate Governance |
| Disclosure 102-22 Composition of the highest governance body and its committees | Corporate Governance |
| Disclosure 102-23 Chair of the highest governance body | Corporate Governance |
| Disclosure 102-24 Nominating and selecting the highest governance body | Corporate Governance |
| Disclosure 102-25 Conflicts of interest | Corporate Governance |
| Disclosure 102-26 Role of highest governance body in setting purpose, values, and strategy | Corporate Governance |
| Disclosure 102-27 Collective knowledge of highest governance body | Corporate Governance |
| Disclosure 102-28 Evaluating the highest governance body's performance | Corporate Governance |
| Disclosure 102-29 Identifying and managing economic, environmental, and social impacts |
Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-30 Effectiveness of risk management processes | Corporate Governance |
| Disclosure 102-31 Review of economic, environmental, and social topics | Corporate Governance |
|---|---|
| Disclosure 102-32 Highest governance body's role in sustainability reporting |
Corporate Governance |
| Disclosure 102-33 Communicating critical concerns | Corporate Governance |
| Disclosure 102-34 Nature and total number of critical concerns | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-35 Remuneration policies | Corporate Governance |
| Disclosure 102-36 Process for determining remuneration | Corporate Governance |
| Disclosure 102-37 Stakeholders' involvement in remuneration | Corporate Governance |
| Disclosure 102-38 Annual total compensation ratio | Corporate Governance |
| Disclosure 102-39 Percentage increase in annual total compensation ratio | Corporate Governance |
| STAkEHOLDER ENGAGEmENT | |
| Disclosure 102-40 List of stakeholder groups | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-41 Collective bargaining agreements | Employees and Organization |
| Disclosure 102-42 Identifying and selecting stakeholders | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-43 Approach to stakeholder engagement | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-44 Key topics and concerns raised | Engagement of Key Stakeholders and Material Aspects |
| REPORTING PRACTICE | |
| Disclosure 102-45 Entities included in the consolidated financial statements | 2019 Business Results |
| Disclosure 102-46 Defining report content and topic Boundaries | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-47 List of material topics | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 102-48 Restatements of information | About this Integrated Report | |
|---|---|---|
| Disclosure 102-49 Changes in reporting | About this Integrated Report | |
| Disclosure 102-50 Reporting period | About this Integrated Report | |
| Disclosure 102-51 Date of most recent report | About this Integrated Report | |
| Disclosure 102-52 Reporting cycle | About this Integrated Report | |
| Disclosure 102-53 Contact point for questions regarding the report | About this Integrated Report | |
| Disclosure 102-54 Claims of reporting in accordance with the GRI Standards |
About this Integrated Report | |
| Disclosure 102-55 GRI content index | GRI index | |
| Disclosure 102-56 External assurance | Opinion of The Management Board Committee of The Croatian Business Council For Sustainable Development on the 2019 CSR Report of Valamar Riviera |
| Disclosure 103-1 Explanation of the material topic and its Boundary | Engagement of Key Stakeholders and Material Aspects |
|---|---|
| Disclosure 103-2 The management approach and its components | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 103-3 Evaluation of the management approach | Engagement of Key Stakeholders and Material Aspects |
| Disclosure 201-1 Direct economic value generated and distributed | Engagement of Key Stakeholders and Material Aspects | |
|---|---|---|
| Disclosure 201-2 Financial implications and other risks and opportunities due to climate change | Corporate Governance |
| Disclosure 202-1 Ratios of standard entry level wage by gender compared to local minimum wage | Employees and Organization |
|---|---|
| Disclosure 202-2 Proportion of senior management hired from the local community | Employees and Organization |
| Disclosure 203-1 Infrastructure investments and services supported | Engagement of Key Stakeholders and Material Aspects |
|---|---|
| Disclosure 203-2 Significant indirect economic impacts | Corporate Governance |
Disclosure 204-1 Proportion of spending on local suppliers Engagement of Key Stakeholders and Material Aspects
| Disclosure 302-1 Energy consumption within the organization | Responsibility to the Local Community and the Environment |
|---|---|
| Disclosure 302-3 Energy intensity | Responsibility to the Local Community and the Environment |
| Disclosure 302-4 Reduction of energy consumption | Responsibility to the Local Community and the Environment |
| Disclosure 303-1 Interactions with water as a shared resource | Responsibility to the Local Community and the Environment |
|---|---|
| Disclosure 303-3 Water withdrawal | Responsibility to the Local Community and the Environment |
| Disclosure 305-1 Direct (Scope 1) GHG emissions | Responsibility to the Local Community and the Environment |
|---|---|
| Disclosure 305-2 Energy indirect (Scope 2) GHG emissions | Responsibility to the Local Community and the Environment |
| Disclosure 305-5 Reduction of GHG emissions | Responsibility to the Local Community and the Environment |
| Disclosure 306-1 Water discharge by quality and destination | Responsibility to the Local Community and the Environment |
|---|---|
| Disclosure 306-2 Waste by type and disposal method | Responsibility to the Local Community and the Environment |
| GRI STANDARD | REPORT CHAPTER | |
|---|---|---|
| Gri 307: eNVirONmeNTal COmPliaNCe | Responsibility to the Local Community and the Environment | |
| Disclosure 307-1 Non-compliance with environmental laws and regulations | Responsibility to the Local Community and the Environment | |
| Gri 401: emPlOymeNT | ||
| Disclosure 401-1 New employee hires and employee turnover | Employees and Organization | |
| Disclosure 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees |
Employees and Organization | |
| Gri 402: laBOr/maNaGemeNT relaTiONS | ||
| Disclosure 402-1 Minimum notice periods regarding operational changes | Employees and Organization | |
| Gri 403: OCCUPaTiONal HealTH aND SaFeTy | ||
| Disclosure 403-4 Worker participation, consultation, and communication on occupational health and safety | Employees and Organization | |
| Gri 404: TraiNiNG aND eDUCaTiON | ||
| Disclosure 404-1 Average hours of training per year per employee | Employees and Organization | |
| Disclosure 404-2 Programs for upgrading employee skills and programs which promote the constant opportunity to employ workers |
Employees and Organization | |
| Disclosure 404-3 Percentage of employees receiving regular performance and career development reviews |
Employees and Organization | |
| Gri 405: DiVerSiTy aND eqUal OPPOrTUNiTy | ||
| Disclosure 405-1 Diversity of governance bodies and employees | Employees and Organization | |
| Disclosure 405-2 Ratio of basic salary and remuneration of women to men | Employees and Organization | |
| Gri 407: FreeDOm OF aSSOCiaTiON aND COlleCTiVe BarGaiNiNG | Employees and Organization | |
| Gri 416: CUSTOmer HealTH aND SaFeTy |
| Disclosure 416-1 Assessment of the health and safety impacts of product and service categories | Service Excellence |
|---|---|
| Disclosure 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services | Service Excellence |
Disclosure 417-3 Incidents of non-compliance concerning marketing communications Service Excellence
93
The strategic goals presented in this report represent the intention of the Management Board and are based on currently available information, current assumptions, and forward-looking expectations and projections. The strategic goals are not a guarantee of future results and are subject to future events, risks and uncertainties, many of which are beyond the control of, or currently unknown to Valamar Riviera, as well as to potentially incorrect assumptions that could cause the actual results to materially differ from the strategic goals.
In addition, the level of capital investments in any given year is subject to specific proposals of the Management Board to the Supervisory Board, each board may elect to deviate from this policy if appropriate under the prevailing circumstances.
Risks and uncertainties include, but are not limited to the ones described in the part "Company and Group Risks". Materially significant deviations from the strategic goals may arise from changes in circumstances, assumptions not being realized, as well as other risks, uncertainties, and factors, including:
▸ Labor force availability, mobility and costs, transport, energy, and utilities costs, selling prices of fuel and other goods and services, as well as supply chain disruptions;
▸ Changes in accounting policies and findings of financial report audits, as well as findings of tax and other business controls;
The strategic goals presented herein are not an outright recommendation to buy, hold or sell Valamar Riviera shares.
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