18
Nov
2020

Why is quantity important for Croatian tourism?

first_imgLower turnover – higher earnings?Lately, we often have the opportunity to hear the slogan “fewer nights, more income”. This does not sound bad when it comes “from the mouth” of entrepreneurs, accommodation owners, people who have well calculated the ratio of invested funds, achievable price levels and the number of days of occupancy at the desired price.Without going deeper into the “mathematics” of calculating the rate of return on investment in “solid” facilities in Croatian tourism, which averages between 6 and 6,5% per year, it is clear that reducing costs (fewer nights) and increasing prices achieves better profitability. This is true for private investments.However, when the same statement is made by a person from the public sector in the style of “let’s stop counting nights, counting earnings”, then it sounds a little different. The national economy is not equal to the private economy. The national economy takes into account the consumption of Croatian goods and services on the employment of the population, the impact of tourism on the development of other sectors and the development of the quality of life of the total population. That is why employees and public sector officials must be careful not to take on the role of “lawyers of private companies” in their statements, but to represent the general, public interest of the Republic of Croatia.The ratio of the number of nights and consumptionWhat is true for the private sector is not true for the national economy when it comes to the volume of tourist traffic. According to the data of the prestigious GFK Institute, the average daily consumption of passengers-tourists is 155 euros. This includes all travel expenses, from leaving the house to returning. On average, passengers spend 30% of that amount per day on accommodation, and the rest on all other services.This means an average of 46 euros per night, and 40 euros per day for all types of transport. For all other offers, 69 euros per day remains available. The spending of this money depends on the attractiveness of the offer. When we talk about the average, then we are talking about a survey conducted on a sample of 500.000 people on all continents and among representatives of all major groups of travelers-tourists. A part of the stated consumption on his trip is realized by the tourist outside the destination to which he is traveling. This applies in particular to the costs of transport, food, beverages, shopping.The most visible part of consumption in the destination is related to accommodation. However, when we count tourists per night, in addition to the basis for calculating the consumption of accommodation, we also have the basis for estimating the daily average consumption of other facilities. That’s why nights are important to us. For example, on 4.815.740 overnight stays on the island of Krk in the period from 1.1. to 30.9. In 2018, we can get an estimated consumption excluding transportation costs of 524.915.660 euros. Each night raises consumption per day by an additional 109 euros.Tourist traffic, purchasing power and consumptionAccording to the Croatian Chamber of Commerce, the purchasing power of tourists is 2,5 times higher than that of Croatian citizens. This means that in the period of the main tourist season, Croatia has the potential for consumption as a country with 10 million inhabitants. The island of Krk has a daily potential for consumption as if 50.000 people live on Krk.However, the consumption of tourists is even higher because they spend more and more on vacation than in everyday life. The minimum daily consumption according to the so-called “union basket” for a four-member household is about 230,00 kn. If we doubled that consumption, we would get a daily consumption of 112,06 kn per person, which is 15,34 euros. If we compare the daily consumption of passengers-tourists from 109 euros to 15,34 euros of Croatian citizens, then we come to a ratio of 1 to 7,5. This means that the daily consumption realized in Croatia in the season is at the level of the country of 28 million inhabitants!The impact of tourist spending on the standard of living of citizensThe most noticeable difference between purchasing power and daily consumption is visible in the month that begins – November. Now tourist trends are fading, and after All Saints’ Day, there is no longer an increased need for travel within the country and additional spending by Croatian citizens. November, January and February are the months of facing the real state of purchasing power and consumption of Croatian citizens. It is also an indicator of what tourism means for Croatia.From March to summer, the situation is slowly improving and getting better with the increase in the number of arrivals and tourist nights. When a place reaches the daily number of overnight stays of 10.000 then the effect of spending is significantly felt throughout the community. Money is simply “spilled” according to various forms of supply. If we exclude the cost of overnight stays and calculate the daily average consumption of 69 euros for “other facilities”, we come to an impressive 690.000 euros that are spent daily by these 10.000 travelers – tourists in one tourist place.Is it clearer to you now why super and hyper markets are sprouting like “mushrooms after rain” next to our small tourist places? Why do we have an ever-growing supply of anything and everything? Everyone feels this “consumer fever” and everyone “wants a piece of the pie” from the “cake of 28 million inhabitants”. The impact of tourist spending on the standard of citizens of the whole country is great. It is more significant in places with more tourist traffic. So there is no doubt that the “amount of tourists”, the number of nights is extremely important for the national economy.Volume economy and downward pressure on pricesThe current situation in the global economy is such that there is still a tendency to offer the cheapest possible product or service. Only innovative products that strongly affect the emotions of customers achieve a higher price. As a rule, these are sophisticated “smartphones”, laptops, electric cars and the like. But even with these products, the new series lowers the price of the old series, and novelties are released at an annual pace.Tourist travel is also influenced by this global trend. Low cost air and bus lines, car sharing, blabla car, Uber, Airbnb, Booking.com, Ryan Air, FlixBus… are modern icons of low prices with a large offer and a large volume of traffic. And the store is rapidly moving to web platforms, sales spaces are closing. Savings in storage, lease of business premises, jobs, compliance with complicated regulations… spill over to the benefit of the customer. On the other hand stronger logistics, door-to-door delivery, container ships have regular supply routes from China to the rest of the world… Volume economy lowers prices. The opposite happens only in a small percentage of special products. Tourism is no exception.And as Boduli would say – “a couple of jokes for the end”The global economy dictates the downward movement of prices. A higher price can only be achieved with an innovative offer “charged with emotions”. It is important for Croatian tourism to keep the existing volume of traffic in the main season and concentrate all efforts to increase the volume of traffic in the rest of the year and to all parts of the country.Public tourism authorities must know general trends and pursue smart policies in favor of national interests, in favor of the national economy. Everyone aiming for a higher price level must show something new every year, fun according to the interest of potential buyers. In other words, don’t be fooled by statements about the higher category as the key to success. Without innovation and a higher category of service, such investments will soon prove unprofitable.We already have an “intrusion” of five-star hotels into the three-star price range as soon as the volume of traffic drops drastically… And that overnight stays are not important ?!Author: Nedo Pinezić, www.nedopinezic.com* The views and recommendations expressed in the author’s columns, advice and comments are exclusively the views of the authors and do not necessarily reflect the views of the editorial staff of the HrTurizam.hr portallast_img

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