The Western Balkan region is attracting some significant hotel investment. Hilton and St. Regis are planning developments in Serbia, but several other major projects—both new-build and renovation—are in the works in Croatia.
Arqaam Capital has signed a deal with Four Seasons Hotels and Resorts to build a mixed-use resort on Croatia’s Hvar Island. Set to open in 2019, the 120-room Four Seasons Resort Hvar will be located on the Dalmatian Coast at Brizenica Bay.
Also on Hvar, owners of the Hotel Pharos are investing 50 million kunas in renovations geared to attract millennials, the largest demographic to visit Central Dalmatia this Easter. Renovations are also planned for the Hotel Slavia (for another 50 million kanas), and the Romana Hotel in Makarska and Medora Hotel in Podgora are set to open in June.
In the center of Split, the Hotel Ambassador—slated to open in early 2018—has been purchased by the heir to the Birkenstock shoe empire, Klaus Alex Birkenstock. The business is expected to invest between €13.6 and 14.3 million on the project. Birkenstock also took over the finished design plans for the property, which is expected to begin a 20-month construction in the fall.
Late last year, Marriott announced plans to open between four and five hotels in Croatia under various brands by 2020. "I am trying to show investors that the costs [of joining the brand] are justified by increased revenues of individual hotels and by significant improvement of brand identity of the destination in the global market," Ivica Čačić, regional VP of development for Marriott in Eastern Europe, said at the time.
This interest in the country makes sense, given Croatia's growing economic strength—not to mention its appeal for millennial travelers. The International Monetary Fund estimated that the Croatian economy would grow by 1.9 percent this year, nearly double the previous forecast of 1 percent. The IMF includes Croatia in emerging European economies whose growth forecast reach 3.5 percent and 3.3 percent for 2016 and 2017, respectively.
According to the latest IMF World Economic Outlook, inflation would drop to 0.4 percent in 2016 from 0.5 percent last year, but for 2017, it was expected to significantly speed up and reach 1.3 percent. Unemployment, would also decline—although it is worth noting that IMF expects the rate to only drop below 16 percent by next year. An improving economy, high demand from a strong demographic and a workforce seeking employment can all combine to make Croatia a good value for international investment.