Pvi0277

7TH CCE ASSEMBLY → Luka Burilović remains President of the Croatian Chamber of Economy PAGES 2-3

SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY

www.privredni.hr

EXCLUSIVE TO PRIVREDNI VJESNIK - VALICON → Emotions contra challenges PAGES 4-9

TOURISM IN 2017 AND PRELIMINARY ESTIMATES FOR 2018 → On track to becoming a year-round destination PAGES 14-19

PVinternational C R O A T I A N

B U S I N E S S

&

F I N A N C E

M O N T H L Y

February 2018, Year XI, No 277

DIGITAL TRANSFORMATION OF THE CROATIAN ECONOMY

CCE the developer of DigiCro Hub project The Digital Croatia Hub project developed by the Croatian Chamber of Economy was selected by the European Commission amongst 137 submitted projects

T

he Digital Innovation Hub is intended to provide support to companies in order to improve their business and production processes, and strengthen their competitive market position through the introduction of products and services of digital technology. More specifically, DIHs are one-stop-shops which help companies in the digitisation of their business processes.

Digital Croatia Hub, DigiCro, is a project developed by the Croatian Chamber of Economy which has recently been selected by the European Commission from amongst 137 submitted projects. “In addition to the CCE, the DigiCro Hub consortium will include technical faculties and co-working organisations, which will provide professional assistance and specialised infrastructure to companies undergoing digitisation of their business processes”, noted the Vice-President for Indu-

Tomislav Radoš

stry and IT, Energy and Environmental Protection at the CCE, Tomislav Radoš.

“Relevant public administrative bodies will also be included in order to enable a higher quality flow of field information, and in order to ensure institutional support. DigiCro Hub will be the focus for the digitisation of SME’s and startups in Croatia within thematic priorities identified in the Smart Specialisation Strategy”, stressed Radoš.

The Hub will provide services to inform, support, educate, mentorship, infrastructure and all other services required whilst moving to promote the digitisation of the Croatian economy and to ensure new innovative solutions. Moreover, DIHs enable companies to access the latest insights, as well as expert networks, technologies for testing and experimentation with digital innovations relevant to their products, processes or business models, such as robotics, photonic networks for high performance computing (HPC), data analysis, simulation, the Internet of Things

(IoT), cyber-physical systems and data protection, to name a few.

“In addition to the focus on technology, DIHs also focus on sectors and they can thus focus on specific sectors such as agriculture, construction or manufacturing. The specific objective of DIHs is the strengthening of industrial competitiveness throughout Europe through provision of support to its digital transformation.

It will bring together businesses and investors, facilitate access to financing of digital transformation and encourage synergy between digital and other key technologies”, concluded Radoš. (K.S.).

7TH CCE ASSEMBLY

LUKA BURILOVIĆ REMAINS PRESIDENT OF THE CHAMBER One of my key goals for the forthcoming mandate is that policy creators recognise the voice of the economy even more, CCE President highlighted. He also added that the focus for the period to come will be on internationalisation, dual education development and digitalisation

by Krešimir Sočković

CCE’S FOCUS HAS TO BE ON ATTRACTING FOREIGN INVESTMENT AND DRAWDOWN EU FUNDS, CCE PRESIDENT SAID

L

uka Burilović will be the President of the Croatian Chamber of Economy for the period 2018-2022. This was decided at the 7th session held on 25 January and in compliance with the provisions prescribed by the Assembly’s Rules. The vote was taken by a secret ballot. The CCE Assembly consists of 93 members and considering the President received 80 votes, he won in the first round. Candidates Marin Lovrović had seven votes and Davor Poljak, two. One paper was judged invalid and three Assembly members did not vote.

Before the vote, each of the three candidates was presented to Assembly members.

In his speech, Luka Burilović said the Chamber’s vision and the strategic projects for the forthcoming period present significant moti-

2 | PVinternational | February 2018 | No 277

vation to continue the work envisaged by the CCE Strategy 2017-2022. “I specifically mean the internationalisation of the Croatian economy, the implementation of dual education and service digitalisation. A stronger network of representative offices will help us support exports even more, which is one of the crucial elements of Croatia’s economic development. One of the key goals in the forthcoming mandate is that policy creators recognise the voice of the economy even more”, CCE President highlighted. Marin Lovrović, owner and director of Consmar, a company specialising in electric installations in ships as well as being a well-known Croatian ex-sailor, highlighted in his speech that the Chamber’s work should be international. The Chamber must be a partner to whom the Government will listen, and the

Work plan of the CCE President for the next four years

Based on the plan of the CCE, President Luka Burilović announced the focus for the next four years will be on providing a

better position for political representation at all levels. The Chamber needs to be their partner and a corrective in creating policies and laws. The Chamber should be more involved in working with political and economic participants, especially in the area of energy development, formation of the innovation system and IT development.

The Chamber will continue to present the interest of the members and the entire economy and society. It will also work on adopting the CCE model of dual education based on the example of Germanic countries and with the support of EU funds as well as creating an infrastructure required for its implementation. The Chamber plans to take over additional public authorities, such as establishing companies since the Chamber can do this more efficiently, faster and more cost-effectively. During the next four years, the Chamber will work on develo-

focus has to be on the sea, tourism, ship building and maritime affairs. We are not assertive and focused enough in industrial development, Lovrović highlighted. He also said the Chamber should have an opinion regarding the Pelješac Bridge, since this project will be developed by non-Croatians – even the planner comes from neighbouring Slovenia.

CCE IS AN INSTITUTION WITH A CLEAR PURPOSE AND ECONOMIC CONTRIBUTION Davor Poljak, former Manager of Končar Electric Vehicles and Vodoopskrba i odvodnja from Zagreb, thinks the Chamber should be managed in compliance with Statutes and the law, good practice and high moral principles. Detailed analysis is a foundation of a quality business activity plan which will include all the elements for management promotion. The CCE is vital to all of us. We need to work together with the Government and Parliament as well as chambers and organisations on various activities, Poljak added.

In his speech of thanks, Burilović, who became the President of the Chamber on 1 April 2014, after being the Board President of Sladorana Županja, looked back on his soon

ping a direct personal approach to members through contemporary tools. With an automated and highly relevant approach, each member will be able to process all local and foreign data concerning activities of the market, regulations and trends. The Chamber will also strengthen its co-operation with state institutions, economic diplomacy and will promote Croatia as a desirable investment destination. The Chamber should be the largest supporter of solutions and policies beneficial for its members, and it will form and propose solutions and proposals through professional associations. The Chamber will achieve all this by keeping mandatory income at the current level without increasing fees (it may be possible it will decrease them), and a share of its services will be commercialised to raise the quality and level of services for everyone, but also individual members.

to end mandate. “I was certainly aware of the difficult road ahead of us, but I was also aware of the potential which we could achieve. When others talked of reforms, we were the ones who implemented them – with cuts and an increase in efficiency. Four years later, the CCE is an institution of clear purpose and economic contribution. There is not an economic issue which is not consulted with a Chamber expert. We became a service to our members and the voice of entrepreneurs which cannot be overlooked, Burilović said. He also stressed that the CCE’s focus in the forthcoming period has to be on attracting foreign investment and draw-down of EU funds. “We will continue to subsidise all reforms in the country and provide support to institutions, especially reforms of the judicial system, public administration and education. We will work on the internationalisation of business and export promotion as well as opening new representative offices and the creation of dual vocational education which we will harmonise with market demand. Also, our entrepreneurs will be able to find solutions with only one click of a mouse through the digitalisation process, Burilović concluded.

A stronger network of representative offices will help us support exports even more, which is one of the crucial elements of Croatia’s economic development.

Luka Burilović, CCE President

WE HAVE BECOME A SERVICE FOR OUR MEMBERS AND THE VOICE OF ENTREPRENEURS WHICH MUST NOT BE OVERLOOKED, BURILOVIĆ STATED February 2018 | No 277 | PVinternational | 3

EXCLUSIVE TO PRIVREDNI VJESNIK - VALICON

4 | PVinternational | February 2018 | No 277

EMOTIONAL BRANDING

EMOTIONS CONTRA CHALLENGES Now, brands need to be unique and establish a deep bond with consumers in order to stand out from the vast range of competition. Consumers do not expect brands merely to meet their basic requirements, they also expect delight and to have their expectations exceeded by Kristina Črep, Ilijana Grgić

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lobalisation and the digitisation of life have increased the number of options and opportunities to inform current consumers to such a great extent that it has become extremely difficult - or almost impossible – to identify a unique product or service. Thus, products alone are not sufficient to attract attention or retain customers, as there is an increasing number of polemics about the extent and in which popu-

EACH PURCHASE IS AN EMOTIONAL EXPERIENCE IRRESPECTIVE OF HOW MUCH EFFORT IS INVESTED INTO IT OR HOW FAST WE COMPLETE IT lation segments prices are crucial for consumer choice. Products and services have their life cycles and characteristics, which, eventually, are copied at least by some competitors, whilst most businesses can count on price discounts and “best offers” only on a short-term

basis. Consequently, one needs to focus on a distinguishing feature, something special and specific, different from competitors, or at least sufficiently distinctive. In other words, one needs a brand. Psychologists confirm that we all collect positive and negative connotations over time, and these connotations are connected with specific words and expressions, which then become unconsciously absorbed into our memory. Moreover, each purchase is actually a fully emotional experience – irrespective of how much conscious or unconscious effort we invest into it, and how fast we manage to complete it. In addition, purchases are even subject to instinctive decisions, although they sometimes appear automatic and habitual. Regional research conducted by Valicon for Privredni vjesnik confirms that emotional branding is not only a global issue, since consumers in regional countries attribute significant importance to this aspiring segment.

Brands now need to be unique, and establish a deep bond with consumers in order to attract attention from amongst the vast range of competition. Consumers do not expect brands merely to meet their basic requirements; they also expect delight and for their expectations to be exceeded. The majority of the general public regionally who participated in the research are highly aware of the importance and the role played by an emotional connection with a brand, especially in the making of purchase decisions.

February 2018 | No 277 | PVinternational | 5

EXCLUSIVE TO PRIVREDNI VJESNIK - VALICON Index of Importance of emotional branding REGION SLOVENIA

71

67

71

73

CROATIA

72

BOSNIA AND HERZEGOVINA SERBIA * significant divergence of a country compared with the region: significantly less

(N=4193)

(N=1040)

(N=1048)

(N=1053)

significantly more

(N=1052)

Region (total): Analysis of importance of tested statements A brand I can trust that I am fond of that I am planning to use in the future that provides security that is unique, different that was made/created/developed just for me that is congenial that I would hardly be able to find a replacement for that I enjoy sharing that follows me through my life that shares my values that provides me unique experiences that evokes my emotions that I often think about that motivates me that represents the region I come from

86%

11%

83% 80% 78% 75% 75% 74% 71% 69% 69% 68% 67% 67% 66% 64% 61%

0%

20%

STATEMENTS WHOSE SHARE WAS ABOVE AVERAGE

important

40%

indifferent

3%

14% 3% 16% 4% 17% 5% 20% 5% 20% 5% 20% 6% 22% 7% 24% 7% 24% 7% 26% 6% 27% 6% 25% 8% 26% 8% 29% 7% 26% 13% 60%

80%

100%

(N=4193)

unimportant

Analysis of importance of tested statements in general (N=4193) A brand I can trust that I am fond of that I am planning to use in the future that provides security that is unique, different that was made/created/developed just for me that is congenial that I would hardly be able to find a replacement for that I love sharing that follows me throughout my life that shares my values a brand that offers me unique experiences that evokes my emotions that I often think about that motivates me that represents the region I come from

6 | PVinternational | February 2018 | No 277

86% 83% 80% 78% 75% 75% 74% 71% 69% 69% 68% 67% 67% 66% 64% 61%

-6% -6% -6% -11% -17% -10% -5% -8% -9% -4% -13% -7%

0% -1% 0% -2% 1% -2% -1% 3% -2% 0% 1% -1% 0% 3%

-9% -10% -8% -2%

0% -4%

2% 0% 1% 3% 5% 2% 0% 2% 4% 5%

0% 2% 1% 3% 1% 3% 2% 1% 3% -1%

4% 3%

0% 2%

6% 5% 5% 9%

0% -1% 1% -2%

Analysis of importance attributed to the most important t distinctive statements tested in individual categories FOOD

(N=4193)

represents the region I come from that I am fond of that is congenial that I can trust hardly be able to find a replacement for

85%

that represents the region I come from evokes my emotions that I am fond of hardly be able to find a replacement for that is congenial

61%

7%

0%

-6% -4% 4% 1%

34% 33% 31%

0% -1%

-5%

-2% -2% -1%

1%

4% 0%

2% 0% 0%

-1% 1% 0%

1%

0%

1%

-1%

(N=4193) 51%

-9% -2% -4% -1%

-8% -6% -6% -6%

50% 49% 49% 48%

FASHION

2%

4% 3% 4% 1%

1% 3% 1%

2%

0%

(N=4193)

that follows me through my life that was made/created just for me that is unique, different that motivates me that shares my values

64% 59% 58% 56% 53%

TECH PRODUCTS

-5%

0%

-1%

-5% -1% -5%

2% 0% 0%

-1%

2% 0% 1%

1% -3%

-2%

-8%

4% 2%

1%

(N=4193) 61%

-1%

1%

60% 56% 55%

-5% 4%

-1% -2% -3%

61%

CARS

1% -1%

-2%

0%

3%

-6% -3% -2%

1% 2% 2%

-5%

2%

(N=4193) 56%

13%

5%

7%

51%

1% 4% 3%

6% 6%

43% 42% 39%

SERVICES that provides security represents the region I come from that I can trust that I am planning to use in the future that offers me unique experiences

-1%

-7%

38%

hardly be able to find a replacement for that was made/created just for me that follows me through my life that is congenial that I am fond of

that provides security that offers me unique experiences that I can trust that is unique, different that motivates me

6% 4%

-1% -1%

(N=4193)

COSMETICS

that provides security that offers me unique experiences that motivates me that is unique, different that I can trust

3% 2%

-3% -2%

-4% -4%

64%

-2% 0%

2%

63% 62%

DRINK

-2%

-5%

66%

4%

-4%

-3%

-1% -1% -1%

0%

-3% -5% -4% 1%

-2%

(N=4193) 47%

2%

45%

3% 5% 0%

39% 39% 38%

2%

6%

-2%

-4%

0% 8%

1% 3% 2%

-3%

-3% -4%

0% 1% 2%

-4%

February 2018 | No 277 | PVinternational | 7

EXCLUSIVE TO PRIVREDNI VJESNIK - VALICON EMOTIONAL CONNECTION WITH BRANDS

86% of respondents believed that brand trust is imperative in purchase decisions

83% of those questioned stated that it is important to like what you purchase

On average, 71% of those questioned across the region, assessed the testing of the statement on emotional connection with brands as important when deciding on a purchase. Generally speaking, Slovenians gave a slightly lower level of importance of building emotional connections with brands compared with the rest of the region. On the other hand, citizens in Bosnia and Herzegovina, on average, attributed a higher level of importance to emotional branding; 86% of respondents believe that when making a purchase decision it is important that brands selected provide them with a feeling of confidence. Similarly, 78% stated that brands they select need to provide them with a feeling of security, that they inspire loyalty and that they feel close to them was pointed out by 74% of those surveyed. 83% of the respondents stated that for them it is important to be fond of what they select, whilst the fact that they are planning to use the brand in the future was stressed by 80% of those questioned. Furthermore, the selection of brands can also be a way to express one’s own individuality. Hence, it is often important for brands to be perceived as those that offer something special and different, which was emphasised by 75% of participants.

The same percentage believed it to be important that amongst consumers, brands evoke a feeling they had been created solely to meet their own specific requirements. On the other hand, those questioned across the region attributed the least

importance to the fact that the brand stands for the region of their origin, although this feature was also pointed out as important for the selection of the brand by 61% of respondents. These general insights into the importance of emotional branding recorded within the region have confirmed global trends, as well as marketing and branding assumptions.

ORIGIN IS CRUCIAL FOR FOOD PRODUCTS Regarding purchase decision-making of food across the region, the most important aspect was the origin of the brand, according to 85% of those questioned. Nevertheless, after the selection of a brand, that feature ranked the lowest.

This is mainly due to the fact that local origin products are perceived by consumers as those for whom the journey “from field to table” is shortest and so fresher and healthier. Although different countries in the region show specific features and differences in terms of the importance attributed to individual aspects of an emotional connection with food brands, the level of importance attributed was normally very similar across the region. Furthermore, some common trends may be identified throughout the region. For example, emotional branding of food is considered as slightly more important by those in older age groups and amongst unemployed, whilst a smaller proportion of the young people and those in middle and senior management believe that emotional branding is impor-

TIHOMIR VRANEŠEVIĆ, PROFESSOR AT THE FACULTY OF ECONOMICS IN ZAGREB

Emotional value of the brand is a prerequisite for successful brand management When monitoring brand success, attention should be paid to the combination of its functional, emotional and symbolic value, according to Professor Tihomir Vranešević from the Zagreb-based Faculty of Economics. “A combination of functional, emotional and symbolic value is the most appropriate method of exploiting brand potential.

Trademarks and brands are a category considered superior to products and services, since, in addition to a functional value of the relevant product or service, they also include the creation and maintenance of emotional and symbolic brand values. Thus, in this way, brands become a category through which strategic management process is implemented and consequently brands are added products and/or services. The origin affects

8 | PVinternational | February 2018 | No 277

the emotional and symbolic brand value.

Brands present a specific culture and through specific cultural values it has long-term

objectives and aspirations. The same applies to emotions evoked by brands amongst consumers. The emotional value of a brand is a prerequisite for successful brand management. Emotions are important and can be divided into a large number of categories, such as: fondness, good mood and pleasant memories, amongst others and primarily brand trust. This has been confirmed by a large number of research studies, which have shown that brand trust is an important aspect of purchase decisions. Consumers are loyal to specific brands as they evoke positive emotions as a result of their brand trust”, pointed out Vranešević, adding that the conclusion may be reached that over the last several years emotions have played a focal role in competitiveness.

tant in the purchase of food products. In terms of cosmetics and personal care products, no high levels of differentiation were identified by 45% to 50% of respondents. What distinguished cosmetics from other categories was that in the selection of products in this category the importance of the degree to which consumers connect the brand with their own individuality and identity exceeds the average. During the selection of brands of cosmetics and personal care products it is important also whether they suit individual lifestyles and also that they share their own values. Those considered special and different from others, tailored to meet specific personal needs, will certainly be the brands that consumers will be talking about and sharing with others.

CARS NEED TO BE SPECIAL In terms of durable goods, such as tech products and new technologies, certain aspects of emotional connections built (such as familiarity and affection for the brand) were pointed out as less important. In these categories, more attention is paid to features such as the feeling of security stressed as important by 61% of those questioned. 55% of respondents noted confidence as important, and 54% of those questioned believed their long-term use to be the most important. A similar situation as in the case of tech and technology products, may be identified with car purchase decisions, an area where safety and reliability are paramount. It is vital that the brand

Private brand boom Over the past decade private brands, as a special brand category, have boomed. Irrespective of the fact that most people normally link private brands with retail chains and food and drink products, private brands are also present in the categories of cosmetics and fashion. In food and drink, private brands certainly have value-added due to the potential of retail chains and especially through the appearance and strengthening of discounters. According to the findings of the recently conducted research on trends in the food industry, 25% of respondents in the region showed high price sensitivity, and an additional 40% of those questioned showed a medium level of price sensitivity. When asked to assess the level of their interest in specific innovations and trends in the food industry, almost half of participants stated they would be interested in tasting private brand food and beverage products.

opted for evokes a feeling of safety and that it can be trusted. In addition, car owners frequently consider their cars as far more than mere vehicles. They can be symbols and a way of showing personal style and achievement; thus, during car selection it is often important that it is ‘special and different’, that it provides a special experience and that it motivates its owners.

78% of participants believed brands need to evoke a feeling of trust

KATARINA LEKO, DIRECTOR OF THE MARKETING AGENCY MANJGURA

Brands cannot thrive merely on a good story, the evocation of pleasure or former glory It is a well-known fact that building emotional connections with customers enables a long lifespan of a brand and puts it in a favourable position during purchase decision-making. This is true even when competitor brands are on a par with it or when they outperform it with rational arguments for the purchase, stressed Katarina Leko, Director at the marketing agency Manjgura.

“Customers are currently constantly and everywhere exposed to a wide cross-section of data and user experiences about products and services, and they are therefore more demanding concerning the rationale behind the purchase. Irrespective of the fact that they make purchase decisions based on emotional thinking, customers expect effectiveness and practical value for money and so a disappointing practical experience

will redirect them towards competitors.

The latter will act proactively and customers may be equally moveable due to digital communication”, she added. “Against a backdrop of bidirectional communication and rapid information exchange, brands cannot thrive solely on a good story, the evocation of pleasure or former glory. Local companies with a long tradition of regional presence and those providing consumer goods that today’s generation of purchase decision-makers have grown up with, are aware of these issues. We are talking about brands with a huge emotional potential. In addition to their aiming to make an emotional impact on customers in a creative way, these companies are also exerting huge efforts whilst aiming to meet their contemporary rational requirements. They invest

substantially into technology and education in order to develop, for instance, healthier or more environmentally-friendly versions of popular brands. Such advantages need to be effectively communicated to customers, whilst always bearing in mind that dissatisfaction with the quality and functionality can transform the initially positive emotion into a viral joke that could permanently damage the brand”, concluded Katarina Leko.

February 2018 | No 277 | PVinternational | 9

INTERVIEW DIANA RUBIĆ, MANAGER, KRUPA

WE DID NOT DEVELOP AS A HEALTH DESTINATION Croatia has many advantages, but one of the most significant may well be Croatian high-quality health services, since the cost of health services are still below the level of developed EU countries by Jozo Vrdoljak

T

he new hotel in Split, Hotel Marvie, is the first ‘health and wellness’ hotel in Dalmatia. It is managed by Krupa co. from Split. Privredni vjesnik spoke with its manager, Diana Rubić about their activities, future prospects and their expectations. Diana Rubić talked about her perspective on health tourism as well as Croatia’s disadvantages and advantages as a health tourism destination.

14million

€

invested in Hotel Marvie

How much was invested in the construction of Hotel Marvie?

The investment was €14 million. The financial aspect was partially closed finalised by a loan from CBRD. Hotel Marvie is the first ‘health and wellness’ hotel in Dalmatia. It offers a series of specialised services in medical wellness across 1200 m2 plus a state-of-the-art spa and fitness facility.

Did you receive subsidies or finance from EU funds?

No, we did not. Turmont, the investor, was the main contractor in the construction project of this hotel. The architectural aspect was provided by Atelier Šverko i Šverko from Split, and the visual identity was designed by Carli+Sosa, studio for creative communications.

9,400 0m

2

hotel area

45 5 people employed in hotels and polyclinics

Describe the hotel for us..

It covers a total of 94,000 m2, has 76 accommodation units, two of which are apartments, and a huge roof terrace with an outdoor pool.

Its public garage is divided into three floors.

There is a restaurant with a specialised gastronomic menu and a spacious wellness area with an indoor pool and premium offers for relaxation.

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What medical services does the hotel provide?

The hotel is equipped with a polyclinic for physical medicine and rehabilitation as well as a second one for cosmetic medicine. It is

WE WILL CONTINUE DEVELOPING AND IMPROVING OUR OFFER, AND OF COURSE, KEEP UP WITH TRENDS IN HEALTH TOURISM true that Hotel Dioklecian & Residence was built before Hotel Marvie, and this hotel also has medical surgeries and offers care for the elderly. Therefore, these two hotels specialise in this type of offer, and we wish to become recognisable in the destination.

Why did you opt for this type of market product and position?

A lot of effort has been invested lately into the development of health tourism. This aspect of tourism is now popular. Due to the services of these two polyclinics, we wish to gain a position on this market and recognition. Hotel Marvie is in the direct vicinity of the clinicalhospital centre KBC Firule. This hospital with services of public healthcare was another reason why we opted for this type of market posi-

Health tourism is now large, and I hope it will develop even further

February 2018 | No 277 | PVinternational | 11

INTERVIEW

tion with emphasis on health, fitness and wellness. The position of health tourism in Croatia is becoming more prominent. In fact, it has become one of the strategic development goals of tourism and health, as in many other countries.

Hotel Marvie is in the direct vicinity of KBC Firule.

This hospital services public healthcare and was another reason why we opted for this type of market position with stress on health, fitness and wellness.

Are you satisfied with the current situation?

We have started our trial work period and began accepting visitors in July 2017. We are satisfied with the market reaction, especially since we are building this way ourselves, as Split lacks experience in this type of tourism and offer. We are pioneers in this area and every beginning is hard.

Where do your guests come from?

It is difficult to say we specialize in only one particular market, since our visitors come from many different countries. However, we achieved quite successful results on the British market, especially during the post-season, and also the Scandinavian market. We have had many visitors from Russia, with whom we are very pleased. These are possibly our top three markets.

How did your Russian visitors find you?

We received mainly group inquiries, mainly after the season. They came through tourist agencies and were interested in wellness and health services. The British, on the other hand, came mainly during the main season and stay for a shorter period of time. We perceive all this as the present trend. However, we have not been active long enough to be certain this is a realistic trend. We will see in the seasons to come and when we have a more realistic profile of our visitors.

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What do you expect from this season?

Serious preparations have already begun and we have great expectations. We have started working with agencies and we joined the Aqualis wellness brand which is part of Spanish Hotusa Hotels. This is how we are creating new forms of co-operation on a specific market. Hotusa as a grouping and a global brand works with Croatian hotels. We are position-

THE HOTEL HAS A POLYCLINIC FOR PHYSICAL MEDICINE AND REHABILITATION AS WELL AS FOR COSMETIC MEDICINE ing ourselves with co-operation with their sub-brand Aqualis specialising in wellness.

This is only one area of our preparations for the season. Of course, there are also other standard and sales channels. We are creating a new way of co-operating and we find niches, which have not been active in our destination but they imply our hotel’s specific offer, of great interest.

Do you expect a lot through this co-operation?

We’ll see. This is an international grouping with certain know-how that will be of help to us. Overall, we try to get the most of everything we can. We are independent and do not

We need to become predominantly a hotel destination What is lacings in the tourist offer in Split?

As long as hotel accommodation cannot cover demand, Split will change its profile of visitors. The accommodation structure should be predominantly of an hotel type, not apartments. However, everything is still chaotic, but when hotel investment

have support of a root franchise so we need to keep up with every trend on the market.

Health and medical tourism is a growing market. Is that evident in Croatia?

A new Act on providing services in tourism has been adopted, and it will simplify business activities and yield results in health tourism.

We are open to all offers, so we fight for the market. Our pace is slow and I hope we will achieve the desired results. We are 100% sure of our success.

In your opinion, what might be done here?

This type of tourism has been quite popular recently. I think this project, at least in Split, is in its early phase. It is true there is potential we could use. This is certainly a way of prolonging the season, and this is our goal – a full year of business. There are documents, plans and strategies, and we as a hotel are only a small part of this process, but will try to contribute as much as we can. Health tourism is big now, and I hope it will develop even more. In case of a significant growth we, as a hotel, will fit in easily.

What is Croatia’s advantage in your opinion?

Croatia has many advantages, but one of the largest is that we provide quality health service the prices of which are still lower compared with other developed countries in the EU. Furthermore, this means we are competitive. With seasonality added, despite the holes in the post-season and pre-season, health tourism can be combined quite well.

What is missing in that part of the year which could increase interest?

I think the main obstacle is the lack of flights after the main season. However, the situation has been improving and is reflected in tourism.

projects, which have already started, are completed, things will be different. We do not mind nor do we feel in danger of other hotels opening. We feel this could only benefit us. If we have more hotel rooms, we will attract larger business events, or conferences. We could do with a Conference centre to boost our activities.

How does the destination respond?

Does Split recognise the potential in this segment of tourism?

I have a feeling the destination will begin to respond only after an area develops, or after an entrepreneur develops it. It is difficult for us as a hotel to be recognised globally, since we are a relatively small hotel and part of a large franchise. This is why we need the support of our destination. It would be easier if the destination’s response was quicker. We will continue to expand and improve our programme and, of course, keep up with the trends in health tourism.

You have invested considerably in gastronomy…

We are trying to fit our gastronomic offer with our health offer. We designed this offer to fit in with the habits of our visitors who take care of their health. This includes gluten-free, vegetarian and other special types of food. Visitors can also consult our nutritionists to take full advantage of a wide variety of delicious meals, regardless of their diet. We have adapted our menus to various food regimes and this proved to be necessary. The procedure of preparing and procuring food is more demanding. This cannot be handled by every kitchen. To put it simply, our customer says what he wants and we deliver it.

We have started working with agencies and joined the Aqualis wellness brand which is part of the Spanish Hotusa Hotels chain.

This is how we are creating new forms of cooperation in this specific market.

How many people work in the Hotel?

There are 15 staff employed in the health side and the tourism side (accommodation/hospitality) has around 30.

Did you have problems with finding staff?

Not at all. I think this is because we are in the city and the hotel works throughout the year so we do not have many seasonal workers. Luckily, we do not have such problems.

Do you co-operate with other hotels?

Yes, we co-operate quite well in the Split area.

February 2018 | No 277 | PVinternational | 13

PV ANALYSIS

TOURISM IN 2017 AND PRELIMINARY ESTIMATES FOR 2018

On track to becoming a yearround destination In 2017, Croatia has achieved its best tourism results since records began, thus confirming its position as one of the most popular tourist destinations attracting an increasing number of tourists’ year round

by Sanja Plješa

O

verall statistical data, provided by the Croatian Bureau of Statistics, as well as that provided by eVisitor, which includes data on tourism turnover achieved in commercial and private facilities, as well as the nautical charter eCrew system, confirm that 2017 was an extremely successful year for Croatian tourism. Nevertheless, the data shows wide variations, since it is collected in different ways. Hence, the data published by the Croatian Bureau of Statistics is expected to show even better final results. On the other hand, data provided through eVisitor for 2017, shows 18.5 million tourist arrivals, 13% up compared with two years ago. Simultaneously, the same source recorded 102 million overnight stays, showing an increase of 12% over 2016.

These are the best tourism results achieved since records be-

14 | PVinternational | February 2018 | No 277

gan, which has confirmed its position as one of the most popular tourist destinations attracting an increasing number of tourists year-round, as stated during a presentation of tourism results recently held by the Ministry of Tourism. It has to be noted that, according to data from the Croatian Bureau of Statistics, during the first 11 months of 2017 commercial accommodation facilities saw 17.1 million tourist arrivals, 13% up and 85.6 million overnight stays, an increase of 11% compared with the same period for 2016. German tourists recorded the highest percentage of overnight stays, with an increase of 24%, followed by tourists from Slovenia and Austria, both 9% up, Polish at 8% and Czechs and Italians with a 6% increase in relation to the results achieved during the first 11 months of 2016. According to such satisfactory

February 2018 | No 277 | PVinternational | 15

PV ANALYSIS tourism results, the assumption has been made that, when the results for December have been added, data provided by the Croatian Bureau of Statistics will exceed that collected by the eVisitor system.

IN 2018 THE TOURISM MINISTER ANTICIPATES A BETWEEN 5% AND 7% INCREASE IN TOURISM TURNOVER COMPARED WITH 2017.

ments, as well as through other programmes and activities by the Ministry of Tourism and the Croatian National Tourist Board, 2018 will also be a successful year for Croatian tourism and that it will provide new foundations for further development. Furthermore, tourism in destinations on the Adriatic Sea compared with the continental part of the country cannot be considered separate anymore, since we are currently already able to talk about year-round tourism across the country, stated Cappelli. He added that he hopes to see high quality statistical data when data on tourists covering last year for the European Men’s Handball Championship is added. Sports tourism is highly developed globally and its percentage in other tourism types in Europe is about 14%.

DUBROVNIK STILL EXTREMELY POPULAR

18.5 5 million ourist arrivals recorded in Croatia in 2017, according to eVisitor (+13%)

102 2 million overnight stays recorded last year (+12%)

During the presentation of the results collected by eVisitor, the Minister for Tourism, Gari Cappelli, and the Director of the Head Office of the Croatian National Tourist Board, Kristjan Staničić, both expressed their pleasure with the results achieved. They announced a more vigorous development for year-round tourism in 2018, based on sustainable development and destination management. “Tourism results in 2017 and primarily during the preand post- season are the best indicators of how a breakthrough can be achieved within a short period of time. Consequently, we are working towards the continuity of the improvement of tourism in 2018 in order to contribute to the further positioning of Croatia as a year-round tourism destination, and so enable more competitive entrepreneurial activity in tourism, as well as additional investment, improved conditions for tourism staff, and in order to provide additional encouragement to the Croatian economy”, noted Cappelli. He also expressed the hope that, after crucial legislative amend-

eVisitor granted UNWTO award The Croatian national tourist information system eVisitor has recently been awarded the third prize and the UNWTO award for Innovation in Research and Technology. The award was presented to Kristjan Staničić, Director of the Head Office of the Croatian National Tourist Board within FITUR, the International Tourism Fair held in Madrid. eVisitor was the only nominated Croatian project amongst the finalists. It has to be noted that the finalists were selected from 128 submitted innovative projects originating from 55 countries, which additionally highlights the huge success of the project by the Croatian National Tourist Board. During the award ceremony, Staničić pointed out that this was yet another acknowledgement for Croatian tourism and yet another confirmation that Croatia has been identified as one of the leading tourism destinations.

16 | PVinternational | February 2018 | No 277

Concerning tourism turnover according to each Croatian county, the largest number of arrivals, (4.2 million), was seen in Istria County, which also recorded 27.5 million overnight (10% up compared with 2016). Split-Dalmatia County ranked second, (3.4 million tourist arrivals and slightly over 19 million overnight stays), an increase of 13% over 2016. PrimorjeGorski Kotar County was third, with 2.9 million tourist arrivals and 18.6 million overnight stays (9% up). Irrespective of the fact that Germany still ranks as the primary source market for Croatia, Slovenia is second and Austria third. Last year, the Polish market saw a huge breakthrough, with 6.3 million overnight stays (up 21% in relation to 2016). Moreover, the number of American tourists has also seen a significant increase, as well as those from the Far East, Asia and Australia. The increase in turnover was certainly due to the opening of a direct flight Zagreb-Dubai. Croatia is currently focusing a more vigorous promotion campaign on the American market, since it has been identified by American tourists as an important tourist destination.

Dubrovnik currently still ranks first of the top 20 Croatian tourist destinations; it saw 4.2 million overnight stays (15% up over 2016), followed by Rovinj (3.8 million overnight stays and an increase of 11%), Poreč (3.4 million overnight and 9% up), Medulin (2.7 million overnight stays and a rise of 2%) and Umag (2.6 million overnight and an 11% increase over 2016).

Commenting on the statistical data, according to eVisitor, Cappelli highlighted that the Croatian islands also saw significant tourism, and that they are becoming an increasingly important factor in tourism programmes. Hence, in 2017 the islands saw a total of slightly over 3 million tourist arrivals, (10% up over 2016);

ANALYSING THE ENTIRE YEAR, GROWTH RATES ACHIEVED BOTH IN PRE- AND POSTSEASON EXCEEDED THE GROWTH RECORDED DURING THE PEAK SEASON, EMPHASISED DANIJELA ČAVLOVIĆ they also recorded 25.9 million overnight stays, showing an improvement of 13%. Cappelli pointed out that tourism results achieved on the islands accounts for 25% of overall results nationally. According to types of accommodation, data provided by eVisitor showed that the highest level of overnight stays was seen in private accommodation, (35 million), followed by hotels, (25 million) and campsites (19 million) overnight stays. Throughout 2017, nautical charter saw 3.2 million overnight stays. Minister Cappelli anticipates a between

5% and 7% increase in tourism turnover in 2018 compared with 2017. Moreover, he expects an increase in investment of €125 million, in addition to further investment in health tourism. Consequently, according to him, the “magical” figure of €1 billion of investment into tourism may well be exceeded.

INCREASING DEMAND FOR SMALLER ACCOMMODATION CAPACITIES Commenting on the results, Danijela Čavlović, President of the Private Accommodation Association at the Croatian Chamber of Economy, stated that data clearly showed recordbreakers in the most successful tourist season overall. “According to data provided by eVisitor, private accommodation accounted for 34% of overall overnight stays, specifically a total of 34,946,748 overnight stays, which exceeded the results achieved in 2016 by 15%. Analysing the entire year, growth rates recorded in both pre- and post-season exceeded growth rates during the months of the peak-season. So, in October, 166,984 tourists opted for private accommodation, up by 30% over 2016, which confirms that tourists opt for this type of accommodation outside the peak season. Tourists have increasingly shown a wish to stay in smaller, more intimate accommodation, where they are given the opportunity to find out some

17.1 million tourist arrivals during the first 11 months in 2017, according to data released by the Croatian Bureau of Statistics (+13%)

85.6 6million overnight stays recorded during the same period (+11%)

February 2018 | No 277 | PVinternational | 17

PV ANALYSIS €11 billion tourism revenue expected According to data provided by the Croatian National Bank (HNB), during the first 10 months of 2017 the level of tourism revenue generated wast €8.724 billion, 10% up over the same period in 2016. During the first nine months, the share of revenue from travel and tourism in total gross domestic product (GDP) at current prices was 24%, an increase of 0.9% compared with the same period of the previous year. The Minister, Gari Cappelli, pointed out that he expected total tourism revenue in 2017 to reach €11 billion from consumption of both local and international tourists, when the results for November and December have been included.

Tourism results achieved in 2017, primarily those during both the pre- and postseason, are the best indicators of how the breakthrough can be achieved over a short period of time.

Gari Cappelli, Tourism Minister

interesting stories and information about a specific destination exclusively by local hosts.

In addition, they are given the opportunity to pick fruit directly from their hosts’ garden or taste homemade cooking from a recipe of the owner”, noted Danijela Čavlović. She added that all these aspects are being increasingly valued during holiday planning, since such moments significantly contribute to the creation of authentic experiences, which, according to a large number of research studies, are a key motive for going to a specific destination.

Danijela Čavlović stressed that in 2017, Croatia registered over 85,000 private accommodation facilities with a total of 550,000 beds.

According to estimates, in 2017 private accommodation saw a total tourism turnover of €2.5 billion. The value of registered accommodation has been estimated at €15 billion. The value of investment implemented by owners of private accommodation into routine maintenance is in the region of €110 million, based on a minimum of €200 per bed. Furthermore, they also need to invest into additional facilities, such as swimming pools, wellness equipment, cycling tourism, children’s facilities, landscape horticulture or marketing, and the value of these investments annually reaches an additional €130 million. “350,000 people are directly involved in the provision of services to private accommodation, which clearly shows the importance

18 | PVinternational | February 2018 | No 277

of this category concerning the demographic revival of Croatia, since many people have taken the opportunity to remain and work on their own property”, pointed out Danijela Čavlović.

Concerning the Tourism Minister’s words that he “tourism in destinations on the Adriatic Sea and continental part of the country cannot be considered separate anymore, since we are currently already able to talk about year-round tourism throughout the country”, she believes that the figures of only 2% overnight stays recorded in the continental part of the country need to be considered as indicative of what is needed to focus on during the planning of development activities in the near future. “Counties located in the continental part of the country have shown creativity and resilience and have seen 15% growth over 2016. Consequently, this potential certainly needs to be exploited if we are aiming to meet the objective of Croatia 365”, emphasised Danijela Čavlović. Moreover, she added that during a working group meeting in which the issue of bringing into force a new law on a tourist tax, the Tourism Minister proposed the abolition of tourism categories and seasonal periods upon the payment of a tourist tax. He explained that “Croatia no longer has seasonal tourism, as we can currently talk about “365 tourism””. Nevertheless, the actual situation is rather different. Even in Istria, which is the region that recorded the highest number of overnight stays in Croatia, most hotels are normally closed from November to April, which shows that we yet need to achieve the goal of yearround tourism. “We will only be able to talk about year-round tourism, rather than seasonal periods, once this objective has actually been met”, concluded Danijela Čavlović.

The Croatian National Tourist Board is already working on strengthening the national tourism brand, working to make 2018 an even more successful year compared with 2017.

“In 2018 the Croatian National Tourist Board will be involved in a broad range of activities, aiming for a more successful promotion on different markets and striving to improve the

co-operation with partners on international source markets. We will primarily be focusing on the further programme expansion and the introduction of new flights”, noted Kristjan Staničić. He added that this year local tourism

CROATIAN TOURISM PROGRAMMES WILL THIS YEAR BE PRESENTED AT 26 TOURISM EXHIBITIONS, HIGHLIGHTED STANIČIĆ programmes will be presented at 26 tourism fairs. 9 of these will be specialised for nautical, conference and camping programmes. Furthermore, the Croatian National Tourist Board has allocated €7.5 million for this year’s marketing campaigns, of which €2 million will be invested into the promotion on foreign markets.

ANTICIPATING THE TOURISM LAND ACT Tourism Minister Cappelli has announced amendments to several laws in 2018, such as the Act on Tourist Boards and the Promotion of Croatian Tourism, a Tourism Tax Act and the Law on Tourist Board Membership Fees.

The Tourism Land Act is anticipated by the end of the year, which will be enforced by the Ministry of State Property, and the Ministry of Tourism will also be involved. When asked how the enforcement of this new law will affect the tourism industry, Natali Komen Bujas, Director of Catering and Tourism Association at the Croatian Employers Association, stated that employers in tourism industry have been impatiently waiting for the final adoption of the Tourism Land Act. “The Catering and Tourism Association at the Croatian Employers Association constantly

communicates with the Ministry of Tourism concerning this issue, working to tackle this extremely important problem in the way which will enable further tourism development. The representatives of the Croatian Employers Association have been appointed into a Working Group for Tourism Land at the Ministry of State Property and we are currently discussing this issue with representatives of the Ministry. We are aiming to discuss this issue with experts, in order to address the issue of standards intended to regulate property management in campsites and other land for the requirements of the tourism industry pursuant to the new Law on State Property Management. We are convinced all the ambiguities concerning its enforcement will be successfully overcome and the consolidated text of the Law on State Property Management will take into account tourism as the cornerstone of the Croatian economy”, stressed Natali Komen Bujas.

She added that the Association welcomes the adoption of new laws concerning the issue of tourism land management if they eventually result in more order and facilitate the use of state property including tourism land. They welcome the payment of specific and required fees and the unambiguous establishment and identification of the legal owners of the property, as well as the opportunity to fully use the land in accordance with existing spatial planning documentation. “Due to an inadequate Tourism Land Act that was enforced in 2011, property-legal relations on tourism land have remained unclear and undefined. That was considered as an obstacle to a large number of investment projects that were not implemented and that would have otherwise contributed to maintaining and improving the competitiveness of Croatian tourism. In addition, the revenue that would have been generated from these investment projects such as VAT, taxes and contributions on salaries of those involved in construction and the Horeca sector and income tax, was not generated as a consequence, so the state lost out”, concluded Natali Komen Bujas.

350,000 people are directly involved in the provision of services to private accommodation, which clearly shows the importance of this category concerning the demographic revival of Croatia.

Danijela Čavlović, President of the Private Accommodation Association at the Croatian Chamber of Economyxx

February 2018 | No 277 | PVinternational | 19

SHIPPERS BUSINESS ACTIVITY

20 | PVinternational | February 2018 | No 277

OPTIMISM BASED ON ECONOMIC RECOVERY After some while, specifically the last several months of 2017, the off-shore market began a recovery due to a rise in oil prices; this resulted in the termination of laid-up of vessels and the possibility of revival, emphasised Mario Pavić by Jozo Vrdoljak

T

he Croatian Shipowners’ Association Mare Nostrum has 10 members; they are the most important Croatian shipping companies who, on the last day of 2017, managed 133 vessels, a total of 1.65 million GRT and around 2.66 DWT. “Following several years of the crisis period and the poorest results on record achieved in February 2016 on both the dry and bulk cargo markets, current trends appear positive. The world’s leading analysts are showing optimism in this area. This is due to a revival in major international economies, primarily US, China and Europe. In addition, an increase in the transportation of all types of bulk goods has

THE DRY BULK MARKET SAW THE END OF 2017 WITH THE HIGHEST FREIGHT RATES SINCE 2013, POINTED OUT TASLAMAN been noted. An extremely low number of contracted newly-built vessels and an acceleration in scrappage have resulted in rising freight rates and vessel value”, pointed out Mario Pavić, President of the Management Board of Tankerska plovidba and President of the Mare Nostrum Association.

According to him, these are simultaneously the most important reasons for a 4% increase

in the volume of transported dry and bulk cargo recorded in 2017, over the previous year.

Average freight rates in 2017 exceeded those of 2016 by over 50%, and the value of this type of vessel increased by around 40% compared with end 2016. “We are not anticipating an excess of capacity on the dry bulk market in the forthcoming future, which has resulted in a depression in this area during the last decade”, explained Pavić.

TRANSPORT OF OIL AND DERIVATIVES Regarding vessels intended for the transport of oil and derivatives, freight rates were lower than last year. Nevertheless, the year was positive and stable without any significant oscillations. The end of 2017 saw an increase in freight rates on a par with those seen in the previous year. This area anticipates a reduced number of vessel deliveries in 2018 compared with 2017.

Freight rates of vessels intended for crude oil transport saw a significant correction in 2017, although the total volume of transport of liquid cargo grew by 3%. “The negative trend in the tanker market is primarily due to an increased number of newly-built vessels during the past two years and a slight slowdown in turnover growth. Irrespective of the fact that tanker spot freight rates are down compared with those of 2016, relatively stable freight rates have been retained for vessels intended for the transport of oil derivatives, which arise from long-term contracts, as well as the value of this type of vessel, which suggests that the “shrinkage” of order books of new vessels, with an acceleration in scrappage, may enable an increase in freight rates in the future”, pointed out Pavić.

In addition to the supply and demand of vesFebruary 2018 | No 277 | PVinternational | 21

SHIPPERS BUSINESS ACTIVITY

AN EXTREMELY LOW NUMBER OF CONTRACTED NEWLYBUILT VESSELS AND AN ACCELERATION OF SCRAPPING HAVE RESULTED IN RISING FREIGHT RATES AND VESSEL VALUE, EMPHASISED MARIO PAVIĆ

sels, market conditions will also be affected by new conventions in the future. The decision by IMO MEPC will come into effect starting 1st January 2020, according to which the global limit for sulphur content in shipboard fuel oil will be up to 0.50% m/m, which will require the installation of exhaust gas cleaning – allowing the use of a scrubber or through the use of more expensive fuel. “Consequently, shipowners will be faced with a huge challenge of how to meet the new requirements and provide financing for any investment, since in the case of the installation of scrubbers, the value of investment will be measured in millions of dollars. Moreover, shipowners need to comply with the ballast water convention through the installation of a ballast water treatment system”, added Pavić.

According to him, after some long while, specif-

ically during the last several months of 2017, the offshore market began a recovery due to a rise in oil prices, which resulted in the finalisation of laid-up vessels and the possibility of a revival in this area. However, over the last decade the situation on the local tug market has been unchanged and an improvement may be achieved only when there is an increase in turnover volume in the Port of Ploče.

AVERAGE FREIGHT RATES RISING The sources of the Dubrovnik-based Atlanska plovidba, taking into account the usual cyclical ups and downs, stated that they expect average freight rates to rise by around 20% over 2017.

“The dry bulk market saw the end of 2017 with the highest freight rates since 2013. Irrespective of the fact that during the second half of December, and at the beginning of January, freight rates fell slightly, yet they are still considerably higher compared with the same period during the previous years. The most significant growth was achieved for vessels

Projects of Mare Nostrum Association worth €808,000 The Croatian Shipowners’ Association has submitted four projects for the Interreg Italy Croatia VA co-operation programme.

It has to be noted that the Ministry of Sea, Transport and Infrastructure is involved in three projects. The total value of these projects is €808,000. “2018 will see the continuation of work on loans and guarantees granted by the European Investment Bank. It is important to point out that shi-

22 | PVinternational | February 2018 | No 277

powners whose ports of call are not in the EU have never received non-repayable funds for any environmental standards.

The Ministry of the Sea, Transport and Infrastructure and the Croatian Shipowners’ Association Mare Nostrum have hired Oxford Economics for the preparation of the impact study of the Croatian shipping industry on the local economy, which will be published on the website of the Mini-

stry in the forthcoming future”, stressed Sandro Vidas, Director of the Croatian Shipowners’ Association Mare Nostrum.

An overview of the capacity of the members of the Croatian Shipowners’ Association Mare Nostrum (at 31/12/ 2017) Number of vessels

GRT

TANKERSKA PLOVIDBA

18

658,070

1,144,337

307,202

2.

ATLANTSKA PLOVIDNA

13

446,065

784,686

3.

ULJANIK PLOVIDBA

8

243,480

419,374 292,933

364,114

Num.

Name of ship owner

1.

4.

JADROPLOV

6

168,402

5.

JADROLINIJA

50

114,025

DWT Grain capacity Number of Numberof in m3 vehicles passengers

6.

BRODOSPAS

16

11,464

11,312

JADRANSKI POMORSKI SERVIS

16

5,327

3,178

8.

RAPSKA PLOVIDBA

5

2,128 1,212

232

9.

BRODOSPLIT PLOVIDBA

1

10.

HRVATSKI REGISTAR BRODOVA

0

% share of GRT

DWT

165,471

39.88

43.08

953,069

125,470

27.03

29.54

325,680

72,830

14.75

15.79

48,200

10.21

11.03

152,161

6.91

3,824

7.

KW

27,799 116

166

1,092

41,432

0.69

0.43

28,330

0.32

0.12

5,284

0.13

12

Total on day 31/12/2017

133

1,650,173

2,656,052

1,950,065

3,990

29,019

639,178

Total on day 31/12/2016

138

1,741,934

2,834,540

2,224,613

3,990

29,073

647,970

0.07

0.07

100%

100%

Source: HUB Mare Nostrum

such as Capesize vessels where, during the last quarter, freight rates reached on average $22,000 per daily, compared with an average of $12,000 during the first three quarters.

During the last quarter of 2017, freight rates for Panamax vessels was on average $12,000, which exceeded the average for the first nine months by some $3,000 per day. Lower tonnage vessels, Supramax and Handysize vessels, saw a slightly lower increase, since their freight rates had previously peaked in November, and have seen a slight decrease since, stressed Edo Taslaman, a member of the Directorate for Commercial Affairs in Atlanska plovidba. Concerning forecasts for the future, Taslaman highlighted the fact that, in accordance with the growth assessment of the global economy, in 2018 sources in Atlanska plovidba expect to see a further increase in demand for raw materials of around 4% to 4.5%. “In addition to an increase in demand and a slowdown in fleet growth, this will significantly help the dry bulk market in 2018. Following the delivery of 39 million GRT in 2017, we are expecting a further slowdown and deliveries at the level of around 25 million to 27 million tonnes in 2018, which, considering the scrapping of old vessels at the level of that seen in 2017, would mean a real increase of the fleet between 1% and 1.5% in 2018”, explained Taslaman.

AMENDMENTS TO THE MARITIME CODE In 2017, many of the activities performed by the Mare Nostrum Association concerned amend-

ments to the Maritime Code. Association representatives participated in the work on amendments through working groups of the Ministry of the Sea, Transport and Infrastructure: The Working Group for Social Reform; The Working Group for Vessel Registers and the Working Group for Tax Provisions and Shipping. The dynamics in the process of amendments to the Maritime Code was established and, according to plans, by July 2018 it will be referred to the standard legislative procedure. The Association participates in the preparation of the new Maritime Domain and Maritime Ports Act. Working sub-groups meetings have been held in July and October of 2017 concerning concessions, as well as, both at county and local level, regulations of the status of ports open to public transport and the regulation of status of special purpose ports – ‘sports’ ports. The working subgroup held a meeting on special purpose ports, with a special emphasis on sports ports in September 2017. This Act is expected to be referred to the enactment procedure by the end of December.

SHORTAGE OF VESSEL CREWS “I would like to express my compliments to the Ministry of the Sea, transport and Infrastructure for the launched initiatives, which were intended to facilitate the shipping sector business activities through legislative framework and the intention to implement a new register of shipping. This definitely marks a step forward towards a new digital future of

I would like to express my compliments to the Ministry of the Sea, transport and Infrastructure for the launched initiatives, which were intended to facilitate the shipping sector business activities through legislative framework and the intention to implement a new register of shipping. This definitely marks a step forward towards a new digital future of the maritime situation of Croatia.

Mario Pavić, President of the Management Board of Tankerska plovidba and President of Mare Nostrum Association

February 2018 | No 277 | PVinternational | 23

SHIPPERS BUSINESS ACTIVITY Flags of the members of the Croatian Shipowners’ Association Mare Nostrum 2017

CROATIA ATLANTSKA PLOVIDBA 1.

DUBROVNIK 2.

BRODOSPAS - SPLIT 3.

BRODOSPLIT PLOVIDBA JADRANSKI POMORSKI 4.

SERVIS - RIJEKA 5.

JADROLINIJA - RIJEKA 6.

JADROPLOV - SPLIT 7.

RAPSKA PLOVIDBA - RAB TANKERSKA PLOVIDBA 8.

ZADAR 9.

ULJANIK PLOVIDBA - PULA HRVATSKI REGISTAR 10.

BRODOVA TOTAL

MALTA

ST. VINCENT

VENEZUELA

BAHAMAS

5 13

MARSHALL ISLANDS

PANAMA

TOTAL

8

13

1

16 1

3

14

1

1

50 6 5

16 50 6 5

14

4

18

6

2

8

0 113

3

0

1

6

9

1

133

Source: HUB Mare Nostrum

NATIONAL MARITIME TRANSPORTATION SHIPPING COMPANIES

Tradition, men and our fleet – the

2017 was a record-breaking year for Jadrolinija. We carried over 12 million passen stressed David Sopta

N

ew contracts have recently been signed concerning high-speed vessel lines and catamarans, as well as profitable ferry lines. A further large-scale tender is expected to be invited for subsidised shipping lines. Moreover, the contract renewal of the international ferry line Bar-Bari is expected. In addition, the renewal of the local passenger fleet is expected in the near future. Maritime passenger transport has seen a 6% to 7% increase in the number of vehicles and passengers carried. “2017 was a recordbreaking year for Jadrolinija. We carried over 12 million passengers and 3 million vehicles, which is the highest level since annualised records began. It is important to note that 2017 was also the year in which Jadrolinija marked its 70th anniversary of involvement in its long-term relationship with passengers and the sea.

Such results have confirmed that Jadro24 | PVinternational | February 2018 | No 277

linija is the leader in Croatian maritime transport and enabled the company to currently operate with financial stability, as well as to create the backdrop for an intensive investment cycle into fleet renewal that we are about to implement”, emphasised David Sopta, President of the Management Board of Jadrolinija. Sopta pointed out that tradition, men and the fleet are the cornerstones, the greatest advantage and potential for Jadrolinija.

Its fleet currently comprises 50 vessels, 9 of which are high-speed, 4 passenger vessels and 37 ro-ro passenger vessels, 3 of which are large overnight ferries plying international shipping lines between Croatia and Italy. This year, following a comprehensive analysis of the state of the fleet, Jadrolinija is starting the implementation of their strategic plan of fleet renewal and modernisation. “It has to be pointed out that our fleet is currently in good condition. We carry 12 million pas-

sengers annually, in compliance with the highest safety standards and without any significant accidents. Nevertheless, some vessels in the fleet are about to see the end of their life cycle and so they need to be adequately replaced. Regarding the high-speed vessels, we have started taking steps towards renewal, yet we are also simultaneously meeting the requirements of the market on which there is increasing demand for high-speed vessel transport. The idea behind this is to provide Jadrolinija with faster, newer and more comfortable vessels on the most important lines and to ensure access to each island in the most comfort possible and the most effective possible way”, noted Sopta.

LEADER IN THE ADRIATIC SEA “Jadrolinija is currently introducing additional shipping lines towards the most popular and most in-demand tourist

the maritime situation of Croatia”, highlighted Pavić.

Shipowners are faced with a shortage of some crew on the labour market, which caus-

SHIPOWNERS ARE FACED WITH A SHORTAGE OF SOME CREW ON THE LABOUR MARKET, WHICH CAUSES PROBLEMS IN RECRUITMENT es problems in recruitment. Negotiations are currently in place with the Seafarers Union of Croatia concerning the signing of the National

Collective Agreement for Croatian seamen on vessels for international navigation, which is expected to be extended to foreign crew members. This would maintain the competitiveness of vessels flying the Croatian flag, which is the specific objective of the relevant ministry that has entered into contracts linked with the acknowledgement of certificates with the Philippines and Vietnam. “Consequently, seamen originating from these countries have been allowed to embark on vessels under the jurisdiction of the Croatian flag. Notwithstanding the fact that the negotiations with the Seamans Union of Croatia have been extended beyond the deadline, we believe quality solutions for Croatian ship owners will eventually be provided through dialogue, so that Association members recruit the required number of trainees, based on vessel tonnage, but they also significantly exceed the required number. Over 700 cadets are trained on vessels throughout the year”, pointed out Mario Pavić.

10 0 members of Mare Nostrum Association

133 3vessels the Association manages

1.65

it totals million GRT and around 2.66 DWT

greatest potential for Jadrolinija

ngers and 3 million vehicles, the highest level since annualised records began,

destinations. We are working to meet market challenges as effectively as possible using our existing fleet, keeping in mind our mission and our specific objective, which is to ensure connections between Croatian islands and the mainland. Fleet renewal will certainly enable us to further reallocate the vessels where

there is a favourable market opportunity”, he added.

Concerning competition, Sopta pointed out that Jadrolinija has already provided a response to competitors on the international market. “During 2017 and also in 2018 tenders have been invited for new lines for which any shipping

companies whose vessels fly any EU flag are eligible to apply. Jadrolinija has won all the lines that it applied for and thus has successfully retained its leading position in the Adriatic Sea”, highlighted David Sopta.

Jadrolinija currently employs around 1,700 staff, of whom seamen account for almost 75%. “In addition to the fleet, these are our greatest strength and competitive advantage on the market. Their experience needs to be highlighted and we need to ensure knowledge transfer to new generations. The current number of seamen is sufficient, yet we are keeping abreast with the current labour market conditions, primarily due to the fact that there are in-demand professions, which applies both to domestic and international markets. Consequently, through a web app we constantly receive and accept new job applications and CVs of all those interested “, concluded the President.

February 2018 | No 277 | PVinternational | 25

BEHAVIOURAL ECONOMICS

Influences on investment decisions Behavioural Economics methods are adaptable to different situations, as the specific objective of behavioural finance is to improve the understanding of financial markets by Ilijana Grgić frequently make decisions based on temporary wishes or something that accidentally caught their attention for an instant. According to research findings, rational decision-making actually does not exist and we are constantly persuading ourselves that we are making rational decisions”, emphasised the Director of Ramiro, Tanja Pureta.

THE IMPORTANCE OF ADDITIONAL CRITERIA

According to research findings, rational decision-making actually does not exist and we are constantly persuading ourselves that we are making rational decisions.

Tanja Pureta, Director of Ramiro

H

uman assets are constrained by their cognitive abilities and are not always perfectly rational. Consequently, a much-used economics approach reveals the role of intuition and emotion on making of important decisions, and the interpretation of and reaction to, specific information. Behavioural Economics focuses on how feelings and the structure of the human mindset impact on economic decision-making and also explores the limits of human rationality. Furthermore, it provides explanations from multiple viewpoints on why humans are not rational and points out the importance of investor preferences, which do not necessarily always have to be predictable and rational. These were the issues addressed during the roundtable discussion Behavioural Economics and the Psychology of Financial Markets: What Influences our Investment Decisions? recently held at the Zagreb Stock Exchange Academy.

Over the last several decades, an increasing number of psychologists and sociologists have been studying economics, whilst economists have been increasingly using the tools of psychology in their work. Moreover, economic decision-makers are now becoming less frequently considered as rational. “Humans seldom make rational decisions; they much more

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Financial sector decision-making requires facing a large number of risks and different alternatives whose outcomes are frequently unknown. Hence, the tools used in behavioural economics have proved useful in understanding the conduct of investors and managers. In standard financially-balanced models it is assumed that investors focus primarily on asset risk if they impact on marginal benefit of consumption, and that they use publicly available information in order to predict a return on investment as accurately as possible. Nevertheless, many anomalies appear showing this is not always the case. “The importance of additional criteria is frequently emphasised.

In other words, the importance of a broader perspective is pointed out, and the impact of any non-financial aspect of a specific business has been increasing, where corporate social responsibility and the role of ethics in business operations are increasingly gaining importance”, stated Violeta Colić, Director of Communications Office Colić, Laco and Partners.

Behavioural Economics is applied extensively, since its tools and methods are adaptable to different situations in which the principal factors are uncertainty and risk, whereas the specific objective of behavioural finance is to improve the understanding of financial markets. Investor behaviour is studied through the use of methods from psychology, sociology and related sciences in order to provide explanations for ways in which investors process information, based on which they subsequently become involved in activities.

CO-OPERATION BETWEEN DOK-ING AND FER

Autonomous vehicles for extreme conditions The project to develop a remote-controlled vehicle intended for extreme conditions is worth almost €2.2 million, including non-repayable EU funding by Krešimir Sočković

D

OK-ING, in co-operation with the Zagreb-based Faculty of Electrical Engineering and Computing (FER), is implementing a project to develop a remote-controlled vehicle intended for use under extreme conditions.

This project is worth almost €2.2 million, which includes substantial non-repayable EU funding.

The project is intended to develop a vehicle for extreme conditions including nuclear, radiological, chemical, biological and explosive threats. It was launched in October 2017 and, in accordance with the plan, must be completed in September 2019. The project is intended to develop the first prototype of a remote-controlled management system for crisis situations.

The European Union has co-financed the project with €1.2 million through structural and investment funds, more specifically the Operational Programme Competitiveness and Cohesion.

A UNIQUE PRODUCT Throughout this project we have used a new technology which we are aiming to launch on the global market, stated the founder and owner of DOK-ING and one of the project managers, Vjekoslav Majetić. “This project is intended for the protection of people in adverse and extreme conditions, such as the nuclear disaster in Fukushima, fire, biological catastrophes and similar hazards. Our objective is to develop independent vehicles intended to help under the worst possible conditions, where human teams cannot reach, in order to prevent the spread of a specific disaster. Such vehicles need to be able to remove obstacles and dangerous objects, such as explosive devices. In addition, they are intended for patrolling, monitoring and surveillance, as well as the collection and processing of data, fire suppression and decontamination”, pointed out Majetić.

This is a unique product globally and hence there is potential for exports to inter-

national markets. The co-operation with a research group from the Faculty of Electrical Engineering and Computing includes the development of algorithms and vehicle remotecontrol systems, with DOK-ING primarily focusing on vehicle development, highlighted Ivan Petrović, Professor at the Faculty of Electrical Engineering and Computing.

“This is important concerning the difficult working conditions, such as fire or ionising radiation. We are working to develop a vehicle that will be capable of returning to the zone of departure in case communications between operator and vehicle has been interrupted”, added Petrović.

It is important to highlight that DOK-ING ranks amongst the most innovative companies on the local market. It was founded 27 years ago. Its core products are roboticised machinery and mine clearance vehicles, as well as fire suppression and mining machinery.

Over the last several years, the company has been focused on innovative electric vehicles and scooters and they already have customers. Moreover, it is working on YD, which is a new model personal electric vehicle. In addition, it has developed Tom-Tom, a small-dimension multifunctional cargo truck. Furthermore, the company provides Core, the first Croatian electric motorcycle, manufactured in co-operation with a Spanish company.

Our objective is to develop independent vehicles intended

to help in the worst possible conditions, where human teams cannot reach, in order to prevent the spread of a specific disaster.

Vjekoslav Majetić, founder and owner of DOK-IN

February 2018 | No 277 | PVinternational | 27

BOOKING.COM ISSUES GUEST REVIEW AWARDS FOR 2017

Four Croatian cities listed in top 20 of most awarded In Croatia, the award has been given to 24,395 facilities of all types with total average grade of 9.0; 243 received a perfect ten

B

ooking.com, the global leader in connecting travellers with the most diverse selection of accommodation facilities, gives recognition to its partners, owners of accommodation, who constantly provide an excellent user experience, with the Guest Review Award 2017. Based on over a 140 million reviews this year, the award will be given to 549,937 facilities in 218 countries and territories, with new countries, included this year Cuba, Equatorial Guinea and Liberia. The countries with the largest number of awards are Italy (81,603), France (33,500), USA (30,502), Spain (29,598), Germany (25,969), Croatia (24,395), United Kingdom (21,655), Poland (18,391), Russia (18,300) and Greece (17,361).

For the first time, apartments take the lead before hotels, as the most awarded type of accommodation and they represented 30% of the total of the most awarded facilities in 2017. In fact four out of five of the most awarded facilities does not include a traditional hotel - flats 28 | PVinternational | February 2018 | No 277

(165,876), hotels (132,339), vacation houses (63,697), B&Bs (55,833) and weekend houses (29,634).

OVER 140 MILLION REVIEWS In Croatia, the award has been granted to 24,395 facilities of all types, having a total average grade of 9.0; 243 of them

BASED ON THE NUMBER OF AWARDS RECEIVED CROATIA MOVED FROM 9TH PLACE (IN 2016) TO 6TH. received a perfect ten, showing their dedication to offer users an unforgettable stay. Four Croatian cities are included in the top 20 - Split, which came second,

after Rome, Zadar and Dubrovnik (9, 10) and Zagreb (19). Based on the number of awards received, Croatia moved from 9th place (in 2016) to 6th.

Old Town Rooms Deluxe Suite in Zadar, Alte Post Apartment (Zagreb), Polai Panorama Apartments (Pula), Marulic Square Garden (Zagreb), Apartment Karmen (Split), Holiday Home Međimurski ceker (Sveti Martin na Muri), Guest House Cardea (Split), Guest House Plitvice Hills (Korenica), BeaR’s LOG (Selište Drežničko) and Holiday Homes Via Natura (Rakovica) are some of this year’s winners of the 2017 Awards.

Over 140 million reviews available at Booking.com are authentic experiences of actual visitors. Not only do the reviews help travellers find their ideal accommodation, but they also give their owners actual and up-to-date information which could have a positive affect on their business, evaluated Peter Verhoeven, Global Director of Partner Services at Booking.com.