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Horwath Hotel Industry Survey Montenegro 2005

Here, you can find some parts of Horwath Hotel Industry Survey Montenegro 2005.

Content :

1. Introduction by Minister of Tourism of Montenegro
2. Foreword
3. Tourism and Hotel Industry in Montenegro
4. Methodology
5. Executive Summary and Highlights
6. Charts data
7. Download whole document

Introduction by Minister of Tourism of Montenegro

It is my pleasure to introduce, for the first time in Montenegro, the survey results of the national hotel industry of Montenegro, which was conducted by Horwath and Horwath Consulting Zagreb, and the Faculty of Tourism, Hospitality and Trade Management in Bar, under the "Horwath Worldwide Hotel Industry Study".

Montenegro has extremely valuable potential for the sustainable tourism development and aims to become one of the most significan high quality tourism destinations in the Mediterranean and Europe. Such exposure to international competition requires continuous monitoring and transparency of business performance results of each segment of our offer, especially hotel industry, as one of the most important segments.

Results of this survey will enable monitoring of national hotel industry contribution, and its comparison to the results of hotel industries of other countries. I am sure that the results of the survey will be useful to the hotel owners, managers, investors, as well as other stakeholders.

Therefore, on behalf of the Ministry of Tourism, I would like to thank to all who conducted the survey, especially to the hoteliers who have contributed to its realisation.

Predrag Nenezic, Minister
Ministry of Tourism of Montenegro

 

Foreword

Information are, in global economy, the base for achievement of competitiveness on the market. In contemporary hotel industry, transparent information on business results are the basic ground for quality business decision making and effective planning, thus the availability of business information is the main lever for the achievement of business success.

It is our great pleasure to introduce the results of survey on Montenegro hotel industry, which was conducted by the Horwath Consulting Zagreb and the Faculty for Tourism, Hospitality and Trade Management in Bar, ordered by
Montenegro Ministry of Tourism.

This survey is part of the global survey "Horwath Hotel Industry Survey", which has been carried out for the past 35 years in the organisation of Horwath International network, using the standard methodology. When a survey of this type is conducted in a country for the first time, it requires an outstanding effort of both the participants and the organisers of survey. Therefore, we would like to express our sincere thanks to all the hoteliers in Montenegro who participated and provided us with all the necessary data. We would also like to stress that this survey would not have been possible, without the recognition of its importance by the Montenegro Ministry of Tourism.

We believe that we will provide the continuity of this survey in the years to come. Therefore, we would like to invite the industry professionals to participate in this survey next year. Until then, we send you our best regards.

Prof. Dr. Stevan Popovic, Dean
Faculty for Tourism, Hospitality and Trade Management Bar
Dr. Sanja Cizmar, Managing Director
Horwath Consulting Zagreb

Tourism and Hotel Industry in Montenegro

Tourism in Montenegro is experiencing its extensive development, which started in the 1960's. Its ascending path was interrupted by an earthquake on the 15th April 1979, which destroyed and damaged a relatively large number of hotels in the Montenegrin coastal region.

Reconstruction of hotels, thanks to the great help (donor capital for reconstruction and development) from republics and provinces of ex Yugoslavia, was completed within the 8 years, followed by a period of business stabilisation until the 1991. Beginning of the 1990's sees the period of regression caused by an isolation of the State Union of Serbia and Montenegro, and therewith Montenegro as a tourism destination, which lasted until the end of the last century. Parallel with this, the process of slow transition and privatisation took place, which is now reaching its end.

During the last few years, owing to the reconstruction of privatised hotels, synchronised activities of the tourism industry, Ministry of Tourism and the National Tourism Organisation, as well as the Government policies of reintegration of Montenegro in the international community, there are visible signs of revitalisation of Montenegrin tourism and hotel industry, as well as indications of its re-growth, but on the qualitatively new grounds. Montenegro received assistance from the German Government, in a form of a new, contemporary strategy for tourism development - the Master Plan for Tourism Development, adopted in 2001, which includes a new marketing strategy, as well as model projects for development of each of the attractive tourism locations. Based on foundations of the Master Plan for Tourism Development, together with development studies for other services, a new Spatial Plan for Montenegro is in the process of creation, which will create conditions for the operative planning of tourism development on a local level. The Montenegrin Ministry of Tourism established a set of tourism laws, including regulations on classification and categorisation of accommodation facilities adapted to the European Europe standards. An ongoing process of changing the regulations
on the VAT is also taking place, in order to introduce a reduced selective rate for tourism and hotel industry. The Ministry introduced a Strategy of Sustainable Mountain Tourism Development and a Wellness Strategy, whilst the Government recently accepted a particular spatial plan for the area of maritime domain of Montenegro. The first private Faculty for higher education in tourism
and hotel industry was also established in Bar.

Beginning of new, positive trends was evident by the increase in tourism nights volume (approximately 15% in total, and 32% in foreign volume) in 2004, as a result of the tour operator's return to the reconstructed hotels, and the continuation of tourism season extension in 2005. Preliminary arrangements were made for the arrival of reputable international hotel management companies (Aman Resort for the lease of "Sveti Stefan" hotels), which can be a
good catalyst for attracting the major investors ("major players") to Montenegro.

The Ministry of Tourism has recently started two capital informative projects: Satellite Account (TSA) of tourism expenditures with the WTTC and the Montenegrin Hotel Industry Survey according to the USALI system conducted by the Faculty for Tourism, Hospitality and Trade management in Bar and Horwath International, Horwath Consulting Zagreb. Both of the projects represent the
implementation of international standards in the area of analytical information, and they allow the international comparison by key figures, which is one of the indispensable requirements for an efficient macro and micro economic management of tourism development. Analysis of results by the USALI system also has an important educative mission for the hotel management in
Montenegro.

Methodology

This hotel survey in Montenegro has been carried out on the basis of standard methodology of "Horwath Hotel Industry Survey".

The research instrument used for this survey was the questionnaire, which was basically defined in Horwath International. This 21-item questionnaire includes
information on physical condition of the hotel properties, structure of facilities, technological equipment, employment, market and financial business results.

The field research was conducted in the period between April and October 2005. The data collected refer to the 2004 financial year and budgeted results for 2005.

The survey sample includes 37 hotels with 4,869 hotel rooms, which represent 38.9% of the 2004 registered hotel capacities in Montenegro. The results of this survey do not strive to represent the statistical average of business results of Montenegrin hotel industry, but indicate the currently achieved level of business performances and provide the basis for monitoring of development trends of
Montenegrin hotel industry.

Results are presented according to the size, category, price level and geographical location of the hotel (Seaside, Central area, Mountain area of Montenegro). All figures are based on simple arithmetic averages.

The financial results are shown in accordance with the "Uniform System of Accounts for Lodging Industry" by hotel departments, and are given in Euro. An explanation of the terms used is given at the end of the publication.

 

Executive Summary and Highlights

Market Position and Key Figures of Montenegro Hotel Industry

Montenegro - the Wild beauty - is one of the young, newly discovered tourism destinations on the international tourism market, which is at the growth stage of its life cycle.
Montenegro is entering a phase of serious tourism and hotel products creation, as well as its shaping of tourism supply within the whole value chain.

The performance results of the hotel industry in Montenegro completely reflect this market position of the country as a tourism destination. In 2004, Montenegrin hotel industry generated 5.5 thousands of Euros of net operating revenue per room (without the value added tax), whilst it planned a high growth rate for 2005. Such business performance results are still achieved in high seasonality conditions and with concentration of hotel demand in the summer months respectively, which is confirmed by the annual room occupancy rate of 28%. The average hotel operating period is 9.5 months. Additionally, the average net room rate (without the added value tax) in 2004 was 25 Euros, which shows there is considerable space for the price growth in the years to come, especially considering Montenegrin hotel industry is at the stage of intensive investments. Overall, Montenegrin hotel industry is mostly based on the allotment and group businesses, whilst the individual guests represent only 12.2% of total nights in hotels, whether they stayed in Montenegrin hotels for leisure or business purposes.

The results of the survey are based on the sample structure which mainly consists of three star hotels. The average age of hotels in Montenegro is 22 years, with the average 4 year period from last renovation.

Planned Investments

46% of surveyed hotels in Montenegro will invest 261 thousand of Euros per property on average in 2005, and in 2006, 19% of hotels plans to invest 503 thousand of Euros per property on average. The amounts of average planned investments indicate this is the process of improvement of the existing market products, i.e. without a more radical market repositioning.

Profit Level of the Hotel Industry

Surveyed hotels in Montenegro in average operate with losses, which amount to 27.5% of net operating revenue in 2004. However, it is worth mentioning that the plans for 2005 include a significant loss decrease, which means that this year should, according to plans, conclude with only 2.2% of losses compared tonet operating revenue.

Main causes of business losses of hotels are, on the one hand relatively low revenue per room, while on the other hand, expenses include high share of gross payroll and related expenses, which totals to 38% of the net operating revenue. Notwithstanding the low monthly average gross payroll of 320 Euros per employee, there is a relatively high number of full-time employee per room, which in 2004 equalled to 0.54.

The structure of expenses also includes high energy expenses and the administrative departments' expenses.

Results by Region

The hotel resort product of Montenegro in the seaside region generates the highest occupancy, but also the lowest room rate in comparison to the other regions of Montenegro. Tourism in this region is generally based on the allotment business, which has only started to shift towards the product diversification strategy, which will be the main lever of future growth of the hotel industry's operating indicators in this region.

On the other hand, the central region of Montenegro is mainly comprised by city hotels, which are mostly relying on the business guests' demand, and much less on the leisure tourism demand. This is the reason for the aboveaverage level of room rates in relation to the average in the hotel industry of Montenegro. Nevertheless, the relatively low annual occupancy rates are achieved in this region, which mainly depend on demand of the business guests as the dominant segment.

The hotel industry in the mountain area of Montenegro is generally based on the ski and mountain tourism product, which is the main reason for the low occupancy of hotel capacities in this region of the country.

The profitability of hotels is evident in the central and the mountain area of Montenegro, whilst the hotels in the seaside area operate with negative business results on average.

 

Charts data

1989 and 2005 Montenegrin Accommodation Capacities (Beds)

 

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Horwath Hotel Industry Survey Montenegro 2005 (MN/engish)