DEVELOPMENT OF THE SPA TOURISM IN SLOVENIA

EXPERIENCES FROM THE TRANSITION PERIOD AND AFTER JOINING THE EU

OPPORTUNITIES AND CHALLENGESOF THE INDUSTRY IN THE SEE REGION

Peter Vesenjak, Hosting d.o.o.Tuhelj, 11.10.2014

Spa sector in Slovenia - fastest growing tourism branch – 15 spas

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20105,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Average number of hotel beds in slovenian Spas

+27%

Share in all Slovenia Hotel industry:

18,5% (15 spas)

Spa destination -> 26,5% of all beds in

Slovenian tourismEU

acc

essi

o,

seco

nd

inve

stm

ent

cycl

e

Ownership definition,

privatisation, first investment

cycle

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Total Domestic Foreign

More arrivals, more overnights, quality development ...

+77%

Share in all Slovenia:

26,4% (15 spas)

31,5% (all spa destinations)

Development of higher quality of lodging and services standards

Share 2009 Share 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

67.0% 70.0%

10.3% 8.5%

22.7% 21.5%

Share of the overnights by type of accomodation

Hotels Apartments Campings

58.4%

11.4%

30.2%

Share of beds by type of lodging capacities (2013)

Hotels Apartments Campings

Low dependency on domestic health insurance guests/patients

YearNumber

overnights from Health

Insurance

Total Number of overnights

Domestic overnights

Share in all overnights

Share in only domestic

overnights

2009 263.175 2.562.007 1.653.144 10,3% 15,9%

2010 277.606 2.537.328 1.591.353 10,9% 17,4%

2011 301.202 2.636.471 1.614.325 11,4% 18,7%

2012 287.810 2.601.958 1.518.397 11,1% 19,0%

2013 288.826 2.530.842 1.458.170 11,4% 19,8%

Stable occupancy rate with all year round operation

Beds Rooms/ units Beds Rooms/ units Beds Rooms/ units Beds Rooms/ units Beds Rooms/ units2009 2010 2011 2012 2013

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

61.7

% 68.2

%

62.8

% 69.4

%

62.1

% 68.7

%

62.2

% 68.8

%

61.2

% 67.6

%

50.0

%

67.3

%

45.7

%

61.5

%

43.3

%

58.3

%

40.0

%

53.9

%

38.2

%

51.4

%

39.8

%

48.2

%

37.6

%

45.6

%

38.9

%

47.1

%

36.2

%

43.9

%

36.5

%

44.2

%

53.7

% 60.8

%

53.2

% 60.7

%

53.2

% 60.5

%

52.0

% 59.7

%

51.1

% 58.5

%

Hotels Apartments Campings TOTAL

Best occupancy rate in Spa hotels – But decline since 2003? Challenge?

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201045%

50%

55%

60%

65%

70%

75%

Average occupancy rate of hotel beds in slovenian Spas

+11%

Importance of international markets for long term growth

33%

8%

59%

TOP 6 foreign Other Foreign Domestic

32.6%

32.6%

7.5%

9.2%

4.2%

13.9%Austria

Italy

Croatia

Germany

Netherlands

Russia

Number of overnights in Slovenian Spas (2010)

Intensifiying the international markets in last period.

Share 2009 Share 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

35.5% 42.4%

64.5% 57.6%

Foreign Domestic

2008 2009 20100

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

1,887,841 2,005,7782,316,972

4,625,039 4,763,647 4,965,683

Day visitors to pools Entrance to pools area

High importance of thermal and recreation water surfaces

Diversified revenues

Share 2009 Share 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40.8% 46.0%

27.4%25.1%

21.5% 20.6%

10.3% 8.3%

Lodging F&BMedical services Entrance to the pools

Stability of operations

2009 2010 2011 2012 20130 €

50,000,000 €

100,000,000 €

150,000,000 €

200,000,000 €

250,000,000 €

211

,913

,169

€

220

,288

,565

€

222

,277

,737

€

220

,275

,501

€

207

,984

,353

€

206

,594

,978

€

209

,955

,378

€

217

,511

,884

€

217

,108

,389

€

203

,328

,197

€

180

,917

,080

€

176

,636

,739

€

182

,439

,453

€

198

,643

,468

€

188

,207

,739

€

Operations revenues Clear revenues from sales

Growing efficiency

2009 2010 2011 2012 20132,900

3,000

3,100

3,200

3,300

3,400

3,500

3,600

3,700

3,8003,736

3,603 3,616

3,437

3,224

Number of employees (pay role)

Number of employees (pay role) 2009 2010 2011 2012 2013 1,200 €

1,220 €

1,240 €

1,260 €

1,280 €

1,300 €

1,320 €

1,340 €

1,253 €

1,298 € 1,297 €

1,326 € 1,326 €

Average monthly salary (gross)

Labour (gross) cost per employee

Growing efficiency

2009 2010 2011 2012 20130.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

0.74 0.71 0.690.65 0.62

37.2% 36.5% 35.2% 34.1% 34.2%

Number of employees (pay role) per roomShare of Labour (gross) cost in operations revenues

Increasing level of prices

2009 2010 2011 2012 2013 - €

10.0 €

20.0 €

30.0 €

40.0 €

50.0 €

60.0 €

70.0 €

80.0 €

90.0 €

100.0 €

74.

4 €

69.

3 €

67.

1 €

73.

5 € 8

4.8

€

39.

0 €

36.

6 €

35.

6 €

38.

5 €

43.

1 €

80.

5 €

73.

4 €

71.

5 €

78.

6 € 9

0.4

€

48.

4 €

45.

2 €

44.

1 €

48.

4 €

54.

5 €

ARR average - all types of accomodation REVPaR average - all types of accomodationARR hotels REVPaR hotels

The most succesful and fastest growing part of Slovenian tourism – comparison to all hotel industry

Category/Ratio for year 2013Share or comparison of 15 spas in all Slovenian Hotel Industry (left-> Spas,

right-> All hotel industry)

TotaL Revenues 47,7%Operations revenues 45,8%Assets 42,5%Total financial liabilities 35,7%EBITDA (€) 52,6%EBITDA share in operations revenues 16,8% 15,0%Capital 50,3%Direct and indirect share of public sector (state and/or municipalities) 39,9% 33,5%Number of employees 50,2%Total added value 52,3%Added value per employee 104,2%Average bed occupany rate 50,2% 38,0%ARR in hotels 116,6%RevPAR in hotels 135,2%Revenue per overnight 114,4%

• Quick transformation to commercial companies, definition of ownership and privatisation process

1

• Investment process – upgrading the quality of facilities and services (wellness) – enhanced by EU funding after accession to EU

2

• Enhancing the quality of services, going back to Health + Medico Spa, marketing restructuring (pricing), intensive internationalisation (markets, capital, management) -> improving financial results of operations

3

Lessons from transition period and accession to EU

HOSTING D.O.O.WWW.HOSTING.SI PETER VESENJAKMTEL: 00386 41 514 020

Thank You for Your attention.