NEWS FLASH
The former state operator of Zagreb Airport, Zagreb Airport Ltd. (not to be confused with the current operator Medjunarodna Zračna Luka Zagreb - MZLZ) issued a public call earlier this month inviting interested investors to express their interest in participating in an international competition for the selection of an investor for the construction of a new hotel and mixed-use centre near Zagreb Airport. In its call, Zagreb Airport Ltd. said, “The most favourable investor will gain the right to implement the project by establishing a building on a plot of land measuring 18.344 square metres located on Rudolfa Fizira Street, Velika Gorica [the same street the airport is located on]. The land is owned by Zagreb Airport Ltd. and is outside the concession area of Medjunarodna Zračna Luka Zagreb - MZLZ”.
The investor will be selected through a two-stage process. The first phase involves submitting an expression of interest, while the second, competitive phase will be open only to those who participated in the initial round and provided all required documentation. The company is seeking to develop a 500-bed hotel as part of a mixed-use centre that includes commercial facilities such as clinics, conference halls, restaurants, and other amenities to serve passengers. The hotel must operate under the franchise of a reputable international brand.
I know there was some news that there will be one at Ljubljana airport and I wonder if that really went through or?
ReplyDeleteGood but why is this needed
ReplyDeleteWhy is hotel needed next to an international airport?
DeleteI for one would use it, as it's hard to drive from Ljubljana at 2 am just to catch the 7am flight :)
DeleteMostly used by people who need to catch a morning flight, yep. Businessmen, largely, also tourists to an extent. At least that's my personal experience from when I stayed at Gatwick's airport hotel
DeleteEvery major airport has an hotel, Zagreb airport has several hotels, but none are adjacent to the airport, nearest business hotel (Hotel Aristos 120 rooms) to the airport is around 10km away in Buzin, there's small Best Western hotel in Velika Mlaka, 40 rooms, and then you have 8-9 small hotels/inns, near the airport in Pleso area, about 3km current terminal. 3 smaller hotels have barely 10-12 rooms each, so not sufficient for the required traffic at the airport. New hotel would also need to be under major hotel chain, ideally 4 or a 5* hotel, with 250 rooms/500 beds. Roughly investment of €50-57 million needed. Shereton or Hilton being most likely choices here.
DeleteOK, they just added Pulman hotel to this list, very close to Aristos Hotel, Pulman has 194 rooms, ~380 beds.
DeleteYes, but Zagreb is not a hub and there’s no sign it will become anytime soon. So that hotel would have very weak utilization
DeleteZagreb is a major regional airport, national hub, Zagreb is also growing tourist and business destination. Ad to this being capitol city of an EU/NATO member state which is closely integrated in to said organizations and belongs to group of wealthiest nations on Earth with GDP of around ~$103billion or €95 billion, it is high income economy with $26600 per head and $53500 PPP.
DeleteI think in 2025, 500 bed Airport hotel might be half empty, as there's as you pointed out Airport has too few passengers, projected 4.8 million in 2025, but by the time airport hotel is complete, lets call it Airport Sheraton in 2030, airport will be handling well above 7-8 million passengers, at normal rate of growth, Airport Zagreb is expected to handle 8.5 million passengers. Naturally the growth could accelerate and total noumber could be far higher, or we could have slower growth, and this figure could be lot lower. But even with 7 million in 2030, and this is almost anaemic growth, you're still looking at lets say 500 bed hotel having substantially higher occupancy rate than with current traffic.
If we assume, with current traffic potential airport would have only 25% occupancy rate with current traffic, with 7 million it is fair to assume, that ratio will be 35%, if airport hits projected 8.5 million passengers, then we're looking at 42%. now it airport hits lets say 10 million passengers, then you're looking at 50% occupancy rate. And lets not forget airport hotel is built for long term needs, not 1-3 years, based on initial occupancy rate.
By 2040, airport Zagreb will handle at least 17 million passengers, with 20 million quite possible target to aim for. with 17 million this means Hotel will have 85% occupancy rate, and with potential 20 million ,this figure will go up to 100% occupancy rate meaning, it'll be more than good reason for existence of such hotel.
I don't like your mathematics, you can not calculate airport growth knowing that home airline is more than inert and that prices on Croatian coast are expensive even for western European tourists, whose economies are deteriorating. At the end, do Croatian diaspora grows and do they visit it's homeland often?
DeleteAnyway, you should take a look at what kind of passengers are going through airport. Are they transfer or p2p passengers? Right now and in the future. Do they, or don't they need to use a hotel service?
Anon 15:03 Zagreb added less than 2 million passenger in the past 10 years. You think adding over 15 million in the next 15 years is quite possible?
DeleteThank you for all the laughs!
@Anonymous16:17
DeleteA fair points, but I am looking at similar sized countries and economies in similar predicament. You need to assume who ever is proposing a business plan and looks at ROI what will be €57 million, must look at longer term projections. Can a hotel be justified as an investment on this location and what'll be the utilization of such facility, would it be financially prudent.
Part of the assessment will be, how viable it Croatian economy, how viable is Zagreb as a destination. As this will be primarily a business hotel, and overnight guests who need to catch a morning flight will also stay at the hotel, so you need to look at these longer term projections. Also consider what other hotels might be nearby that might offer same standard of service.
To my knowledge, there's Aristos 4* hotel some 10km away, offers 125 rooms and suits and large conference facilities. Other being Pulman, offering 194 rooms and suits this being 4* delux hotel, but it is 12.5km away from the airport. So both hotels would offer strong competitive price point and position to any future hotel, but where Sheraton/Hilton Airport hotel might have a distinct advantage might be its location, right next to the terminal, well 300m from the terminal. Which no doubt will be crucial for many guests who visit Zagreb only for a day or two and need to catch a morning flight.
Now this is economics come in to play, what'll be the market conditions in Zagreb and Croatia in 2030, 2035, 2040... You look at current trends, current Croatian economy which is $103bn and what'll be the situation in 2030, estimates are if we look at Croatian National Bank and current Government, based on current trends:
Croatan GDP estimates and projections in in billion €...
2024: 87.2
2025: 94.8
2026: 103.4
2027: 112.7
2028: 121.8
2029: 132.7
2030: 143.4
Assuming Zagreb constitutes 30% of that figure, this would put Zagreb's economy at €43 billion in 2030, purely on that fact, this would be sufficient reason for an airport hotel, due to business demand in the local economy alone. Then you also assume, noumber of visitors or travellers to Zagreb/Croatia would increase at current trend, and you come to a figure of 8.5 million travellers using Zagreb airport in 2030, in time of new Sheraton/Hilton Airport first year of operation.
Vilnius for example has 3 airport hotels, 100 room Radisson being one of these.
Prague has 4 large hotels, including 120 Room Holliday Inn, 200 room Courtyard by Marriott and 120 room Hotel Modra.
Riga is getting a large Rail Baltica 4* Hotel at the airport and 120 Room Sky-high Hotel has been there for noumber of years.
Tallinn has noumber of hotels but considering the airport is in close proximity to city centre...
Noumber of similar sized cities across the EU have airport hotels, in most cases several such hotels, Dublin for example has 4 large hotels , Helsinki 4 large hotels, Bristol Airport has large Hilton hotel, Oslo airport has 3 large hotels and list goes on.
The point is, as economy of the city and the country grows, the more they become attractive to investments and therefore business travellers. Zagreb has about 20 or so business hotels, 4-5 of these are large 5* hotels, and about 15-20 are 4* hotels of which about half are large over 100 rooms. But city lacks about 10-12 such hotels as is, and by 2030, this noumber might not change due to increased demand. As we speak 4 business hotels are being constructed, one of these is a 5* and remaining are 4*, but still there's loads more demand.
I genuinely don't see the problem or lack of demand for another 4* hotel at the airport. If noumber of other similar sized cities in Europe have it....
Bravo Hrvatska!
ReplyDelete