By 2027, Belgrade will get 8-15 hotels - When, where and how the investment in hotels pays off

(Photo: shutterstock/TinnitusDoll1)

There are 417 hotels operating in Serbia, and 109 hotels in Belgrade, including five five-star hotels. Due to the EXPO 2027, Belgrade will need to increase its hotel capacity by at least 30% to 40%, which would mean an additional 3,000 rooms, according to eKapija interlocutors, noting that between 2024 and 2027, 8-15 hotels are expected to open in Belgrade. which is significantly less than the 120-130 buildings that, in the opinion of the President of Serbia, Aleksandar Vucic, must be built by the time of EXPO 2027.

The time required for investment return in Serbia is often estimated at 10-15 years, which is the same as in Europe. And yet, despite expectations, only a few projects applied for state subsidies until October 9, the total planned investment value of which is EUR 231 million, which is not even half of the EUR 578 million originally allocated for subsidies.

The interlocutors of eKapija point out that the greatest need for new hotels in Serbia is currently in Belgrade, especially due to the preparations for EXPO 2027, but also that Novi Sad and tourist centers such as Zlatibor, Kopaonik and Vrnjačka Banja are also experiencing high demand for accommodation.

As they state, there is a need for additional family hotels, amusement parks, "adults only" hotels, facilities near the airport, glamping resorts.

Belgrade has 5 5-star hotels

According to data from the Serbian Chamber of Commerce, Belgrade has 109 hotels with a total of 7,434 accommodation units that provide a capacity of 10,084 beds and a total accommodation capacity of 13,783. Most of them,, 73 in total, are 4-star hotels with a capacity of 9,266, followed by 3-star hotels with a capacity of 3,184, while the capital has 5 5-star hotels with a capacity of 1,333.

As explained in SCC for eKapija, Belgrade also offers a significant number of peer-to-peer accommodation with 3,184 units providing an additional capacity of 7,372 beds and a total accommodation capacity of 18,141.

- The average occupancy rate of Belgrade hotels is between 60% and 70% on an annual basis, with peaks during the tourist season (April-October) and large events or conferences - says the SCC.

The largest number of hotels in the capital, 73, are four-star (Photo: vvoe/shutterstock.com)

How many investors took advantage of the subsidies on the occasion of EXPO 2027

One such big event, EXPO 2027, is coming soon. In order to increase the number of hotels, a decree was adopted by which the state subsidizes the construction and reconstruction of hotels in Belgrade in the amount of 20% of justified investment costs.

As previously stated, in the next three years, starting in 2024, RSD 22.6 billion will be allocated in the budget for this investment, a total of RSD 67.8 billion, or about EUR 578 million.

- We expect that a large number of investors will use the government`s incentive funds for the construction and reconstruction of hotel facilities with the aim of improving the offer for EXPO 2027 - the Ministry of Tourism and Youth told eKapija.

However, the expectations were not fulfilled. As the Development Agency of Serbia told eKapija, until October 9, according to the Decree on determining the criteria for awarding incentives to attract direct investments in the hotel accommodation services sector, several potential projects have applied so far, which involve direct investments for the realization of the international specialized exhibition EXPO BELGRADE 2027. The total planned value of the investment is 231 million EUR.

- Of the above, more than 70% relate to investments in the construction of hospitality facilities for accommodation (hotel type) and the planned investment value is around EUR 200 million, while the rest relate to the reconstruction of hospitality facilities for accommodation (hotel type) and the planned investment value is about EUR 31 million. Of the above, about half are 4-star categories, while for the rest, due to the addition of documentation, it has not yet been specified whether they will be 4 or 5 stars - the Development Agency of Serbia explains.

They add that incentive funds will be allocated only to projects that meet the criteria prescribed by the decree.

- The right to participate in the procedure of awarding funds for the realization of the international specialized exhibition EXPO BELGRADE 2027 have investors, who, before the start of the implementation of the investment project, apply for the allocation of funds no later than December 31, 2024 - they remind in the DAS.

At the beginning of October, it was announced that the Ministry of Economy awarded the first subsidy in the amount of EUR 5.9 million to the company Airport City West Gate doo Belgrade, for the construction and furnishing of the AC Hotel by Marriott Airport City Belgrade.

At least 30% capacity increase required

The SCC says that EXPO 2027 is expected to attract between four and five million visitors during its duration, a large number of whom will seek accommodation in Belgrade, especially during the peak visitation period. With an average stay of two to three days, the demand for hotel rooms will significantly strain the current capacities, they emphasize.

- Estimates indicate that Belgrade will need an increase in hotel capacity by at least 30% to 40%, which would mean approximately 2,500 to 3,000 additional rooms. This expansion can be realized through new hotel projects or expansion of existing facilities - they point out.

Congresses also dictate the development of hotels (Photo: Pavel L Photo and Video/shutterstock.com)

SCC notes that between 2024 and 2027, an additional 8-15 hotels are expected to open in Belgrade, which will add approximately 2,000 rooms. These hotels, as they explain, will be a combination of luxury, high-end and mid-range, as well as budget accommodation, strategically located near key places and traffic hubs. Also, several existing hotels are planning to expand their capacity by adding new wings or renovating older buildings, which could add another 500-1,000 rooms to the city`s hotel inventory, SCC explains.

- The plan includes mixed development projects that combine residential, commercial and hotel spaces. These projects will add another 500-800 rooms, intended for both short-term visitors and those with a longer stay - they say in SCC.

Hotels are also needed because of congresses

Along with the increase in accommodation capacity, a plan for new events that will ensure hotel occupancy after the EXPO 2027 exhibition should be developed, the SCC notes, pointing to World Tourism Organization (WTO) data that over 30% of international tourist movements belong to the so-called non-tourist movements, among which a significant place is occupied by congresses.

SCC reminds that Belgrade as a destination does not have a seasonality in the form of a year, but is a year-round destination, so it can attract additional guests with its attractiveness with cultural, sports and entertainment content, who visit medical and scientific congresses, sports competitions, concerts, festivals and other cultural events.

- The key for the congress industry in Serbia is the opening of the renovated Sava Center, as well as the St. Regis hotels, which complete the offer of high-class accommodation in Belgrade. In addition to the capital, there are several other congress destinations in Serbia: Zlatibor, Kopaonik, Novi Sad, Vrnjačka banja, Subotica and Palić - they say at the SCC.

Hotels are failing in Novi Sad as well - Looking for family-friendly hotels, as well as hotels "for adults only"

According to data from the Ministry of Tourism and Youth, 417 hotels, including apart and garni hotels, are currently operating in Serbia, with 21,328 accommodation units. There are the most hotels with four stars - 184, followed by 140 hotels with three stars, 67 hotels with two stars, 15 hotels with five stars and 11 with one star. There are also two camps, seven motels, one boarding house and six tourist settlements. There are 181 hostels operating in Serbia, with nearly three thousand accommodation units.

- After the pandemic, Serbia has continuously recorded double-digit growth rates of foreign guests, and since the city centers are the carriers of tourist traffic of foreign tourists, the greatest need for increasing hotel capacities is in Belgrade and Novi Sad - the Ministry of Tourism and Youth told eKapija.

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In Novi Sad, there are 23 hotels

In Novi Sad, according to the data of SCC, there are 23 hotels with a capacity of 1,820, plus 1,116 peer-to-peer units with an additional capacity of 8,972.

• Irig and Fruška Gora: 12 hotels with 546 rooms, 871 beds and a capacity of 1,123, plus 883 peer-to-peer units with a total capacity of 4,576.

• Kragujevac: 11 hotels with 372 rooms, 481 beds and a capacity of 609.

• Arandjelovac: 2 hotels with 177 rooms, 269 beds and a capacity of 450, plus 181 peer-to-peer units with a capacity of 978.

• Other cities: 10 hotels with 334 rooms, 446 beds and a capacity of 614.

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In SCC, they note that in addition to Belgrade, tourist centers such as Zlatibor, Kopaonik and Vrnjačka Banja also record high demand for accommodation. As they say, there is plenty of hotel and private accommodation in the mountains, which should be accompanied by infrastructure and additional facilities for all guests, and especially on Kopaonik there is room for additional facilities, especially facilities for families.

- Also, there is a need for family hotels, additional amusement parks, "adults only" hotels, as well as hotels near the airport, and this is a good opportunity for investors. It is important that the hotels are close to the main traffic roads, but also along the rivers, due to the development of nautical tourism and marinas - says SCC.

Novi Sad has 23 hotels with a capacity of 1,820 (Photo: Dejan Aleksić)

In what period is the investment in hotels returned - 10 to 15 years

In the SCC, they note that state subsidies, building permits, speed of issuing permits and accompanying documents, availability of main roads, good connection with airports, as well as proximity to railway stations and highways are important for investments in hotels.

- In Serbia, the time needed to return the investment is often estimated at 10-15 years, depending on the location of the hotel (e.g. Belgrade, Novi Sad, tourist destinations), the type of hotel and the occupancy level. In Europe, the time required to return the investment is also estimated at 10-15 years, while in the USA and Asia the time required to return the investment is often estimated at 8 to 12 years, due to the high demand and higher prices of accommodation (New York, Los Angeles, Japan, China) - the SCC explains.

And what pays off sooner - five-star hotels or lower categories? In SCC, they note that luxury hotels generate higher revenues per room, attract guests who are ready to spend more on additional services, but also have high construction and maintenance costs and strong competition, which can make it difficult to achieve high occupancy rates. On the other hand, more modest hotels have lower construction and maintenance costs, require smaller initial investments and can attract a wider target group.

- Due to lower costs, the return on investment can be faster. On the other hand, overnight prices are lower, which may mean less revenue per room and a smaller number of additional services that can bring additional revenue - says the SCC.

Initiative to amend the Regulation - Subsidies are sought in other regions as well

SCC emphasizes that investment in hotels can be profitable in Belgrade, where there is significant demand for hotel accommodation and an increase in the number of tourists is expected, which makes investments in hotels more attractive.

However, this investment can be profitable both in the mountains and in the spas, adds the SCC, where the costs of building and maintaining hotels are often lower than in urban areas. However, the demand for accommodation can be seasonal and it is necessary to improve the facilities that would attract tourists all year round, they note.

As the DAS reminded, support for projects through the Regulation on determining criteria for awarding incentives to attract direct investments in the hotel accommodation service sector has been implemented since 2018 in spas and climate resorts.

- So far, around 20 projects related to direct investments in spa and climate resorts have been applied for, with a total planned investment value of slightly more than EUR 320 million - they say in DAS for eKapija.

The Chamber of Commerce of Serbia, in cooperation with the Development Agency of Serbia, held a presentation of the Regulation in September, and, as we know, businessmen showed the most interest in the way of filling out the application, the possibility of extending the scope of the Regulation to other areas, the length and specifications for the period of incentive monitoring.

- After this presentation, the Serbian Chamber of Commerce sent the Ministry of Economy an initiative to amend the Regulation on incentives in the hotel sector in order to extend the regulation to other parts of Serbia, which are not provided for by the current regulation. Many investors recognize the potential for profitable investments in the hotel industry in Serbia, especially with the support of the state and the growing demand for accommodation - SCC concludes.

Marija Dedić