Good morning. Thank you for being here during this Investor Day 2026, with the title of the year of Pical . First of all, the disclaimer, I won't be reading that, but I believe you know what is written in the disclaimer. What I want to talk about, on the other hand, is the results of Croatian tourism in 2026 for the first three quarters, as regards Valamar, and the projections until the end of the year. Then, the projections of the key indicators from the strategy for the year 2026, the last year of the current strategy, with our own objectives.
And then our colleague, Marko Čižmek, and me, we stand at your disposal, as usual, for your questions, with a Q&A session. So first, the Croatian tourism results in the year 2026. I believe that we can say they were talking about growth stabilization. I will tell you something about the data and the physical indicators that show that will be almost 105 overnight stays, which means an increase of +0.9% compared to the year 2025, +1.8%. That is a solid growth of physical tourist traffic in Valamar.
Hotels and campings were winners with an increase of 2.1% as regards overnight staying. So when we look at destination, what you can see on our graph here, we can see all the counties on the sea, and you can see that everywhere we had an increase, but the winner is the region of Istria with +407,000 overnight stays in the first six months. That means +1.4% increase. Only Dubrovnik, for the second year in a row, is stagnating, has a slight minus, but I have to say, as regards Dubrovnik, in the year 2024, it had one of the best years.
So we're talking about a stagnation, which is, in a way, solid. When we're talking about capacities, what you can see in this graph on the right, we can see the number of beds by type of accommodation from the year 2019 in hotels and campings. So we're talking a +5% camps, +2%, and the greatest increase in number of beds was in properties for short-term rental and residence. We're talking about 600 beds in hotels, and as regards that type of properties, residences, we can see a slight - 2%. You can see here on this slide the exact number that we have, 127 days for campings, and that is the results of the investments in Croatian camping sites.
Probably you have heard last week that Croatia, for the first time, has got an award for best destination, camping destination is in Europe from ADAC. That is a great award. In the end, of a short-term rental, 36 days of accommodation, so w e can see that the model of increase of Croatian tourism, as regards short-term rental and stay, has been used as a total, which is not negative for Croatian tourism, because part of those properties will be transformed to accommodate people in general and I believe that this smaller increase can also mitigate the risk of overall tourism.
As regards most important key emitting markets, you can see two tables. Here, the share comparing the year 2026 and the year 2025, and also the comparison between the year 2026 and the year 2019, in order to look at a broader perspective to see what the trend is. What are key insights First of all, the most important key emitting markets are still Germany and then Austria. They have a slight negative trend in year 2026, if compared with year 2025 but if you compare that with year 2019, we are still in plus, because of stabilization. They represent more than 20% of all tourists that come to Croatia, so they are stable as a market.
And the second message is that the Croatian market has become the second most important destination for Croatian tourism, from the perspective of Valamar, and we are very content with that and many people from Croatia come to our hotels, mostly to the newly renovated one, five-star hotels so t hat means that also the standard in Croatia is better that Croatians go to the beach in our hotels and t he third trend, which is also very important, is that Eastern European markets have come back, which is great news. Poland, Czech Republic, Slovakia, Hungary have a strong growth by 19%.
And what is also interesting here is that we are not talking about the tourism that we used to have in the past. We are talking about people that have money, that come and are accommodated in hotels more and more, and that is a very good tendency because we are acquiring new markets and diversifying Croatia as a destination as opposed to other markets. So you will see that Valamar sees that tendencies as well. We are turning towards those markets, Traditional markets, Italy, France, and U.K., still have a small share in this downward trend compared to the year 2019.
I see potential here for the future because the U.K. used to be one of our traditional markets, and I believe that we will be able to do something here. And then there is also a significant positive shift in tourist traffic from the U.S. market compared with the year 2019. We are talking about a +42.1%, which is a very good tendency, not only for Dubrovnik, but also for the other destinations in Croatia. I do not have the final data about consumption, but what we can say is in the first nine months of the year 2026, and the value of physical investment in tourism grew by almost 18% in the first nine months, and the number of investors is up by 6%.
That means that we will have growth of financial invoices and revenues from tourism, which is good news as well. I believe that, according to these indicators, we could be able to tackle inflation. So one of the theme we have tackled last year as well, because it influences also Valamar, is labor cost in Croatian tourism. You can see here the data compared with the year 2020. The growth of labor costs was 75% in Croatia, which is above the average in the European Union and the Mediterranean, where we had a growth of 56%. So here, we have to say, first of all, that, of course, it influences our business and the increase in overhead costs, in general, the expenses.
We are talking about a average +80% as regards the cost of labor per hour. On the other hand, that is not that bad news because the quality of labor is increasing. We are more competitive on the European market, and we have better salaries as opposed to Malta, Portugal, Cyprus, and the government will be deciding on the minimum wages, which will be influencing the average salary in Croatia, so w e believe that for the next year, it will be a +7.6% in salary increase. So taking into consideration those two aspects, it will, so yes, diminish our provision, but it will increase the quality of labor and w ith that increase taken into consideration, we will invest in quality, which Valamar is always doing.
So when we are talking about Croatian tourism in general, stabilization of growth, hotels are the winners. So when we are talking about key emitting markets, there are positive trends, especially that part regarding the increase of the Eastern European markets that have better paying standard and l ast week, we have presented some of the data and then w e have taken into consideration the cost of labor. When we want to look at the business results for the first three quarters in the year 2026 and the projection until the end of the year, what has happened here?
In the first nine months of this year, we are talking of EUR 500,000 of revenues, so a +9.2% EBITDA adjusted increase. So total revenue +15.2%. The expenses were +17%, and there was a somewhat faster trend in the increase of costs because we opened new hotels in Poreč, Hotel Pical, and some more expenses in labor costs if compared to the inflation rate. Other costs, food, inventory, and so on, they have come to normal level, and we are within inflation. It was a year of Pical.
The biggest project in Croatian tourism was opened this year, a flagship hotel, very successful, that significantly influences our business. What I can say here that we are very content with the quality that was recognized by the guests and rated by the guests, so 5+ quality and w e have employed more than 800 people, new jobs have been created. You know how difficult it is to manage such a huge hotel. And more important, Pical is even better in the results financially from what we had for Sim. Really a great success for Valamar this year, and this hotel will be a driver of growth for sure in the next couple of years.
Let us sum up in this first nine m onths of our business, so o f course, again, I have to mention the new hotel, Pical and Sunny in Poreč. We also have renovated in Brulo the old Hotel Crystal and Apartments Diamant in July, which is another step forward. To renovate Brulo, a lot has to be done for sports, guest revenues, see a +15% with Pical as new hotel, and a ll the other destination are growing apart from Dubrovnik. That is at a level of last year, but I have already mentioned that early on because of the stagnation of growth there, but at a high level.
As regards the costs, we have commented that briefly. Let me just add here that costs that are linked to investment, opening of Hotel Pical and Sunny, EUR 5.1 million for inventory, uniforms, promotion, and so on, are to be counted here, but such a positive financial influence has never been seen earlier. So we are talking about +800 keys, so rooms that were opened and new and w e are invested at the moment in Arba. The Arba Resort is in an expansion phase. It will be opening next year in April or May and we are finalizing the hotels, dependances, and villas.
And then we will be continuing to invest in the Brulo Sports Zone, the reconstruction of Hotel Diamant with new sports centers, thus bringing our investment to a whole, with the reconstruction of Crystal and the Apartments Diamant. Direct sales, great, 66%. Quality is increasing, and this year 90%, which is a great result, and our teams have really done a great job this year and not less important for you who are investing in Valamar, we have gone above EUR 1,000 million value, as regards our market capitalization, with a growth of EUR 280 million. Pardon, I was talking about a billion earlier on.
Business results, what is the projection until the end of the year? +13%- 14%, with an adjusted EBITDA of +7%- 9.4%, with EUR 5.1 million one-off costs regarding Pical and Sunny in Poreč. Let me just briefly tell you what we planned for next year, if compared with the strategy 2026, on the basis of what we had foreseen in the year 2022, when we defined what our objectives for the year 2026 would be, and we are concluding that year. And later on, in spring, we will conclude the strategic cycle for the year 2026 and present Valamar's strategy for the next four years until the year 2030.
As regards market value and shareholder return, if we look at the last 10 years from 2016 until 2026, we are talking about over 126%. So there was a 96% increase in the price of the shares, and in this period, we paid out 30% of dividends. So I would say it is a very solid growth, and as regards fundamental value, using a multiplier of 10.2%, it is this calculated as a multiple of 10.2% times EBITDA minus the adjusted net debt minus minority interest, I would say that when talking about the strategy, this is linked to the investments we talked about. Fundamental value will be slightly below the target, EUR 1 billion in strategy, primarily due to the higher realized investments.
We talked about EUR 5.1 million one-off costs, but this will make their full financial contribution in the coming period. When talking about the EUR 512 million, these are the realized investments in raising the quality of the portfolio under management. So we were able to invest in Pical Resort. We opened it. Also, Arba Resort, we increased the quality of the portfolio also. In Obertauern, as planned, and we invested in our new brand, Sunny, which targets the economy segment, and this has been a huge success so w e accelerated investments. This had not been planned. Sunny Poreč, Sunny Makarska.
We also invested in Brulo Sports Zone as part of the ongoing investment and a lso, we opened the Jadran Hotel. When talking about our motivations, we did not just realize quality projects. An additional motivation was that we wanted to maximize the possibilities we got from tax incentives regarding our investments. So Valamar Riviera will be able to fulfill its full potential of EUR 110 million investment with a 30% tax incentive, so t his will be booked EUR 30 million, more or less. This will be booked, so we will not pay profit tax on that in the next 10 years.
When it comes to our investments further on, development of our portfolio and our business results, we will achieve a bit over EUR 4,000 per accommodation unit. The price has increased and not occupancy and w e know that direct sales also achieved 66%. We have achieved our objective here. When it comes to our hotels and resorts, the average accommodation unit will achieve this year over EUR 40,000 as a result, which is an excellent result, above our initial projection. EUR 1,500 is our result, and the projection was EUR 1,200 as regards the TRevPAR, but that is occupancy.
Unfortunately, Easter came in earlier this year, and this influenced especially camping sites so t hat' s the reason why the result was as such. When it comes to human potential, human resources, we mostly reached all our objectives. They were very, very significant because we increased employment compared to last year. Almost 1,000 new employees, simultaneously with the opening of Pical Hotel and other investments. So we got to 9,732 employees. 46% have year-round salaries, 45% seasonal work, 10% is covered by students and pupils.
And if we see the employee structure, 68% of domestic employees, that is a bit lower than the objective we had of 70% in the projection, but it is still way above the average of Croatia, which is 45% of the workforce, which has been imported but w e have a lower import of workforce, and I think it is excellent result. When it comes to local employees, that is those who live and work in the same destination. That is what I objected to reach the 50% number, and that is what we achieved and w e have returning seasonal workers, 48%.
So, one in two come back to Valamar. When it comes to our earnings, we foresee that we are going to fulfill our objective, 10% above the price average of the sector. That was our objective, so to be in that range, 10% above the average for tourism workers. As regards loyal guests are a guarantee of quality and added value for Valamar. Over 1.2 million guests throughout hotels, 1.6% guests are in the marketing database and w hen it comes to the loyalty program, we have 870,000 guests in Valamar. That is over our projections, and it is a recognition on the part of our guests, and also the quality of our service.
When talking about guests who are returning guests, the number is 32%. So, the objective was 30%. Really an excellent asset of Valamar in that part when it comes to guest loyalty. And t his is in line with the indicators listed in the lower part of the slide, where quality rating by product in 2026 increased for all products, reaching the average of 90%. 87% for camping, t hat's really a good number for this segment. Sales, we went above our objective for 2026. We have here the pre-season and post-season, which is a bit less than predicted but h otels such as Pical, they have not concluded the whole year yet, so we cannot have complete results.
66% for direct booking and w hen talking about source markets, not to repeat myself, what happened for Croatia happened for us too, and we have a decrease in traditional markets but w e have a very positive trend, an increased trend as regards the Central European market, and that is Czech Republic and Hungary, etc., and the United States. This for us is a reason for satisfaction. We will continue developing this. We will continue developing the rate, the part regarding U.K. and flight guests. We will be continuing our work in this. Also regarding markets which have stabilized since 2019, such as Germany.
Also, last but not least, Valamar has been focused for a really long time on sustainable business and social accountability, and these are only some of our awards. In 2025, we got a gold medal from EcoVadis, got among the five globally sustainable companies in the world. We also got two awards for construction, so the DGNB Platinum Certificate for 2026. We were the first one to have this in Croatia when it comes to sustainable building, sustainable construction, and a lso, Pical Resort and Arba Resort, our new hotels, got the DGNB Gold Pre-Certificate for Sustainable Construction and Valamar also was second point in Croatia with Valamar Amicor Resort.
Well, that is all from me for now, but Marko and I are available for all your questions. We are back. Thank you. We really got a lot of questions, so Marko and I will try to give you our answers. We will pool some of the answers together because there were many questions coming in. So firstly, when it comes to electricity, given the increase in electricity prices, could you share more information about your electricity supply contracts and the level of protection they provide against price volatility?
When it comes to electricity, we sought to reduce our exposure to market price volatility in a timely manner and ensure the greatest possible cost predictability. We secured electricity supply contracts to the end of 2029, so 50%, and the contracting price, including green energy, ought to be very close to the levels we had in the first half of this year. This includes solar panels for the 50%, and remaining 50% should be covered by the supply contracts through the end of 2029.
Secondly, please explain the reasons for the decline in the EBITDA margin in 2026 and the difference between the projected results and those set out in the investors. We talked about that in the presentation, so I will not go repeating myself, b ut if you see that the range, if you have a EUR 5.1 million one-off investment, small inventory for the opening of the hotel, etc. , that is the gap which we did not foresee and which influenced partly the EBITDA margin, and also when the increase in wages also influenced our margin but w e are still— w e see the operating revenue will definitely cover that.
Okay, I see the next question is for me. Hello, everyone. In your quarterly report, you mentioned one-off costs related to the opening of Pical Resort and Sunny Poreč. Could you clarify what these costs entail and provide an approximate figure? Through this presentation, through the report, we actually tried to clarify that these are one-off costs which would permit our EBITDA to adjust to this. These are primarily costs, one-off intensive costs, which is not difficult to understand if you think that Pical Resort has over 500 rooms. Željko mentioned that this is EUR 5.1 billion cost, just a trivial piece of data, just workwear for Pical, where over 800 employees are working now, it was EUR 0.5 million.
So we also mentioned that these are costs into initial promotion, grand opening, small inventory for such a huge hotel. These costs, definitely when it comes to intensity, will not be repeating in the next financial period. For smaller hotels, such as Sunny Poreč, these one-off costs amounted to EUR 0.6 million, and this also gives you an idea of a comparison between a huge hotel such as Pical, which had almost 10 times as much one-off cost. Another question for me. How do you comment on the increase in adjusted net debt? In an environment of higher interest rates, do you see any specific risks associated with higher level of indebtedness on the balance sheet?
Well, this is one of the questions which we get year after year. In this moment, our adjusted net debt at the end of the third quarter was about EUR 360 million. We call it adjusted net debt because it does not include the amounts which are capitalized under IFRS. These EUR 360 million are correlated to gross debt and financial institutions, which I think is EUR 395 million, consisting of EUR 379 million long-term liabilities and EUR 16.1 million in short-term liabilities.
The average interest rate is, I think, from the 75%. So this tells us that we have a strong balance position. Of course, this can always be compared to your results, but the credit loan durations over five year, which means that we don't have any imminent refinancing risk for our portfolio. Of course, our investments or future investments are founded also on a strong operative cash flow and a t this moment, we can say that we have a good outlook on the market, and also a very stable position when it comes to its future stability.
Okay, what's the planned investment amount for the next period, 2030? This is expected in 2027. As we said, in the first half of 2027, you will be given an overview of what is being prepared, what we are going to invest by 2030, and what we published is that in our plan for 2027, we have around EUR 51.6 million investments in projects. So this is what we had already communicated, and as regards the renovation of Diamant Hotel , Brulo Sports Zone, as I've already mentioned.
And also another question, Pical, is there a risk that it will take up one part of the amount cannibalization? Is that a real risk? Well, it happened that we did have a sort of cannibalization this year. This happens with high-quality hotels where you have some stable guests which leave other hotels such as Marea, Isabella, etc., and go to Pical. We think that this is mostly behind us for 2026, and that slowly these clients will be distributed in our best hotels. I would also like to mention that we expect some positive effects, so not cannibalization, but quite the opposite. Valentino Hotel, for instance, which is right close to Pical, they had a positive effect because of the opening of Pical.
Okay, what are the midterm and long-term investments for Dubrovnik destination? We will communicate this through our strategy, so have a bit of patience. In the first part of the year, we haven't had the public communication yet, but we are working on good concepts, and there will be investments, and you'll know more about this in the first half of next year. Francis Brooking, in 2027, what are the expectations when it comes to prices in 2027? On the level of the tourism sector or portfolio, how is this foreseen for 2027?
Well, when it comes to prices, we have talked about that a great deal, and when talking about Croatia, it is a very topical issue. But what is definitely the case is that prices are slowly entering the phase of growth with inflation, which I think this is the reality of Croatian tourism, and it is the way in which we should see in the next period. There will not be growth above inflation.
I think that is very improbable in our market. But we are very happy to see, with Pical too as well, that every investment in quality manages to get to adequate prices which are in line with investments done. They tell me we have given our answers to all your questions. Thank you for participating in this Investor Day for 2026. I would like to invite you next year to be with us present here in Croatia, in Poreč, and I would like to thank you once again.