KSL rumours highlight appeal of Croatia


KSL Capital Partners is rumoured to be buying leading Croatian hotel company Sunce hotels d.d. The deal would cover 11 properties across Croatia, mostly on the Dalmatian coast and operating under the Bluesun Hotels & Resorts brand, as well as one under the TUI brand. The properties are expected to be managed by local company Valamar.

The country’s “tourism transaction of the year” – as dubbed by business publication Poslovni -, this would mark the first time a global investment firm enters the market, which is currently dominated by domestic players.

The Sunce portfolio had been rumoured to be for sale even before the COVID crisis hit the market. KSL had hinted its intention to invest in Croatia prior to the pandemic. Its interest in Apple Leisure Group, which is targeting Europe for development, could be a driver.

The details of the transaction remain unknown for now, but they highlight the appeal of the Croatian market to leisure hospitality investors. Croatia has experienced continued growth in its economy as well as in terms of revenues and investments in the hospitality industry in the past years. It remains largely dominated by local players, followed by European brands. Barriers to entry can be high in particular for development (construction permits are cited as a major issue), and seasonality is a challenge, but the market is strong and can recover better than others from the current crisis. In particular, its geographic location works in its favour: although it is reliant on international travel for tourism, Croatia is a drive-to destination to a number of key neighbouring markets such as Austria, Italy and Slovenia.

While we await confirmation of the KSL deal, Croatia remains a market to watch.