With 1.8 million inhabitants, Belgrade is the capital city and economically the most developed in Serbia, outperforming the rest of the country in almost all macroeconomic parameters. Belgrade contributed to nearly 40% of the Serbian GDP, with 36% of total employees in Serbia.
Belgrade is the main transport hub of Serbia and the region since all important highways and main roads of Serbia, pass through Belgrade. Nikola Tesla Airport served more than 4,7 million passengers in 2015 and has entered a stable phase of operations, after a notable growth in 2014 of nearly 31% compared to the previous year. Good results are due to the launching of the national airline – Air Serbia, which is 49% owned by Etihad Airways. The airline is gaining regional importance, especially after the introduction of regular flights from Belgrade to New York earlier this year.
A pipeline of projects worth more than 4 billion EUR is currently being prepared and implemented in Belgrade, supporting its leading role in the region. The flagship project, supported by the Government of the Republic of Serbia, is Belgrade Waterfront – urban renewal of the Sava riverfront, with an estimated investment of more than 3 billion EUR in the next 20 years.
Tourism in Belgrade today primarily refers to business guests and lower-budget leisure tourists. However, the city has not yet capitalized on its tourism potential, bearing in mind the modest budget for city tourism marketing and rather “old-fashioned” destination management model.
Increasing business activities in Belgrade are bringing more visitors to the city. According to the official statistics data, a total of 808 thousand tourists visited Belgrade in 2015, with 1.7 million overnights. The increase in demand was fuelled by foreign tourists, with achieved 10% of annual growth over the last five years (both arrivals and overnights).
A total of 15,541 beds are officially registered in accommodation facilities in Belgrade, although the number is probably much higher since there is a significant number of unregistered private accommodations. Hotels have a dominant share of 65% in total beds, while hostels and private accommodations (including apartments) have a 24% and 7% share respectively.
There are 90 hotel establishments currently operating in Belgrade. Four-star hotels dominate the market with more than half of the share in the total number of hotel rooms (53%), followed by three-star hotels (25%), whereas five-star hotels account for 9%. Two-star and One-star hotels account for 13% of the total room count. Stable and strong growth in hotel demand contributed to the opening of new hotels, especially in four-star and lately in the three-star segment (in 2014 and 2015). However, new properties are dominantly smaller in size (up to 50 rooms).
Until a couple of years ago, Belgrade was one of the few capital cities in Europe with a very limited supply of internationally branded hotels. However, this situation drastically changed when brands such as Crowne Plaza, Radisson Blu, Luxury Collection by Starwood, Falkensteiner, Courtyard by Marriott, and Holiday Inn Express entered the market. This caused a “shock” to the city hotel market taking into account the simultaneous increase in the number of hotel rooms. Currently, the number of keys associated with international brands is 34% share of the total hotel rooms.
Almost 90% of total overnights were registered in hotels. According to STR data, room occupancy has notably increased in 2016 compared to previous years, ranging from 42% to 60% on average (compared to the previous range of 27% – 55%). However, ADRs dropped by approximately 20% – 25% (depending on category) in the past five years and are at the level of ADRs in main cities in the surrounding countries (Budapest, Bucharest, and Sofia).
Belgrade’s traditional geo markets include Germany, Russian Federation, Bulgaria, Croatia, Slovenia, and Greece. Turkey has become the most important market in 2016, with the strongest growth of 50% of increase annually in the past three years, due to flight connections and no visa requirements. These geo markets account for nearly 1/3 of the market share.
In short term, approximately 400 rooms will enter the market in the upscale segment, with additional 700 keys in the pipeline. According to the previous announcements, future entrants to the market include Hilton Belgrade, Kempinski, InterContinental, and the recently announced deal with Starwood hotel group, within the Belgrade Waterfront project. Other international hotel operators are exploring options to enter the market as well.
Largest regional MICE destination
Belgrade is recognized as a growing MICE destination, achieving significant progress in the number of international events. The number of international meetings and participants doubled in the past six years – in 2015, 52 international meetings were organized with 11,000 participants. However, resolving the issue of the key convention facility – Belgrade Sava Center through energy efficiency improvements and facility modernization would certainly contribute to stronger growth in this business segment.
Belgrade hotel industry performance related to business and MICE market segments will predominantly depend on the expected strong growth of the Serbian economy, as well as on the capacity of the City of Belgrade to attract businesses and investments. Furthermore, it should be noted that Belgrade registers an increasing number of visitors from the leisure demand segment, especially individuals. However, the City of Belgrade still hasn’t capitalized on the increased interest of tourists and media in Belgrade as a tourist destination. Should be the existing destination management model remain, the hotel industry will follow improvements in the overall business climate, with suboptimal, organic growth. However, with the redevelopment of the Sava waterfront coupled with expansion plans for Belgrade airport and economic development outlook, Belgrade provides strongholds for an optimistic view of the future.
Article from Horwath HTL