The main motive for the Budvanska Riviera Hotel Group to be included in this year’s Privatization Plan is the assessment of the Council for Privatization and Capital Projects that the company has valuable assets that have not been valorized in the right way in terms of creating new value, making profits, raising the quality of products and services, and opening new jobs.
This was officially told to the News by the Ministry of Economic Development and Tourism, when asked to explain the announced plan to sell state shares of the Budva Riviera. The department headed by Goran Đurović pointed out that after a detailed analysis, the Government will decide on this issue.
The Government Council, chaired by Prime Minister Dritan Abazović, adopted at the end of last year the Proposal for a Decision on the Privatization Plan for 2023, which foresees the start of the preparation and implementation of public tenders for the privatization of companies, including Budva Riviera through the sale of shares.
– The privatization plan will be submitted to the Government for consideration and adoption, so at this moment no specific decisions have been made in relation to that company – announced the Ministry of Economic Development.
Budva Riviera owns six hotels in attractive locations – Mogren, Slovenska plaža, Aleksandar, Palas, Palas lux and Castellastva, with a total of about 3,800 beds.
Last year, the company lost its most important guests from Russia and Ukraine, and from January to the end of September, revenues of almost EUR 15 million were achieved with a profit of EUR 1.27 million. In the comparative period of 2019, revenues amounted to over 20 million, and profit to almost five million euros.
Loss for two years of covid 11.3 million
The Budva Riviera ended the previous two covid years with a total loss of EUR 11.3 million – in 2021 with a loss of EUR 2.2 million and in 2020 with EUR 9.1 million. For the whole of 2019, the profit was EUR 1.1 million, and for 2018 it was EUR 2.6 million.
The Government announced that the main goal of privatization is to increase the competitiveness and efficiency of the functioning of companies, encourage foreign investment and entrepreneurship in all areas, increase employment and improve the standard of living.
The state, including the Government, the Pension and Disability Insurance Fund and the Employment Agency, has about 58% of the shares in the Budva Riviera, 33% of the shares are owned by MK Group companies, and the rest are small shareholders.
In the middle of last year, after acquiring a third of the shares, the MK Group submitted, in accordance with the law, an offer to take over the remaining shares of the Budva Riviera and Sveti Stefan Hotel at a total price of EUR 61.5 million. The owner of MK Group is a well-known Serbian businessman and one of the richest people in the Balkans, Miodrag Kostić.
Commenting on this offer, Minister Đurović said that the sale of shares is a demanding issue that the Government will seriously analyze and make a decision “in consultation with all the relevant factors that are needed for the analysis”.
The goal Is not for half board to be 39 euros
When Abazović was asked to comment on the announcement of the sale of the Budva Riviera yesterday during his visit to Plantaže, he said that the goal is to create a company that will have significantly higher revenues than they are now.
– If something was included in the privatization plan, it was not said that it would be implemented… Not a single hotel that they manage now has five stars. If someone thinks that the development of tourism in Budva is that 39 euros should be a half-board in Slovenska Plaža, on the foam of the sea, in a city that brings half a billion euros to tourism, they are not in agreement with what I think – said Abazović.
He considered It unacceptable that HG Budvanska Riviera with all its capacities has an income, as he stated, at the level of a better hotel on the coast.
– If we can come up with a business model to increase their quality, to do work that will bring enormous income to them and thus to the state, that is the only interest – said the Prime Minister.
The leader of the Budva Democrats, Krsto Radović, announced after the Prime Minister’s statement that the assumptions that the intention is to go to some kind of barter of Slovenska Plaža for Sveti Stefan are probably correct. He invited Abazović to state publicly if there is any specific offer or privatization plan, stating that this hotel group is managed illegally by the Government, claiming that the hotels and land were stolen from the Municipality of Budva and its citizens.
The company is worth 48 million, new estimate at the end of January
A meeting of the Board of Directors of Budva Riviera is scheduled for January 30, when they will vote on a new valuation of the company. As Vijesti learns, before the New Year, a draft estimate was submitted, which should not change significantly from the final version, according to which the estimate of the company’s value is around 48 million euros and is slightly higher than the one from 2018.
Representatives of the state on the board of the company against privatization
The Board of Directors of HG Budvanska Riviera, whose president is Mijomir Pejović, told the News that, like the entire public, they found out about the intentions of the Privatization Council from the media, and that “the position of the state capital representatives has not changed, that is, they are against privatization as were also in June”.
The company’s board of directors includes three representatives of state capital and two from MK Group.
They then stated in their opinion that in the conditions of the post-covid business, geopolitical situation and trends in the tourist market, the MK group will not substantially improve the operations of the Budva Riviera, since under normal business circumstances that company is the most successful hotel group in Montenegro, with a tendency that in the coming years for years, with existing and planned investments, responsible corporate management and profitability growth, it will remain so.
