H1 2022 marked the continuation of the travel demand surge already recorded in Q1 2022, with strong occupancy growth and solid increase across all customer segments and Arena’s operating regions. Total revenue increased by 303% YoY, amounting to HRK 226.8m, which is at 85% of 2019’s level. In Croatia, revenue increased by 213% YoY, reaching HRK 145.8m, and surpassing 2019’s level by 2%. Campsites also contributed 29% of the total revenue mix, as compared to 22% in 2019. The Group also opened Hotel Brioni (now part of the Radisson Collection) in May, while the opening of the renovated Arena Grand Kažela Campsite and One 99 Glamping also contributed to strong ADR growth. In Germany, revenue recovered significantly, growing by 761% YoY, achieving 92% of total Q2 2019 revenue. In June 2022 alone, occupancy amounted to 72.6%, while the ADR increased to EUR 138.5, which is 39% above 2019’s level. CEE region also recorded a noteworthy performance, with total revenue of HRK 20.8m (H1 2021: HRK 0.5m), an ADR of HRK 894, and an occupancy of 23.4%, mainly driven by the Arena Franz Ferdinand’s performance.
EBITDA amounted to HRK 6.4m (H1 2021: HRK -49.3m), driven by the higher business activity and government grants received in Germany. These grants relate to support for payroll costs of HRK 1.5m and support for operating expenses of HRK 18.6m. OPEX increased significantly in the period, amounting to HRK 284.5m (+81% YoY), driven by higher material costs (+142% YoY) and staff costs (+135% YoY). The current inflationary pressures stemming from higher commodity and material prices are affecting the overall material costs, while higher staff costs are due to the current situation in the tourism industry, where there is a lack of workforce which means higher payrolls and better benefits must be offered. However, Arena stated that it managed to fulfill its workforce needs for the period. EBITDA in Croatia amounted to HRK -8.4m, an improvement of 69% YoY, due to higher costs and one-offs related to Grand Brioni hotel.
The overall net financial result amounted to HRK -27.8m, mainly due to higher FX expenses. Finally, net loss amounted to HRK 88.2m, an improvement of 15% YoY. The Company also noted that the renovation of the hotel in Zagreb is delayed to Q2 2023, due to supply chain-related delays, while Arena 88 rooms will be repositioned as a Radisson Red lifestyle property, to be completed by the end of the year. Hotel Riviera in Pula is also expected to open in 2023. Arena also commented on their outlook for 2022, in which they expect the current positive trends to continue, particularly in terms of the top line growth and profitability recovery, especially in Croatia, Germany, and Austria.
Overall, Arena’s H1 2022 results are positive in terms of growth across all its business segments, with an even stronger than expected recovery in Germany. The current macroeconomic situation is presenting a challenge on the cost side, but as Q3 2022 contributes most of the tourism industry’s profitability, we expect further top-line growth and a positive bottom line. All in all, the presented results are slightly above our expectations, and as such, we keep our BUY recommendation.