The Sava Hotels and Resorts group have been dealt a knockout blow by Slovenia’s Bank Asset Management Company(BAMC), the state-owned company formed in 2013 tasked with restructuring the country’s banking system, in particularly absorbing the bad debts carried by many financial institutions that largely contributed to the near collapse of the nation’s banking system. Colloquially known as Slovenia’s “bad bank” the BAMC have adopted an aggressive approach with many of the banks’ debtors, of which Sava appear to have come out of it the worst, control of all but 1% of share capital being wrestled from its authority by the Ljubljana-based BAMC.

Amid accusations of pillaging and financial manoeuvres running contrary to Slovenian law, Sava and their Koper-based counterpart Istrabenz have initiated what looks to be a lengthy legal process against the BAMC. Statements though suggesting cash generated by hotel groups wasn’t reinvested in their businesses or used to pay down liabilities, instead disappeared out of the tourism sector altogether, will resonate with many national and foreign observers who are becoming increasingly aware of the scale of problems infesting many areas of Slovenia’s tourism industry. A process of assets being sweated with little or no inward investment for routine maintenance and ongoing development has become a familiar, if somewhat cynical business model for many hoteliers in Slovenia, never more so than in the Bohinj region. Nevertheless, the putative seizure of major industry players like Sava and Istrabenz will serve as a warning throughout the Slovenian business community that the BAMC will no longer countenance financial exposure at levels that, without state intervention to recapitalise several of the country’s banks, would in all likelihood have seen the downgrading of the nations debts to junk status.

Now controlling a staggering 30% of Slovenia’s hotel capacity,  BAMC will hope to swiftly execute plans to increase asset values by an ambitious 60%, highlighting the immense potential for geometric growth in businesses it regards as having been undermined by poor management although, this process is widely expected to take between 2-5 years. With a portfolio numbering 41 hotels nationwide, a ‘one size fits all’ strategy being rolled out across the country will be inappropriate, although standard best practice procedures will undoubtedly harmonise basic operations to complement nuances pertaining to individual properties, with target demographics and necessary investment inevitably varying on a case by case basis.

The Sava group, whose chain of hotels include the internationally renowned Lake Bled-based Grand Hotel Toplice and hotels Jadran, Golf and Park, in particular felt the full force of BAMC’s considerable might once its management-driven restructuring plan was given short shrift, seen as being akin to an exercise of rearranging the Titanic’s deckchairs rather than a mutually satisfactory road map. Whilst Sava will argue their case in a court of law, I for one find BAMC’s intervention to be a positive development which over time, will serve to bring under-performing and financially neglected infrastructure back into active service to become assets of which local communities can once again be proud. In turn enhanced levels of patronage will aid job creation and improve the image of, for example, Lake Bled, which has increasingly been seen as a location dining out both on past glories and its unique landscape, whilst imposing tariffs on tourists that shows little respect for paying guests and which ultimately weren’t reinvested back into its many lakeside lodgings.

The motto of the BAMC, From Bad to Good, leaves much for it to live up to but having seen the mess much of the Slovenian tourist industry has got itself into, perhaps now is the time for someone else to right some of the innumerable wrongs in a country still coming to terms with the many inherent risks associated with unregulated capitalism and private enterprise.

Further reading on this matter can be found at:

Gorenjski Glas: Sava loses control of its hotel empire

RTV Slovenia: Sava and Istrabenz fight to regain seized assets

Sava website

Istrabenz website

Bank Asset Management Company website