6 things you must define if you plan to invest in tourist transfers

Lady looking at billboard on the airport
Finance
Loans
23/04/2022
JOHN MATHEW
Since the start of the tourist season is just around the corner, it is time for existing tourism workers, as well as those who are yet to become one, to start preparing for the upcoming season. Apart from those who have already started planning and realizing new investments at the end of the previous season, new entities are appearing on the market, as competitors to the existing service, who will start performing various activities in the tourism sector. Among the various activities in the tourism sector, such as renting accommodation facilities, agencies for organizing excursions, catering activities, one of the competitive activities is certainly the organization, sale, and implementation of tourist transfer services.

What are tourist transfers?

According to the Law on the Provision of Services in Tourism (NN 130/17), tourist transfers are determined as: “… a service contracted for a known traveler (service user), which consists of organizing tourist assistance and the transport of passengers and their luggage between the places of provision of various travel services, and especially between passenger terminals (stations and ports of land, maritime, river and air transport) and accommodation facilities upon arrival and/or return, between accommodation facilities, or to or from the place of provision of some other contracted catering or tourist service” As fundamental characteristics that are important for starting the tourist transfer service, as well as for improving it, it is essential to define the following:

1. Demand

Lady looking at billboard on the airport
Before defining the way to realize the business idea, i.e., earning income from the subject activity, it is first necessary to research whether there is any market justification in terms of demand for the mentioned service. It is important for the future entrepreneur to obtain data that indicates that there is potential for performing the activity. The data that should be analyzed are data on passenger traffic at airports, tourist traffic – arrivals and overnight stays, and depending on the defined transfer routes, it would be good to analyze data on the number of visitors to selected tourist attractions (e.g., national parks, islands, tourist-developed cities, and similar).

2. Offer

To obtain data on the offer, it is necessary to analyze the existing economic entities that are already engaged in tourist transfer activities on the market, i.e., to define the main competitors. The advice is to make a comparison with the main competition and to highlight the strengths and opportunities, as well as the weaknesses and threats in relation to them. Since the market situation changes quickly, the time dimension of the SWOT analysis should be taken into account, and it should be updated as needed and progress tracked in relation to the previous period. The conclusions will certainly result in better decisions and business successes.

3. Location of operation

As with most activities, the location of their performance is very significant. This directly affects the realization of income from the activity we are engaged in, but it is also closely related to the costs associated with the income. Specifically for tourist transfer activities, the location refers to the routes on which the service will take place. Therefore, it is important to consider the preferences of end-users, and to adjust the location of operation to the demand market depending on them.

4. Distribution channels and end-users

Heart shaped island from above
Every start of a business is difficult and carries certain difficulties, which at the beginning mainly relate to gaining a network of business partners, i.e., distribution channels through which economic entities will ultimately reach their end-users. It is important to take care of business partners who will recommend their guests to us in case of overcapacity, or to whom we will forward “surplus” guests in the opposite situation. Distribution channels are extremely important, especially when starting a business. In the case of good cooperation, they can be a “wind in the sails” for the economic entity that is at the very beginning of its business. Good examples of distribution channels for tourist transfer activities are certainly hotels, travel agencies, and private renters, who are a direct link between the economic entity offering the service and the end-users.
Jar with coins and a plant

5. Investment and financing of investments

Investment implies the acquisition of fixed or working assets without which we cannot perform the activity. Whether it is about starting or developing an activity and we must acquire the resources necessary for the activity, define the amounts and methods of financing the investment. The investment can be financed in several ways: with own or borrowed funds, a combination of own and borrowed funds, and non-repayable funds if the economic entity meets the conditions according to specific tenders. If we do not have enough own funds, reaching for some long-term sources of financing is a logical sequence. There is a range of financial instruments on the market through which economic entities can finance their own investments, and when choosing a specific method of financing the investment, the recommendation is for the entrepreneur to consult with a financial expert who will realistically assess the situation, give an opinion, and ultimately prepare a business plan or investment study based on which the investment is assessed. The subject activity is eligible for financing within the financial instruments of micro, small loans, and working capital loans of HAMAG BICRO. Namely, the mentioned institution and its mentioned financial instruments are suitable for entrepreneurs because the funds are placed to the end-user at a significantly more favorable interest rate than those available in commercial banks. Interested registered entities, as well as natural persons who are just starting an activity and do not yet have a registered business entity for the application, must have a developed business plan as its most important part, which proves the profitability of the investment/venture, and even more importantly, the ability to repay the loan. 6. Set goals for the future

It is important for a company to have one or more goals to strive for while conducting business. Thus, one of the goals can be focused on achieving business results (e.g., defining the amount of revenue or the percentage increase in revenue compared to the previous year), which will be achieved based on set tasks. When setting goals, the company must consider several questions. Are the goals verifiable? Will it be known at the end of the period whether the goals have been achieved or not? Are the goals reasonable? Are they set by priority? Are the goals clearly defined? Are the current resources sufficient to achieve certain goals?

Thinking about the previously mentioned characteristics, a company can direct its business towards positive changes, which certainly bring new challenges, but also an additional opportunity for business development. Published on Women in Adria

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Implementation
17 Jul , 2023

Procurement within the scope of projects financed by EU funds

Public procurement holds a significant place in ensuring the most efficient expenditure of public funds. Within the framework of EU tenders, grants are allocated to entrepreneurs, representing a vital incentive for the realization of projects that contribute to their further development and market competitiveness. Entrepreneurs who have applied their projects for certain tenders and have received a funding decision for them, must also take into account procurement for the activities foreseen by the project in the later implementation phase for successful realization and achievement of project goals. Allocated grants may also be subject to repayment if certain irregularities are found during the procurement procedure itself. Financial corrections are applied if the allocated funds were not used for the purposes for which they were intended. The conduct of procurement procedures is not reserved only for obligors of the application of the Public Procurement Act. Legal entities and sole proprietorships that are not obligors of the Public Procurement Act (NOJN) must carry out procurement while respecting certain rules.
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Why do I have to conduct a procurement procedure even though I am not a legal obligor? The fundamental principles of public procurement are key to “introducing order” within the framework of market competition among entrepreneurs. The main principles, on the one hand, limit entrepreneurs (in this case, contracting authorities) who are prevented from favoring certain entities to contract jobs (e.g., rigging jobs for family members, acquaintances, and the like), while on the other hand, they organize the market, which enables equal treatment for all entities – potential bidders, according to which they can equally participate in procedures for obtaining and executing work. What is the main framework for conducting procurement for non-obligors of public procurement (NOJN)? According to the Public Procurement Act, basic principles that obligors must respect are defined to prevent illegal actions that would impede fair competition of economic operators in the market. Just like obligors of the application of the Public Procurement Act, non-obligors of the application of the Act must also respect certain principles. NOJNs must adhere to the following principles when conducting the procurement procedure:
  • Avoiding conflicts of interest
  • Principle of proportionality
  • Principle of equal treatment
  • Principle of non-discrimination
  • Principle of rational and economic spending of funds
What are the steps in conducting the procurement procedure for NOJN?
  1. Preparation and publication of the call for tenders
  2. Defining capacity conditions, the subject of procurement, criteria for the selection of the bid, and deadlines for submitting bids
  3. Review and evaluation of received bids
What are the thresholds for applying the rules for non-obligors of the application of the Public Procurement Act?
  1. Procurement procedure with a single bidder For procurement of goods, works, and services with an estimated value up to HRK 150,000.00 – the contracting authority is not obliged to prepare a call for tenders, and in that case, there is no formal review and evaluation of bids conducted in the procurement procedure with mandatory publication.
  2. Procurement procedure with mandatory publication. For procurement of goods, works, and services with an estimated value exceeding HRK 150,000.00 – the contracting authority is obliged to publish the call for tenders on the website www.strukturnifondovi.hr, and in that case, they perform a formal review and evaluation of the received bids.
  3. Special procurement procedures – conducting the procurement procedure by sending or publishing a call for tenders to one or more bidders regardless of the estimated value of the procurement, possible only in exceptional cases.
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What if I do not conduct procurement in accordance with the defined rules that apply to persons who are not obligors of the Public Procurement Act? Properly conducted procurement ultimately ensures the proper implementation of the EU project. The consequence of errors in the procurement procedure, for the beneficiary of grants, can lead to the occurrence of financial corrections, i.e., the complete repayment of the allocated funds. In case of determining irregularities within the scope of project implementation, the competent authority resorts to financial corrections, which are a negative consequence for the project holder. Financial corrections imply the repayment of all or part of the funding paid to the beneficiary, depending on the severity of the determined irregularity. Some examples of applying financial corrections for NOJN
  • Failure to publish the call for tenders
  • Artificial division of contracts to avoid publishing the call for tenders
  • Unjustified use of a special procurement procedure
  • Shortening deadlines
  • Discriminatory technical specifications
What should I pay attention to when conducting procurement procedures?
  • The thresholds for conducting the procedure
  • Grouping of the subject of procurement to avoid the annulment of the procurement procedure
  • Clearly defining the technical specifications of the subject of procurement
  • Clearly defining the capacity conditions of the bidder for the execution of the contract subject
  • Paying attention to deadlines
If you are one of the potential applicants for individual tenders under which you can finance your own projects partly from EU grants, the assumption is that you will have to conduct a procurement procedure for the subject of procurement, which is published on the pages of Structural Funds (https://strukturnifondovi.hr/). Properly conducted procurement is the foundation for the successful implementation of project activities, therefore it is important to properly set up and implement all parts. The article was published on: Women in Adria
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