1. DEVELOPMENT OF THE SPA TOURISM IN SLOVENIA EXPERIENCES FROM THE TRANSITION PERIOD AND AFTER JOINING THE EU OPPORTUNITIES AND CHALLENGES OF THE INDUSTRY IN THE SEE REGION Peter Vesenjak, Hosting d.o.o. Tuhelj, 11.10.2014

2. Spa sector in Slovenia - fastest growing tourism branch – 15 spas +27% Share in all Slovenia Hotel industry: 18,5% (15 spas) Spa destination -> 26,5% of all beds in Slovenian tourism EU accessio, second investment cycle Ownership definition, privatisation, first investment cycle

3. More arrivals, more overnights, quality development... +77% Share in all Slovenia: 26,4% (15 spas) 31,5% (all spa destinations)

4. Development of higher quality of lodging and services standards

5. Low dependency on domestic health insurance guests/patients Year Number overnights from Health Insurance Total Number of overnights Domestic overnights Share in all overnights Share in only domestic overnights 2009263.1752.562.0071.653.14410,3%15,9% 2010277.6062.537.3281.591.35310,9%17,4% 2011301.2022.636.4711.614.32511,4%18,7% 2012287.8102.601.9581.518.39711,1%19,0% 2013288.8262.530.8421.458.17011,4%19,8%

6. Stable occupancy rate with all year round operation

7. Best occupancy rate in Spa hotels – But decline since 2003? Challenge?

8. Importance of international markets for long term growth Number of overnights in Slovenian Spas (2010)

9. Intensifiying the international markets in last period.

10. High importance of thermal and recreation water surfaces

11. Diversified revenues

12. Stability of operations

13. Growing efficiency

15. Increasing level of prices

16. The most succesful and fastest growing part of Slovenian tourism – comparison to all hotel industry Category/Ratio for year 2013 Share or comparison of 15 spas in all Slovenian Hotel Industry (left-> Spas, right-> All hotel industry) TotaL Revenues47,7% Operations revenues45,8% Assets42,5% Total financial liabilities35,7% EBITDA (€)52,6% EBITDA share in operations revenues16,8%15,0% Capital50,3% Direct and indirect share of public sector (state and/or municipalities)39,9%33,5% Number of employees50,2% Total added value52,3% Added value per employee104,2% Average bed occupany rate50,2%38,0% ARR in hotels116,6% RevPAR in hotels135,2% Revenue per overnight114,4%

17. Quick transformation to commercial companies, definition of ownership and privatisation processQuick transformation to commercial companies, definition of ownership and privatisation process 1 Investment process – upgrading the quality of facilities and services (wellness) – enhanced by EU funding after accession to EUInvestment process – upgrading the quality of facilities and services (wellness) – enhanced by EU funding after accession to EU 2 Enhancing the quality of services, going back to Health + Medico Spa, marketing restructuring (pricing), intensive internationalisation (markets, capital, management) -> improving financial results of operationsEnhancing the quality of services, going back to Health + Medico Spa, marketing restructuring (pricing), intensive internationalisation (markets, capital, management) -> improving financial results of operations 3 Lessons from transition period and accession to EU

18. H OSTING D. O. O. WWW. HOSTING. SI P ETER V ESENJAK M TEL : 00386 41 514 020 WWW. HOSTING. SI Thank You for Your attention.