Amendments to the Decree on Incentives for Enhancing the Quality of Hotel Accommodation Services – Stricter Standards and Enhanced Oversight

The Official Gazette of the Republic of Serbia (No. 13/2026) has published the Decree on Amendments and Supplements to the Decree on the Conditions, Method of Allocation and Use of Incentive Funds for Improving the Quality of Hotel Accommodation Services.

The amendments further clarify eligibility criteria, introduce stricter requirements concerning franchise arrangements with international hotel chains, and strengthen monitoring and control mechanisms throughout the lifecycle of investment projects.

Eligible Applicants

Incentives may be granted to market participants implementing an investment project through:

• the establishment of a new legal entity or branch office; or
• the expansion of the capacity of an existing entity, provided that the project relates to a new hospitality facility.

Applicants must be duly registered in accordance with hospitality regulations, financially and legally stable, and must not be subject to bankruptcy, liquidation, or reorganization proceedings, nor have outstanding tax liabilities. Furthermore, the State, autonomous province, or local self-government units must not hold ownership interests in the applicant entity.

Additionally, applicants must:

• not have received other forms of state aid for the same eligible costs,
• not be subject to repayment of unlawful state aid,
• not qualify as an undertaking in difficulty, and
• not have ceased the same or a similar activity within the preceding two years.

Mandatory Franchise Agreement with an International Hotel Chain.

A key innovation of the amended Decree is the mandatory conclusion of a franchise agreement with an international hotel chain.

Such agreement must:

• be concluded for a minimum term of 10 years;
• provide the right to use an internationally recognized hotel brand rated at least four stars;
• ensure access to standardized operating procedures, digital management systems (PMS, reservation platforms, CRM), and marketing and business tools.

An international hotel chain must meet the following criteria:

• manage at least 50 hotels under ownership or direct management;
• operate at least 100 hotels within its franchise network;
• be present in at least 10 countries across two continents;
• maintain operations in leading global tourist destinations.

Applicants may also submit an application while the franchise agreement is in the process of being finalized, supported by a letter of intent issued by the franchisor.

Amount and Structure of Incentives

Incentives are granted as non-repayable funds covering:

• 50% of eligible investment costs for large enterprises;
• 60% for medium-sized enterprises;
• 70% for small enterprises;

Subject to a maximum amount of EUR 5 million per investment project.

The beneficiary must secure at least 25% of eligible costs from its own funds or commercial financing, excluding any form of public aid.

The incentive is disbursed in a single installment, in the dinar equivalent calculated at the official middle exchange rate of the National Bank of Serbia on the date of contract execution.

Eligible Costs and Project Duration

Eligible costs include investments in tangible and intangible assets directly arising from the franchise arrangement.

Costs may be:

• one-off (from franchise execution to hotel opening and categorization); or
• multi-year (recognized for up to seven years following the opening of the facility).

Assets financed through incentives must be newly acquired.

The investment must remain operational:

• for at least five years after completion;
• or three years for small and medium-sized enterprises.

Categorization and Ongoing Obligations

The beneficiary must obtain an official hotel categorization decision within two years from the date of incentive payment, ensuring a minimum four-star rating. This category must be maintained for at least ten years from the hotel’s opening.

Continuous audit supervision is introduced, covering the pre-opening phase, project implementation, and the monitoring period.

Failure to comply with contractual obligations—including deviations from the business plan, missed deadlines, downgrade of hotel category, or termination of the franchise agreement—may result in unilateral contract termination and repayment of funds with statutory default interest. Repayment must be made within 30 days; otherwise, the security instrument will be enforced.

Procedural Tightening

Applications must be submitted prior to the commencement of works, in line with regional state aid rules.

The amendments also abolish the previous possibility of awarding reduced incentive amounts to lower-ranked applicants in the event of insufficient budgetary funds.

The amended framework clearly aims to elevate the quality of Serbia’s hotel sector by encouraging cooperation with globally recognized brands under strict financial and compliance oversight.

The new regime requires careful legal and financial structuring, particularly in relation to franchise agreements, funding models, and long-term operational commitments.

The team at Majstorović & Partners remains at your disposal for comprehensive legal support in structuring investments, negotiating franchise arrangements, and preparing documentation for incentive applications.