HomeAbandonedThe Penthouse Adriatic Club at the Haludovo Palace Hotel
The Penthouse Adriatic Club at the Haludovo Palace Hotel
Apr 14, 2016
This architectural treasure is a remnant of the short-lived Yugoslavian casino boom of the early 1970’s. The Penthouse Adriatic Club casino at the Haludovo Palace Hotel was an extravagant retreat financed by the American magnate of the eponymous adult magazine. Built in the Croatian town of Malinska on the Adriatic island of Krk, the hotel and its lobby were a Brutalist tour de force, designed to attract the wealthy of the west.
Bankruptcy and a law change forced out the American owner after a year. For the next two decades the hotel remained open, but civil war in the early 1990’s drove tourists away and forced the hotel to close. Over the years the hotel has changed ownership several times, but no progress has been made on redevelopment.
During the Cold War it was uncommon to see foreign casino investment in eastern European countries. Yugoslavia was one of the more progressive eastern European countries, credited with founding the non-aligned movement when the rest of the world was separating into the Western and Eastern Blocs.
In 1967 Yugoslavia opened its borders and removed visa requirements for visitors. Investment was welcomed by laws that allowed the existence of casinos and gambling – rare for any country behind the iron curtain. However there was one important stipulation: Only tourists could gamble; the Yugoslavs themselves were not allowed to patronize the casinos.
Initially the new law created an influx of development. By 1973 at least 28 casinos were operating in Yugoslavia. But the law’s lax tax reporting requirements resulted in most taking advantage of a loophole that allowed casino operators to withdrawal money from the country tax-free.
The business-friendly laws attracted American Bob Guccione (pictured), founder of Penthouse Magazine. In 1969 Guccione pumped $45 million into construction of the Penthouse Adriatic Club at the Haludovo Palace Hotel, a magnificent concrete and glass beachfront casino resort on the Adriatic island of Krk in Croatia.
His hope was that thousands of well-to-do American and British businessmen would travel to his casino in Krk and spend money in Yugoslavia.
Penthouse Adriatic Club (1972-1973)
The Penthouse Adriatic Club at the Haludovo Palace Hotel was designed by Croatian architect Boris Magaš, who was given license to explore the era’s popular Brutalist style. Construction of the hotel complex finished in the summer of 1972. It opened on June 15th, 1972, followed by an “inauguration ceremony” on July 7th, 1972.
Hotel guests were treated to bowling and tennis – or they could relax inside the elegant interior of the Great Lounge, which featured hanging gardens, beautiful fountains, and extravagant pools. Adornments were contemporary; the hotel appeared as if it was furnished from the Eames catalog.
During its first year of operation the hotel used Penthouse ‘pets’ as hostesses, promoted by Guccione as “new soldiers of the Cold War.”
Celebrations during the opening months were ostentatious. In addition to the hostesses, Guccione imported several dozen more Penthouse ‘pets’ while guests consumed 220 pounds (100 kilos) of lobster and 11 pounds (5 kilos) of caviar nightly. One account mentioned one of the pools being filled with champagne. To the prodigal Penthouse Adriatic Club, moderation was not in the lexicon.
A news agency wire photograph released on June 24th, 1972, included the following image and caption:
THE PENTHOUSE ADRIATIC CLUB OPENED IN YUGOSLAVIA
American businessman Bob Guccione, owner of the world-wide “PENTHOUSE” magazine, formally opened the “PENTHOUSE ADRIATIC CLUB” in Haludovo Palace Hotel on the island of Krk last week. “Penthouse Pets” are employed as hostesses and croupiers entertaining the guests. A large number of world-known personalities from the world of film, music and show-business, are expected to attend the innauguration ceremony on July 7th.
Photo Shows: The scene inside the gambling casino of the newly opened “PENTHOUSE ADRIATIC CLUB” on the island of Krk in Yugoslavia, showing “PENTHOUSE PETS” as croupiers.”
On July 3rd, 1972, the first group of American guests landed at Krk airport.
The Penthouse Adriatic Club earned a mention on the cover of the 1972 issue of Penthouse Magazine, which announced “PENTHOUSE OPENS RESORT HOTEL” to readers:
“Richly located on the idyllic island of Krk, a few miles south of Trieste and directly opposite Venice, this mile-long Xanadu of glittering buildings will become for international cognoscenti a premier playground for summer andwinter seasons alike.”
Complicated Business, Convoluted Ownership
Bob Guccione’s attempted antidote to the Cold War had auspicious beginnings, but after the opening ceremonies were over it was apparent the economic fortunes of the casino would be a concern. Western guests had failed to embrace the Yugoslav resort as expected, and local residents were disallowed from gambling.
Complicating matters on the business side was Yugoslavia’s ethos of workers’ self-management, a form of socialism that allowed worker-members to manage businesses directly through assemblies. In contrast to the capitalist west, employees in Yugoslavia were allowed to make critical business decisions. It was a tough ideal for even the progressive Guccione to embrace – and even harder for the American Penthouse ‘pets,’ who failed to participate.
The biggest dagger might have been the social stigma of the Penthouse Adriatic as a palatial casino, which kept the majority of Yugoslavia’s middle-class gambling tourists away from Malinska. Self-management was a defeatable obstacle, but a 1973 law that forbade foreign ownership of casinos was not. Existing casinos were allowed to operate under foreign ownership until August of 1974, but the casinos were required to appoint a Yugoslav citizen as director and the employees had to abide by the self-management system. The Penthouse Adriatic Club did not need the extension; it was bankrupt by the beginning of 1973.
To satisfy its economic and legal problems, the Penthouse Adriatic Club casino resort was transferred to the Croat worker-run enterprise Brodokomerc, who in return agreed to pay Guccione “three to seven per cent annually from the whole turnover of the Haludovo hotels: in the first three years three per cent and in all other years seven per cent.”
He may have been primarily motivated by money, but Guccione revealed a tinge of altruism in an interview:
“There are still false ideas about Yugoslavia as a country behind the ‘Iron Curtain,’ in which a businessman or someone looking for entertainment would find nothing. The Penthouse, too, faces many prejudices, doubts and a lack of understanding. We are called non-serious exhibitionists and pornographers, incapable of and disinterested in any serious business. I think that all this is, above all, a result of ignorance. Even the cold war itself is a consequence of ignorance. In order to defeat ignorance it is necessary to develop communications between people. In this connection tourism is certainly one of the most powerful forms of communication. Through the realization of this project [the Penthouse Adriatic on Krk] we have the opportunity to start a big process of re-education: we have become partners in removing doubts and ignorance.”
The Haludovo Palace Hotel
Malinska’s crown jewel re-emerged from bankruptcy under Brodokomerc sans the Penthouse tag. It was now known simply as the Haludovo Palace Hotel, named for a nearby beach. The hotel toned down the overspending, but remained a high-end resort.
For the remainder of the 1970s the resort hosted international dignitaries and heads of state, such as Olof Palme and Saddam Hussein. Haludovo Palace Hotel hosted music events featuring western groups, such as the Golden Gate Quartet in 1975.
The Haludovo Palace Hotel eventually returned to profitability and continued to operate for nearly two decades, but it never achieved the status originally envisioned by Guccione.
Fortunes for the hotel began to turn for the worse with the onset of the Yugoslav Wars. In the late 1980’s unrest in Yugoslavia led to armed conflict; by 1991 the country had completely descended into a civil war.
One victim of the war was the Croatian tourism industry, obliterated by tanks rolling through the streets and an unreliable airport. The hotel was not immune, and its last profitable year was 1990.
During the war the tourist-empty Haludovo Palace Hotel became a shelter for refugees. In the years after the war attempts were made to evacuate the reluctant group of squatters. Many didn’t want to leave, and stripped the hotel of its copper wiring, piping, radiators, and sockets on their way out. The enterprising refugees also relieved the hotel of its appliances, fountains, phones, and most of its furniture.
In 1995 the Haludovo was privatized and managed by the Croatian Privatization Fund, which established the joint-stock company Hoteli Holudovo Malinska d.d. to manage the €27 million property. The following year a majority stake in the hotel was purchased by businessman Bozidar Androcec in a deal that called for a two million euro down payment, with the remainder to be paid in installments.
Between 1996 and 1999 Androcec – who had only paid €2 million for his stake, and reportedly never made subsequent payments – liquidated nearly thirty percent of the hotel complex assets to satisfy personal debts. In all, nine pieces were sold (including the Dubasnica Hotel) for €5.1 million.
The Haludovo Palace Hotel hosted its final guests in December of 2001.
For most of the 2000’s the majority owner was Armenian-Russian businessman Ara Abramyan, a diamond merchant and UN Goodwill Ambassador. During his ownership he neglected to resuscitate the hotel, despite more than a dozen pleas from two Croatian presidents. In 2007 Abramyan sold a stake in the hotel to Bitmass Limited, a shell company registered in Isle of Man. He offered the remainder of his stake for sale in 2008.
Palace Ruins Today
Who is to blame for more than a decade of neglect? Ask the hotel’s previous owners and they’ll tell you about Croatia’s hostile financial environment and onerous controls by the state. Ask government officials and they’ll point to a string of non-committed owners unwilling to invest in Krk. Regardless, the years of deterioration and exposure have left the Palace Hotel a wreck. It could require Dubai-levels of investment to restore, which in Malinska, is unlikely.
Today the lounge is no longer walled by acres of glass, but it is still bathed daily in warm Adriatic light. Walking through the empty shell of the Great Lounge, it’s easy to envision how grand the Penthouse Adriatic Club was. Giant white concrete columns extend toward a high ceiling dotted with hundreds of square panels, most of which are still in place.
The hanging gardens are gone, but a short trip up a wide concrete stairway leads to the upper balcony from which they once hung. Overlooking the bar side of the lounge the circular seating array remains in place, although the tables have been removed and the cushions are now torn. In the center, the largest circle housed the bar.
Floor-to-ceiling glass panes lined every exterior wall, while skylights provided natural light from above, including the sauna and indoor pool. Today the glass is broken – and it’s everywhere. Outside, concrete beams jut out over an empty pool, which is missing tiles and home to several chairs. The indoor pool has likewise collected remnant furniture, along with other debris.
In the lower level some of the bowling alley equipment remains. The enormous kitchen – with its drab white tile and rusty sinks – still has its exhaust hoods, but is otherwise empty. Plastic Coca-Cola and Pepsi shipping carriers are still stacked in a storage room. The elevators have narrow doors, fit for Penthouse ‘pets’ but not the modern-day traveler.
Also small for modern guests are the rooms, cramped by today’s standards. On the hotel side there is less glass (and less broken glass). Dark corridors were the arteries to more than one hundred rooms, each similarly equipped and comparatively boring next to the lobby. Little has been left behind by previous visitors; a few mattresses remain, and some furniture. Despite the monotony of the rooms, none look to have been left alone.
Still, it is not a safe place. Chunks of concrete have fallen from the stairs and broken skylights sit overhead with exposed glass shards. Corroded and jagged metal fixtures hang from ceilings and walls. Occasionally, wind will release the final glass fragment of a stubborn pane.
In the absence of man, it is a peaceful place. The sound of birds chirping and the quietly lapping waves add to the placid backdrop around Haludovo. It still enjoys a beautiful view along its expansive Adriatic waterfront. The parking lots and tennis courts are overgrown now, and the fences are falling apart.
That doesn’t keep away summertime visitors, drawn to the still-open fishing village along Haludovo’s waterfront.