ZAGREB, 5 Feb (Hina) – Croatia’s tourism industry is under pressure as rising prices threaten its competitiveness against Mediterranean rivals, heard a Tourism Council meeting on Wednesday.
The Croatian National Bank (HNB) Governor, Boris Vujčić, stressed that while inflation has been driven largely by rising service costs, Croatia’s tourism prices have surged by 50% in recent years, compared to 15-20% in competing destinations like Spain and Greece.
This has made Croatia more expensive than some Mediterranean competitors, deterring foreign tourists and reducing real visitor spending.
In the long term, such a situation is unsustainable and could have negative consequences for economic growth, it was said at the meeting.
Falling arrivals and revenue drop
Tourism and Sports Minister Tonči Glavina reported a decline in arrivals and overnight stays from key markets such as Germany, Austria, Czechia and Italy. He noted that foreign tourism revenue in Q3 2024 fell by 0.7% year-on-year, indicating stagnation. The rapid increase in accommodation and restaurant prices has also narrowed the price gap between Croatia and traditionally pricier destinations like France and Italy.
The Croatian National Tourist Board (HTZ), led by Kristjan Staničić, warned that Croatia risks being perceived as overpriced, with holiday accommodation costs now higher than Greece and on par with Italy and Spain.
Government: VAT and energy prices not to blame
Finance Minister Marko Primorac dismissed claims that high VAT rates or energy costs are responsible for rising prices, pointing out that VAT on tourism services was reduced to 13%, resulting in €1 billion in lost tax revenue. He criticized industry pricing, warning that current trends are unsustainable and could harm economic growth.
“My impression is that prices have spiralled out of control,” Primorac said, adding that Croatia’s offering does not justify being more expensive than Greece, Spain, or Portugal.
Industry calls for reforms
Sector representatives cited unregistered tourism activity, high booking platform commissions, and administrative burdens as key challenges. Barbara Marković of the Family Accommodation Association proposed a national booking platform to reduce reliance on global services. Hospitality Sector Association President Jelena Tabak called for VAT cuts on beverages to curb further price hikes. Despite these concerns, Croatian Tourism Association (HUT) Director Veljko Ostojić argued that hoteliers are not profiteering, as rising operational costs” particularly wages” have significantly impacted profitability.
Urgent action needed
With Croatia’s tourism market share stagnating, officials and industry leaders agree that improving price competitiveness is crucial. If unchecked, the current trajectory could undermine long-term growth and push tourists towards more affordable alternatives. The government and industry must now collaborate to restore value for money and maintain Croatia’s appeal as a top Mediterranean destination.
