ZAGREB, 30 March (Hina) - Sustainable tourism development in Croatia needs more greenfield investments and new hotels, while spatial plans, especially in major tourist destinations, should limit and urgently halt the construction of new private tourist accommodations, a conference heard on Friday.
The conference, entitled "Tourism in Croatia 2025 - Sustainable Growth and Competitiveness Challenges" and organised by the Jutarnji list newspaper, drew around a hundred participants at Zagreb's Esplanade Hotel, including representatives of hotel companies, tourism associations, consultants, and economists. They discussed key topics such as real estate structures, taxes, hotel profitability, investments, workforce challenges, global competitiveness, and the sustainability of tourist destinations.
Comprehensive reform towards sustainability has no alternative
Tourism and Sports Minister Tonči Glavina spoke about the comprehensive tourism reform implemented over the past six months, emphasising that it has no alternative if Croatia aims to develop tourism sustainably while continuing to significantly contribute to the economy and the quality of life for residents.
He also announced that, in addition to existing EU funding and financial programmes, a new public call worth €40 million will be launched in the fourth quarter of this year to co-finance tourism infrastructure. Additionally, Croatia is developing a "green satellite tourism balance", which will incorporate factors like living costs - a unique initiative in Europe.
New tax reforms needed to improve accommodation structure
Maruška Vizek, an advisor at the Zagreb Institute of Economics (EIZ), described the tourism reform as a bold step but insufficient on its own. She emphasised the need for further reforms, including a new cycle of tax changes by the end of the year, particularly regarding property taxes and flat-rate rental fees.
"Short-term tourist rentals were the least taxed business activity in Croatia before the 2025 tax changes. This led to a surge in private accommodations, especially along the coast, where tourism is most intense. Consequently, demand for real estate from foreign buyers has increased - foreigners now account for around 40% of property purchases in Istria. This reduces housing affordability for locals, not just in coastal areas but across the country, and action was necessary," Vizek stated.
However, she doubts that tax changes alone will significantly alter trends or curb private accommodation growth. She suggests that stricter regulation of non-commercial rentals could make a substantial impact.
Hotel revenues rising, but profits and investment potential declining
Hotel industry representatives stressed that the unfavourable structure of Croatia's accommodation sector, with a low share of hotels, combined with rising costs, is creating challenges. Although revenues are increasing, profits and investment potential are shrinking, mainly due to rising operational costs - especially wages, which have surged by approximately 50% in recent years.
Veljko Ostojić, director of the Croatian Tourism Association (HUT), pointed out that top luxury hotels were nearly fully booked last season, reaching 96% occupancy. However, he highlighted the significant labour costs, with around 50,000 work permits likely needed again this year for foreign workers.
He also emphasised the need for better investment conditions. While the issue of so-called tourism land has been resolved institutionally, challenges remain regarding maritime domain regulations, the dominance of private accommodations, and other structural issues. Addressing these could help increase the share of hotel beds from the current 9.3% to at least 15% within the next five to seven years, he said.
The problem isn't the price, but what is offered for it
Consultant Sanja Čizmar presented an analysis indicating stagnation in hotel performance in 2024 compared to 2019.
"Hotel prices in Croatia fell by about 20% during the pandemic, then rose by 18% in 2022 and 2023 before stabilising in 2024. Meanwhile, our Mediterranean competitors increased their prices by an average of 4.5% in 2024. When comparing overall hotel and restaurant prices, Croatia's were about 1.2% lower than the Mediterranean average last year. The issue is not the price itself but the quality and value offered for that price," Čizmar concluded.
