July the 27th, 2024 – We’re now at the very height of the summer tourist season, but plenty of private villas are standing empty. Is Croatian luxury tourism taking a nosedive? Some say yes, and the reasons for it are simple.
As Ana Roksandic/Poslovni Dnevnik writes, what has Croatia done wrong to fail to attract plenty of so-called more “elite” guests who are ready to pay higher sums to relax in luxurious villas dotted along the coast this year?
The number of reservations for villas has decreased and their owners have found themselves facing the problem of insufficient occupancy even during peak times. There are several reasons behind this. The owners of agencies for renting out luxury accommodation have singled out inflated prices, supply that remains greater than demand and the stagnation of the German economy as the most common ones.
tourism in the wake of the pandemic
Dujo Miočić, director of the Adriatic Luxury Villas luxury holiday rental travel agency, stated that during the pandemic and immediately after it, there was an apparent increase in demand due to the closure of other destinations and disruptions in air traffic.
“Croatia profited a lot then because it’s a destination plenty of people can easily drive to from their home countries. Following that, other destinations opened up. Speaking in football terms, we scored an own goal in 2023 with our extreme increase in prices. The drop in interest that we’re experiencing today started last year when we had a price increase of at least 30 percent. In some cases in the pre-season, those price increases went up to 100 percent compared to 2022,” Miočić said.
He believes that such increases are far from justified, but that they blindly follow the trend of higher prices in other sectors. Last year, during January, February and April, there was plenty of demand, but the prices were higher than the expectations of tourists who then decided to forgo Croatia for other destinations. “Our guests, who are mostly upper middle class from Central Europe, are computer literate and have realised that ‘last minute’ bookings can be made much cheaper in Croatia and that the supply exceeds the demand,” explained Miočić.
a drop in german visitors is affecting croatian luxury tourism
Ankica Ćaleta, director of the My Luxoria holiday house rental agency, estimates that this year the number of beds in Croatian luxury tourism is higher. On the one hand, that alone shows the level of interest of investors in such facilities. “However, unfortunately, not all of the complexes part of the Croatian luxury tourism offer will be filled because a number of bad factors have affected the demand for them,” she added.
Ćaleta pointed out that her agency experienced a “precipitous drop” in the number of German guests last year, and that trend has continued this year as well. According to data from the My Luxoria agency, Germans accounted for 65 percent of their total number of reservations, and from 2023, they fell to a significantly less 43 percent.
stubbornness is also a factor
“It’s really important to understand that the motive of any guest’s arrival is not luxurious accommodation but a destination. The guest buys the entire ambience, and we have five-star accommodation facilities in a three-star environment. Guests are often disappointed by the external offer, which is either of poor quality or unrealistically expensive, or is not there at all in some areas where luxury villas are located. This ia an area that needs to be worked on,” said Ćaleta.
Miočić agrees with her. He noted that although the properties on offer to guests in the Croatian luxury tourism offer do follow all of the latest trends, the rest of the destination offer often doesn’t. “For example, Zadar, where our centre is located, welcomed this tourist season with works on the roads and excavators on the waterfront”, illustrated Miočić.
later reservations in croatian luxury tourism accommodation
Ivan Rukavina, Uniline’s sales director, testifies that among their offer on the Croatian luxury tourism scene, it is noticeable that reservations started arriving later. Some owners of these houses and villas did experience so-called “holes” in both May and June, and even now in July and August, there’s some available accommodation left.
“Overall, the results in the private accommodation sector are slightly below those seen in 2023. At least part of the reason for that lies in the fact that the number of facilities in private accommodation is growing year by year, and this is something that will need to be regulated in the future in order to ensure more sustainable development and continued high quality”, believes Rukavina.
In addition to the need for better offers in destinations, in the world of Croatian luxury tourism – overnight prices usually range between 500 and 900 euros. Sometimes, the costs significantly exceed that amount. Owing to that, there may be property owners who, despite the generous amount of money that tourists are willing to spend – remain stubborn despite all.
inflexible property owners
“We also have situations where, unfortunately, the property owners themselves sometimes turn out to be rather inflexible. We recently received an inquiry from guests who are looking for a certain property at a higher price range and are ready to pay for it, but would like to bring their little Chihuahua with them.
Unfortunately, we’ve seen that even though the demand is weaker and the properties are empty and you have to fight for every guest, the property owners aren’t ready to be flexible. Seven of them actually refused a reservation of two weeks in early August because the guests have a dog. In the end, we managed to find a property for those guests, but they could easily have turned to another destination”, warned Miočić.
Noticeable oscillations
Aminess stated that the accumulated occupancy in their Croatian luxury tourism portfolio so far is in line with their initial plans, but they’ve noticed oscillations in the market depending on the period of stay.
Croatia is not the only tourist country where there are fewer elite guests this year. Italy, Greece and Turkey all also recorded a drop in demand. The only exception has been Spain, which has so far achieved growth of 7.6 percent compared to 2023’s figures. The demand for Turkey from Germany is also declining. Greece and Croatia are recording very similar numbers, while neighbouring Italy has a problem with domestic demand, which is in decline, and otherwise accounts for 60 percent of their total demand.
According to Rukavina, what attracts elite guests to the Croatian luxury tourism sector and the country in general is the preserved nature, rich historical and cultural heritage, gastronomic offer, rich non-boarding offer and quality accommodation. “However, there’s certainly still a lot of room for additional investments in quality content for elite tourism,” he believes.
“The fact of the matter and what should be taken away from this is that guests who book luxury facilities spend on average another 5,000 to 10,000 euros on additional services in the destination (massages, wine, transfers, boat trips, the daily rentals of speedboats, yachts, private chefs, dinners and the like). Isn’t that enough motivation to attract and keep them?”, Ćaleta asks.
