Economic Analyst Reveals How Croatian Tourism Can Level Up

Lauren Simmonds

As Ana Blaskovic/Poslovni Dnevnik writes on the 28th of January, 2020, by launching a strong investment cycle, Croatian tourism can catch up with leading European countries like France, Italy and Spain in terms of productivity, which also means that Croatian tourism can only be sustained by increasing quality, and investing in what creates high added value for the entire economy, especially when it comes to hotels.

This objective should also be put into the Croatian tourism strategy for the upcoming period, which is expected during the year. The prerequisite for activating this potential is to secure a business environment that will attract investors, so in order to jump up the scale in terms of productivity, taxes and barriers to investment should be dramatically reduced.

The conclusion of this analysis is entitled “The contribution of different types of tourism accommodation to value added and economic development” by the independent Croatian economic analyst Velimir Sonje of Archivalytics.

It was presented at the recent ”tourism briefing” organised by the Croatian Tourism Association (HUT), the first in a series of new format that will present analysis and expert papers in the field of tourism by leading domestic economists, such as Sonje. The aim is to stimulate greater interest from key stakeholders in Croatian tourism, which generates approximately 20 percent of Croatia’s GDP, and thus a encourage a better public debate on the role and potential of tourism in the development of the Republic of Croatia as a whole.

As Sonje’s analysis has shown, hotel accommodation, which accounts for only 15.7 percent of the country’s total accommodation offer, currently generates about 3.7 times the value added per bed compared to accommodation in short-term rental properties, which currently make up 60 percent of Croatia’s total offer. According to Sonje, this is a sub-optimal structure that doesn’t allow for the maximum economic impact of Croatian tourism and threatens the sustainability of tourism in general.

HUT director Veljko Ostojic also believes that Croatian tourism, at least with its current offer, has a structure that is vulnerable and unsustainable, ie investments in new high-quality hotels are needed. He detailed that in a proposal.

“According to the proposal, subsidies for large enterprises for the reconstruction and construction of four-star hotels should be abolished. We will prove that such a proposal is illogical and, if nothing else, that we need to return to our current state,” Ostojic said.

“The comparison of the structure of the tourist offer across the Mediterranean showcases the outdated structure of the offer in Croatia. This is the main reason for the relatively low added value that is created in Croatian tourism. An estimate of value added by type of tourist accommodation shows that hotels and similar accommodation types with an approximate 16 percent share in the number of tourist beds, and a 28 percent share in tourist overnight stays generate approximately 40 percent of added value,” said Sonje.

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