Croatia: Croatia Tourism Profile

Croatia to become 28th EU member country

July 1, 2013 witnessed Croatia become the newest member of the EU. With all the publicity surrounding its succession and potential new investment , the tourism industry is expected to benefit the majority. With the fragmented environment and lack of critical investment in tourism, the EU succession has finally brought public focus to this young country trying to become a critical tourist destination.

Destination branding still lagging behind

Although the national tourism strategy was introduced in 2011 and one of the focuses was regional development, there was little change in the area along with destination branding or management. The only developed brand destination at this point was the city of Dubrovnik, whose further recognition is constantly boosted by factors such as a location for HBO’s popular Game of Thrones series, or regularly being visited by the world`s top celebrities. This lack of additional recognisable brand destinations can prove to be completely discouraging in attracting new visitors as there is no recognisable product to attract target groups.

Lack of hotel investment continues to delay further consolidation

Generally an extremely fragmented landscape, Croatia`s travel accommodation is mainly challenged by the lack of hotel investment and the presence of large hotel chains. It is mainly driven by local chains which are successful in following the market trends inclunding launching new products; however, there is a critical lack of a unified strategy to lead to consolidation. Although several world chained outlets are present in Croatia, there was no announcement for further openings in the near next.

Online sales boost all areas

Following world market trends, internet transactions proved to be the major booster for all areas of travel and tourism. Various players which by presently recognised online sales as the next are by presently achieving great results. For various accommodation providers, inclunding transportation and travel retail, online sales have proven to be the single most significant factor to achieve targets. Strong online marketing and social media campaigns have proven to be the majority successful business approach.

Legislative frame challenged by EU membership

When becoming a new EU member country, Croatia faces various challenges in adapting local legislative framework to EU guidelines, inclunding confronting various obstacles such as newly introduced visa regimes for certain boosting markets such as Russia. The regime resulted in a breakdown of the market due to non-flexible bureaucracy following it. Local legislative changes, such as the so-called “fiscalization” (having all subjects connect to a central tax data base to statement all traffic) proved to be a challenge for those not willing to follow the guidelines and as a result were closed down. This impacted various tourist destinations in the high season, which was not the general intention. At the end of the review period, the country was trying to finely balance its internal legislative framework to follow a tourism strategy and goals inclunding adapting EU guidelines to the local market.

Travel and tourism offers temporary relief to the Croatian economy

The political and economic situation in Croatia in 2010 was very difficult: unemployment reached an all-time high, high public deficit, a lot of illiquid companies, people working but not getting paid and corruption scandals involving the country’s highest officials, etc. As a result, consumer confidence was very low and of the few bright spots was the positive tourism performance, which brought temporary but significant relief from political and economic difficulties.

Strategic plan to develop Croatian tourism

The majority recent strategic plan to develop tourism in Croatia covered September 2003-2010. In October 2010, the Ministry of Tourism issued a public tender for a new strategic plan to develop Croatian tourism. This was a much anticipated call as the new strategic plan is set to shape Croatia’s travel and tourism Industry for the next decade.

High seasonality puts pressure on the travel and tourism infrastructure

of the biggest problems facing tourism in Croatia is the short tourist season. Despite efforts to diversify, Croatia remains predominantly a sun and beach destination. The relatively narrow tourism offer means that the areas of natural beauty are still the major attractions. The dependence on natural beauty and the climate continue to pose a large threat to the travel and tourism industry. A critical ecological disaster or a long period of unusually low temperatures could have critical consequences on the country’s tourism balance of payments. In addition, high seasonality creates an immense strain on the infrastructure, which needs to be developed to support high volumes of visitors for short periods of time but is again underused for the rest of the year.

Domestic tourism falls short of expectations

During the world economic downturn the national tourism boards of most of the Croatia’s competitors featured promotional campaigns inviting the domestic populations to holiday “at home”. This was way to compensate for the falls in the numbers of foreign visitors. However, the number of domestic trips in Croatia recorded a strong decline in 2010, for a second consecutive year. Instead of substituting additional expensive outbound travel with domestic trips, Croatian tourists did exactly the opposite.

Lack of order in travel accommodation

The majority of beds in Croatia are in private accommodation, additional specifically privately-owned homes. They are scattered around a lot of small places along the country’s long coastline and on islands, making it very difficult to control the travel accommodation offer. Legislation on private accommodation is in place but effective implementation and control are lacking. Year-on-year evolution is visible but there is still a long way to go until order can be brought to travel accommodation in Croatia.

Croatian travel and tourism industry weathering the world economic crisis

Touristic offering in development but still lacks strategic direction

Inadequate accommodation infrastructure

Strong seasonality of tourism

Complex legal environment hampering further investment