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Tourism in Croatia Iva Tolić ISSN: 2560-1601 Vol. 16, No. 2 (HR) March 2019 Croatia economy briefing: Tourism in Croatia Iva Tolić 1052 Budapest Petőfi Sándor utca 11. +36 1 5858 690 Kiadó: Kína-KKE Intézet Nonprofit Kft. [email protected] Szerkesztésért felelős személy: Chen Xin Kiadásért felelős személy: Huang Ping china-cee.eu 2017/01 Tourism in Croatia Summary Tourism is one of the most important sectors in Croatia and last year was record year in Croatian tourism for the number of arrivals and overnight stays. Since the European Union has recovered from financial crisis arrivals, overnight stays in Croatia grow constantly. However, some problems in tourism in Croatia surfaced, such as tourists’ crowds, lack of labor force and dumpish prices. Tourism in numbers Tourism is one of the most important industries in Croatia, representing around 20 percent of the Croatian GDP and key source of export revenues for Croatia. The history of tourism in Croatia dates back to the middle of the 19th century, but mass tourism expanded in the 1960s and in the 1970s. The volume of arrivals dropped sharply during the wars in the early 90s, but the tourism industry has since recovered and is now booming. Since 2000, the number of tourist overnight stays has been rising continuously (downfall was recorded only in 2008 due to the global financial crisis). The record tourist season with the best results in Croatia's history was recorded in 2017 when Croatia was visited by 17,430,580 tourists who had 86,200,261 overnight stays. That same year Croatia's tourism revenues amounted to €9.5 billion. Although official statistics on the number of arrivals and overnight stays of tourists in 2018 have not been published, from the beginning of 2018 to December, it is estimated that 18.7 million tourists visited Croatia amounting to a little less than 90 million overnight stays. Compared to the 2017, that represents an increase of 7.1 percent of arrivals and 4 percent of overnight stays. Out of the total number of arrivals in 2018, foreign tourists realised 89 percent of arrivals and 93 percent of total overnight stays. The average length of stay was 4.8 days, 5 days for foreign tourists and 3.2 days for domestic tourists. One of the features of Croatian tourism is high seasonality, which is evident when analysing arrivals and overnight stays of tourists by month. In 2017, 49 percent of arrivals and 60.5 percent of overnight stays were realised between July and August. More arrivals and 1 overnight stays of tourists in pre-season and post-season was recorded in 2018, so that in July and August, a smaller share of visitors was recorded compared to the previous year – 46.6 percent of total arrivals and 59 percent of total overnight stays. As mentioned above, the largest number of tourists are foreign tourists. In the first place by the number of arrivals and overnight stays were tourists from Germany with 2.7 million arrivals (which represents a 6.4 percent increase compared to 2017) and 19.9 million nights (2.4 percent increase). In the second place are Austrian tourists with 1.3 million arrivals (2.9 percent increase) and 7.0 million overnights (1.1 percent increase). Slovenian tourists, with 1.3 million arrivals (5.1 percent increase) and 7.2 million overnight stays (1.9 percent increase), are in third place. By type of accommodation, in 2018, the biggest number of tourists stayed in private accommodation, a total of 41.2 percent, where there were 7.6 million arrivals (10.0 percent increase compared to 2017) and 43.3 million nights (6.2 percent increase). Private accommodation is followed by accommodation in hotels with 6.7 million arrivals (increase of 6.7 percent) and 21.3 million overnight stays (3.7 percent increase), and accommodation in camping sites with 2.9 million arrivals (increase of 3.5 percent) and 19.2 million overnight stays (1.0 percent increase). It 2018, the most popular Croatian county among tourists was the Istria County, where there were 4.3 million arrivals (5.6 percent increase compared to 2017) and 26.1 million overnight stays (3.0 percent increase). It was followed by the Split-Dalmatia County, with 3.4 million arrivals (10.0 percent increase) and 17.5 million overnight stays (5.7 percent increase). The third most popular was the Primorje-Gorski Kotar County, with 2.9 million arrivals (4.3 percent increase) and 15.2 million overnight stays (2.6 percent increase). As already shown, Croatia's tourism grows year-by-year as indicated by the number of arrivals and overnight stays of tourists. Thus exports and revenues are equally on the rise. However, in addition to positive statistical indicators, tourism in Croatia also faces numerous problems. The problems of tourism in Croatia According to Orsini and Ostojić, over the past decade, Croatia outperformed the average of the other EU countries in the Northern Mediterranean region (such as Cyprus, Greece, Italy, Malta and Spain). This performance is visible in increasing international tourism revenues, non- 2 resident tourists' overnight stays and arrivals from abroad. However, some structural weaknesses prevent the sector from achieving its full potential. High seasonality, limited range of services, and low average spending are frequently mentioned weaknesses of the Croatian tourist model. Croatian tourism is focused on the "sun and sea" sector. It is geographically concentrated along the coast, which generates congestion costs and feeds regional imbalances. Moreover, nowhere in the EU does tourism show such a strong seasonal profile as seen in Croatia. The high seasonality of arrivals is challenging for local businesses operating in the tourism sector and limits the spill-over effect into other sectors. High seasonality is particularly problematic for infrastructures that tend to have high running costs irrespective of the utilisation rate, such as large hotels.1 In 2018, new problems emerged that marked the tourist season. On the one hand, there are too many tourists and tourists’ crowds created, consequently resulting in an increase in the cost of living in tourist centres. Another problem that has arisen is the lack of labour force in the tourism sector. Although it had been clear since the winter that there will be a shortage of workers in all catering and tourist vocations the issue remained unaddressed. There were about 120,000 employees and circa 20,000 seasonal workers at the "peak" of the tourist season, but another 15,000 workers were missing in the season. The initial quota for the import of workers in tourism was 4,660 workers in the heart of the season, yet it climbed to 7,660. Nonetheless, as far as employers were allowed to import from abroad it did not seem to have aided in solving this problem. In addition, a bigger number of private accommodation facilities led to a drop in prices. The total number of beds in commercial accommodation capacity increased by about seven percent, while hotels increased their capacity by only 2.5 percent. Thus, compared to 600 thousand beds in apartments, only about 167 thousand beds were registered in hotels, which still marks a low share in tourist bedding of only 16 percent. Due to such a growth in the capacity of family accommodation, the occupancy capacity during the 2018 season was below expected. Simply, the growth of the guests was not enough to fill so many new beds in private accommodation, so at the end of July and the beginning of August, the accommodation was offered at dumpish prices, just so they would not be empty. The biggest problem of Croatian tourism is seasonality and massive tourism. It is necessary to think about the sustainable development of tourism, to maintain tourism 1 Orsini and Ostojić (2018.) Croatia's Tourism Industry: Beyond the Sun and Sea. European Economy Economic Brief. 3 throughout the year, to preserve the natural and cultural wealth, to use all the potentials of all unused and undeveloped areas, and to improve the offer that will differentiate Croatia as a tourist destination. Conclusion Tourism is a key sector of the Croatian economy and Croatia benefits from the gradual income recovery in the EU aided by its relatively low price level. In the short to medium run, both arrivals and overnights are set to keep growing strongly – underpinned by further penetration into non-neighbouring countries and rapidly increasing living standards in Central and Eastern Europe. Croatia is currently profiting from the fact that it has been rediscovered as a tourist destination, but needs to address the long-term concerns, as all tourist destinations are at risk of stagnation and even a fall in demand. Currently, Croatia is far from the saturation point, but risks must not be underestimated. Also, there is a danger of an over-reliance on the existing tourism model and state that potential risks can be reduced by encouraging the development of continental tourism, exploiting Croatian historical heritage, developing gastronomic tourism, wellness and health tourism. The offer of new and well-differentiated tourist services could mitigate the risks of stagnation, maximize the impact on other sectors of the economy and reduce the negative effects on the environment. However, the departure from the traditional offer is difficult and requires coordinated efforts by decision-makers at all levels of government to successfully resolve existing shortcomings and to support tourism development in terms of scope and quality of supply. 4 .
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