Offering a stunning Adriatic coastline and 78 islands rivalling those of Greece and Italy, Croatia’s tourism industry has dominated in recent years, beating manufacturing and agriculture to become the country’s strongest asset, representing 20% of GDP.

Croatian tourism enjoyed a record-breaking year in 2019 and the post-pandemic rebound of tourism to the Adriatic region was reassuringly positive. However, although success has been reasonably steady, tourism remains focused solely on the southern coastline of the country.

Ivana Jović, Executive Director of Economic Research at PBZ, says: “In that respect, there have been no significant developments in tourism in the past 10 years. In 2009, 96% of overnight stays were achieved in Adriatic Croatia and in 2019 it was 93%. Thus there is vast potential to develop and promote the continental part of Croatia as a tourist destination. As well as to lengthen the season now concentrated in peak summer months.”

In 2021 overnight stays from tourists increased by 78% year on year, breaking the 75% of overnights realised in 2019. “Once again, Croatia has outperformed its peers,” says Jović. “For example, Italy and Greece rebounded to around 49% of pre-pandemic 2019; Spain to around 38% and Turkey to around 69%.”

In financial terms, international tourism-related receipts reached €9.1bn in 2021, 87% of the 2019 figure. The majority of visitors are from Germany, Slovenia, Austria, Italy and Poland.

Over the first nine months of 2022, foreign arrivals and overnight stays increased year on year by 36% and 28% respectively, reaching 89% and 97% of 2019 levels – indicating that the gap is closing and that full year will be just short or on a par with pre-pandemic highs in terms of physical indicators.

“The most recent data indicates that strong recovery has continued into 2022 – the first year since 2019 that tourism has been operating at full capacity without any containment restrictions,” says Jović. “And it’s expected that it will easily overtake 2019 in terms of financial intake, although to a large extent also reflecting a hike in prices.”

Challenges to Croatian tourism

Although success seems to come easily to the well-known Adriatic coast, the concentration of tourism in that area is a concern for the Croatian Ministry of Tourism.

In the short and medium term, the sector is also facing several other challenges including the rising prices of inputs such as energy, and labour shortages.

One of Croatia’s draws is its lower costs for tourists compared to competitor destinations. A hike in prices may mean a dip in tourism numbers if not properly matched by a rise in the quality offered.

To attempt to tackle these headwinds, tourism has become a central focus in the Croatian government’s Development Strategy 2030.

A new strategy for 2030

The development plan aligns with the UN’s sustainable development goals and broadly aims to raise the GDP per capita and the general standard of living for Croatian people.

It aims both to boost the tourism sector and to draw some of its value chain into the broader economy.

The Croatian Ministry of Tourism has also presented a draft 2030 Strategy document focusing on the development of sustainable year-round tourism.

The plan includes funding for projects that align with the four principal aims of the ministry:

• Activating year-round and regionally balanced tourism – supporting under-visited areas to draw tourism away from the peak season
• Preserving the environment and climate – bringing the green agenda into tourism in the country
• Competitive and innovative tourism – attaining better standards for workers and customers, and supporting enhancement of the structure and quality of accommodation
• Improving resilience overall – through an improved, data-driven governance model

Recovery and resilience funding

In tandem with these broader aims is a targeted funding plan from the EU to help Croatia get back on its feet after the Covid pandemic. The €290m of EU’s Recovery and Resilience facility that is targeted for tourism is designed to support digital and green agendas that will help the country recover on the whole from the impact of Covid-19.

“60% of that is earmarked for entrepreneurs as support of direct private-sector investments,” says Jović, “while the remaining part will be dedicated to investments in public tourism infrastructure.”

An additional €90m for SME co-financing is also available through the EU Cohesion Fund, a targeted plan running from 2021-2027 which aims to correct imbalances between the member states.

Taken together, the strong post-pandemic rebound, government-backed initiatives for change and funding capabilities through the EU represent strong opportunities in the Croatian tourism sector. The industry has reached a turning point, and needs to be actively managed to avoid any negative consequences of mass tourism on local well-being.