Home News High inflation calls into question investment in the Croatian tourism sector

High inflation calls into question investment in the Croatian tourism sector

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Croatian hoteliers expect revenue growth this year, but their costs will also be much higher due to inflation. For this reason, they expect state intervention. The problem was brought to the attention of the Croatian Tourist Board (HUT) at a press conference held on Monday, June 13.

“In order to mitigate the impact of rising prices, we expect the government, as in other EU countries, to make the right decisions, especially when it comes to electricity,” said the director of HUT Veljko Ostoichadding: “Especially considering that Croatian producers provide 70% of the domestic energy supply in the country.”

In a survey of Croatia’s leading hotel and travel companies, HUT found that operating costs have risen sharply and will have an impact on profitability and investment in the sector.

Survey results published by HUT in Tourism impulse for the 2nd quarter of 2022 showed that electricity prices rose the most among hotel and leisure stay spending in the second quarter of 2022 compared to the same period in 2019, namely 142. 5%. The second largest item is gas with a 105% increase, followed by a 20% increase in food prices and a 10% increase in labor costs.

Ostoich stressed that if we add to this the increase in construction prices, then the continuation of investment in tourism is in question. He believes that stopping or slowing them down could be fatal for companies providing high-quality services for which there is a growing demand.

The survey also showed that hotel occupancy this year will reach the pre-pandemic period of 2019. In addition, overnight revenue is expected to increase by 8% and total sector revenue by 3.6%. At the same time, the increase in costs reduces profits and overall profitability in the sector.

As far as the main tourist season is concerned, Ostojić stressed, the highest demand for luxury housing is in the North in Istria than in the South in Dalmatia. However, he added, advance bookings for campsites also increased by 25% compared to 2019.

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