Rising prices, higher vacancy rates, workforce shortages, lower service quality and more – yet Croatian tourism continues to exceed expectations. However, the real question is not whether total arrivals have increased compared to “record 2019” or how many beds are available in private accommodation, though we answer those as well. Instead, it is whether these results stem from sensible and well-targeted strategic planning or merely from truncated decisions fueled by inertia and dependent on whichever way global trends blow, and this one we leave for you to assess.
At the start of 2025, new tourist season talks and concerns about the long-term sustainability and competitiveness of Croatian tourism have resurfaced, fueled by rising prices and lingering concerns over higher vacancy rates during peak summer months in the previous year. The Minister of Finance noted that the tourism sector had “gotten a little carried away, a little much”, highlighting how increasing costs may be affecting the country’s appeal as a tourist destination. He also reminded the public and tourism industry stakeholders of government relief measures, such as reduced VAT rates for tourism services and subsidized energy costs (as if the government shouldn’t be accounted for rising prices as well, at least partly). Meanwhile, the Minister of Tourism and Sport emphasized that price increases in Croatia’s tourism industry have outpaced those of Mediterranean competitors, making Croatia a more expensive destination. When looking at rising prices, it is essential to consider costs related to hotels, restaurants, bars, cleaning and taxi services and other related services, as all of those significantly impact tourists’ overall expenses. This is particularly relevant as the majority of tourists in Croatia opt for private accommodations rather than full-board hospitality, also making them more susceptible to rising retail prices, for example.
Therefore, one of the key challenges for Croatia is its unusually high proportion of private accommodation within the total commercial lodging. Several factors have contributed to this trend. First, Croatia’s strong seasonality discourages large-scale foreign hotel investments, as they require more than two peak months per year to ensure profitability. In contrast, private accommodations demand lower capital expenditures and operational costs since they are often part of existing family homes and require minimal staffing. Additionally, regulatory hurdles, high tax burden, an inefficient labor market and other unfavorable business conditions deter foreign investments in tourism sector but also in the local economy as a whole. The increasing prevalence of private accommodations also raises concerns about mass tourism and an oversupply of low-quality lodging, leading to higher vacancy rates year after year.
Total tourist arrivals and nights in Croatia (January 2019 – January 2025)
Source: HTZ, InterCapital Research
Despite these challenges, 2024 was a record-breaking year for Croatian tourism. Total tourist arrivals surpassed 2019 levels by 3%, driven primarily by a 25% increase in domestic arrivals, while total tourist nights matched the 2019 record levels. On an annual basis, arrivals grew by 3.5%, while overnight stays increased slightly by 0.9% YoY. Among accommodation types, private accommodation accounted for the largest share of tourist nights (36.6%), followed by hotels (23.4%) and camps (19.2%). However, the hotel accommodation showed a slight increase in its share by 0.5 p.p. compared to previous year, partly due to rising costs in private accommodation and the continued improvement of hotel services, which contribute to a longer tourist season.
The positive trend appears to be continuing into 2025, although it is still too early to tell. In January, tourist arrivals increased by 9% YoY (+10% foreign and +8% domestic), while total nights rose by 6% (+7% foreign and 5% domestic). Compared to 2019, arrivals were up by 15%, and tourist nights grew by 17%. Also, as stated by the AirDNA agency, bookings for the year are up 26% compared to the same period last year. These figures suggest that Croatia is successfully extending its tourist season. This shift benefits local communities by reducing overcrowding in the peak months, helps hotels and camps generate revenue year-round and fosters a more sustainable tourism model.
Therefore, to maintain its appeal and ensure long-term sustainability, Croatia should focus on positioning itself more as a high-end tourist destination. This requires improving service quality to match rising prices which will result in maintaining strong booking rates and keeping vacancy levels lower (but these are not necessarily bad either). Expanding tourism offerings – including cultural, gastronomic, historical, medical, business, adventure etc. tourism – will be key to balancing growth and avoiding the pitfalls of mass tourism. Additionally, investing in transport and other infrastructure to support pre- and post-season tourism is essential for the sector’s long-term stability and broader economic benefits.
Still, despite all its challenges, Croatia remains one of the safest countries in Europe, boasting favorable weather conditions, a pristine coastline, rich cultural and gastronomic experiences and an increasing appeal beyond the peak summer months. With evolving travel trends, more tourists are seeking authentic local experiences, exploring lesser-known destinations and traveling outside of peak season. Capitalizing on these trends while improving service quality and infrastructure will be crucial to Croatia’s continued success as a popular tourist destination, instead of capping prices or picturing (all) renters and entrepreneurs as greedy.
