Recently, there has been a lot of talk, both from the side of the Government and the Croatian Tourism Board, as well as in the media about the performance of Croatian tourism in 2024 thus far. In today’s blog, we bring you the numbers and an analysis of what they mean and what they could mean in the future.

At the beginning of July this year, we released a blog overviewing the situation in European tourism, particularly in Croatia. We also went over our expectations for the season and the future. You can read this blog here.

Now that the Croatian Tourism Board has released the August data, both the Croatian Minister of Tourism and the President of the Croatian Tourism Board have commented on the performance in the first 8 months of the year. Various news sites have also made comments, overviewing how different regions and accommodation types performed. Articles also highlighted how certain key emissive markets within driving range, like Germany, Czechia, and Italy, saw declines in arrivals and nights, while other Central European markets such as Slovenia, Austria, Poland, Hungary, and Slovakia either grew or stayed relatively stable YoY.

Furthermore, there have been discussions about the higher arrivals from more distant markets of the UK, but especially the US and China, which have led to increased air arrivals, leading to higher numbers across many, if not all, Croatian airports. Having all of this in mind, let’s look at some numbers before evaluating further.

Total tourist arrivals and nights in Croatia (January 2019 – August 2024)

Source: HTZ, InterCapital Research

Starting off with August, the total number of arrivals amounted to 4.9m tourists, an increase of 6% YoY, with foreign tourists accounting for 4.4m, up 5% YoY, while domestic tourists totaled 478k, an increase of 19% YoY. In terms of tourist nights, the total was 31.6m, remaining unchanged YoY, with foreign tourist nights reaching 27.7m, with negligible change YoY, while domestic tourist nights totaled 3.9m, an increase of 3% YoY. In other words, while a higher number of arrivals was recorded, people overall spent fewer nights in Croatia. In fact, the average stay per person in August amounted to 6.43 nights, a 5% decline YoY.

If we were to compare it to the “record 2019,” total arrivals declined by 1%, down due to a 3% drop in foreign tourist arrivals, while domestic arrivals increased by 24%. Also, tourist nights declined by 4% compared to 2019, with declines in both foreign and domestic nights.

Now for the first eight months of 2024, tourist arrivals increased by 4%, while tourist nights increased by 1%. But if we look at the source of this increase, the first 6 months brought in 8% more arrivals and 3% more tourist nights. In total, EUR 5.4bn of revenue was recorded in tourism during the first eight months of 2024, an 11.6% increase YoY, with almost 300m of receipts issued, a 5.5% increase YoY. Besides the raw numbers, it’s also worthwhile to look at where tourists primarily stayed. Hotels recorded 95% occupancy rates (as of 8 August 2024), followed by camps at 89%, private accommodation at 72%, and non-commercial accommodation at 20%.

Tourist nights in Croatia by accommodation type (As of 8 August 2024, % occupied)

Source: HTZ, InterCapital Research

Having all of this data presented, what can be said about the performance of Croatian tourism thus far?

Firstly, it is quite evident that the growth in the number of arrivals and nights, always touted as the “benchmark” of strong performance in the tourism industry, is being more strongly driven by good performance in the pre-season. This is to be expected; with increasingly hot summers recorded, many vacations are moved earlier in the summer or even before, or reserved for the post-season, especially while the warm weather persists.

Secondly, a drop in the number of arrivals from some of the most important emissive markets such as Germany or Italy can be attributed to the reduction in available budgets in those countries, as the economic situation has been challenging in the last couple of years. An offset, however, was achieved by the good performance of other CEE markets, as well as European and global air travel.

Thirdly, and perhaps most worrying, is the fact that while hotels and camps continue to perform well in terms of occupancy rates, private accommodation is suffering, recording nearly 30% vacancy rates at the peak of the summer season.

This is in stark contrast to the growth in revenue and the number of receipts issued, implying that while people are spending more (overall, not just on accommodation), the price-to-quality ratio in private accommodation is lacking. While it is a positive thing that there is a shift of the tourism season towards the pre-and post-season, which could be seen as an adaptation to the continually warming climate during the summer, further efforts should continue to be made to promote Croatia as an all-year, or at least as not only a summer destination.

In addition to the peace, beautiful scenery, and warm sea, more events and activities should be added continuously. This is especially true if we look at relative growth rates in tourists; Germans, mostly middle-aged or older, are recording declines in both arrivals and nights. To be fair, an increase in other emissive markets in the region similar to Germany demonstrates that this could be just a one-off event due to the economic situation in the country. On the flip side, younger tourists usually make up global arrivals from, for example, the US and the UK. The fact that these arrivals and nights recorded growth more so in the pre-season (and thus possibly in the post-season as well) further lends credence that the focus towards these periods is bearing fruit.

Overall, based on these results, larger hospitality companies with hotels and camps in their portfolio should perform well, recording both higher occupancy rates and revenues. Profits should also grow as cost growth isn’t as severe as it was in 2022 and 2023, with inflation largely subdued. Private accommodation, however, is expected to show mixed results. Despite certain positive measures being taken, a significant increase in the supply of accommodation, while the no. arrivals and nights remain stagnant does means that at a certain point, a slowdown or stagnation has to be recorded. For reference, 250k more beds, or 15% more beds were added from 2019 until 2024, mostly in non-commercial accommodation. When combined with the current price levels, it is unlikely that private accommodation owners can effectively compete and make profits.

If we also add the fact that the whole Mediterranean is faced with these issues, exacerbated by various natural disasters such as fires and floods, other countries are starting to offer significant discounts compared to before. The only question then remains: does Croatia have what it takes to not only maintain but grow the number of tourists under these circumstances, or will changes have to be made? Our view is that it will require continued development and coordination between the Government and accommodation providers, and how well this dynamic plays out will largely determine how the upcoming periods, including the next year and afterward, will turn out for Croatian tourism.