In July 2023, the total number of arrivals amounted to 4.8m, an increase of 4% YoY. Meanwhile, total nights amounted to 29.5m, remaining roughly the same YoY.
The most recent report on the progress and development of the Croatian tourist sector, for July 2023 has been released by the Croatian Tourism Board. In the report, we can see that the total number of arrivals amounted to 4.8m, an increase of 4% YoY. Of this, foreign tourists accounted for 4.4m, increasing by 4% YoY, while domestic tourists accounted for 411.5k arrivals, increasing by 6% YoY. On the other hand, total tourist nights amounted to 29.6m, remaining roughly the same YoY. Of this, foreign tourist nights amounted to 26.3m (or 89% of the total), a decrease of 0.5% YoY, while domestic tourist nights accounted for 3.3m, a 3% increase YoY. This would also mean that the average stay per person amounted to 6.15 nights, a decrease of 4% YoY.
Total tourist arrivals and tourist nights in Croatia (January 2019 – July 2023)
Source: HTZ, InterCapital Research
Looking at the tourist nights by accommodation, 85% of the nights were registered in commercial accommodation, 13% in non-commercial, and the remainder went to nautical accommodation. Of this, private accommodation had the largest share, at 12.7m tourist nights, representing 51% of the total tourist nights. Following them, we have camps at 5.8m (or 23% of the total), and hotels, at 4.7m (or 18% of the total).In terms of tourist nights by country of origin, 17% of the tourists came from Germany, followed by Slovenia with 13%, Croatia with 11%, Czechia, Poland, and Austria with 7% each, and Slovakia with 5%. Looking at the tourist nights by counties, the largest amount was registered by Istra at 7.9m, followed by Splitsko-dalmatinska at 5.7m, Kvarner at 5.3m, Zadarska at 4.9m and Dubrovačko-neretvanska at 2.1m.
When we compare these numbers to 2019, we can see that the total number of tourist arrivals increased by 5%. Of this, foreign arrivals increased by 4%, while domestic arrivals increased by 16%. On the other hand, the total number of nights decreased by 3%, and of this, domestic tourist nights decreased by 7%, while foreign tourist nights decreased by 3%. Meanwhile, on a YTD basis, the total tourist nights amounted to 56.8m, which compared to the same period in 2019, remains unchanged.
If we take all of this into account, but also the various media reports regarding Croatian tourism, the picture is both positive and negative. It is evident that we have reached the 2019’s level in terms of tourist arrivals and nights but given the fact that 2022 only missed this mark by a couple of percentage points, the YoY growth isn’t that impressive. The main reason for this, of course, is the pricing. Even though the expenses in the industry have been going up for a while now, and inflationary pressures are still present, it would seem that tourists, especially foreign ones are less and less inclined to spend as long, or as much in Croatia as they were in the previous years. Last year, a lot of talk in this period was that the price growth could be weathered due to the savings made during the pandemic. Right now however, after almost 2 years of heightened inflation which hit the disposable incomes across the emissive markets for Croatia, it would seem that the tourists are a lot more cautious when it comes to spending their money, which given the price growth seems justified. Will this remain the case going forward, or will the situation improve mostly depends on the tourist companies as well as private accommodation owners’ willingness to keep prices stable, or even reduce them. This is especially true if we also take into account the competition from neighboring countries, which seemed to have capitalized well on this opportunity by offering lower prices.
At the end of June 2023, the average housing loan interest rates increased by 0.81 p.p. YoY, consumer loan interest rates by 1.28 p.p., and corporate loan interest rates increased by 3.1 p.p. YoY. At the same time, the total amount of loans issued by all the Croatian financial institutions amounted to EUR 41.9bn, representing a slight 0.2% decrease MoM, but an increase of 6.8% YoY.
Recently, the Croatian National Bank published the latest monthly report on Croatian financial institutions, including data related to loans. According to the report, the total amount of loans issued by all Croatian institutions as of June 2023 amounted to EUR 41.9bn, which would imply an increase of 6.8% YoY, but a decrease of 0.2% MoM.
Looking at the changes more closely, we can see that both corporate and household loans contributed to this change. On a YoY basis, the number of corporate loans issued amounted to EUR 1.64bn, representing an increase of 12.9%, while household loans increased by EUR 1.13bn, an increase of 5.8%. Meanwhile, on a monthly basis, corporate loans recorded a slight decrease of 0.25%, or EUR 35.9m, while household loans increased by EUR 156.4m or 0.8%.
Corporate and household loans growth rate (January 2015 – June 2023, %)
Source: HNB, InterCapital Research
Breaking these categories down even further and first looking at corporate loans, we can see that working capital loans still continued to increase, both on a MoM and YoY basis, while investment loans and other loans recorded a MoM decrease, but still continued growing on a YoY basis. In total, investment loans, the largest category of corporate loans amounted to EUR 5.62bn, representing 39.1% of the total, and decreasing by 0.42% MoM, but increasing by 9.37% YoY. The 2nd largest category, working capital loans, amounted to EUR 4.48bn, representing 31.2% of the total, and growing by 0.93% MoM, and 2.28% YoY. Finally, the other loans category amounted to EUR 4.28bn, representing 29.8% of the total, and decreasing by 0.8% MoM, but increasing by 33.7% YoY. In terms of households, housing loans still represent the largest category at EUR 10.3bn (49.8% of the total household loans), with growth of 1.42% MoM, and 9.06% YoY. Following them we have consumer loans, which amounted to EUR 7.57bn, growing by 0.93% MoM, and 5.34% YoY.
Composition of Croatian loans to households (October 2011 – June 2023, EURm)
Source: HNB, InterCapital Research
Meanwhile, average interest rates on newly issued loans have steadily been increasing, with growth recorded both on MoM, as well as YoY basis. As such, the average housing loan interest rate amounted to 3.07%, an increase of 0.10 p.p. MoM, and 0.81 p.p. YoY. Consumer loans interest rate amounted to 5.63%, an increase of 0.03 p.p. MoM, and 1.29 p.p. YoY, and finally, average corporate loan interest rate amounted to 4.91%, an increase of 0.26 p.p. MoM, and 3.1 p.p. YoY.
Average new housing and corporate loans interest rate (December 2011 – June 2023, %)
Source: HNB, InterCapital Research
Taken together, this would mean that despite the ever-growing interest rate environment, the demand for loans is still present, both for households and corporate clients. What is interesting to note, however, is the growth in the interest rate on the corporate side, which surely had an impact on newly taken loans for investments and other activities, except the working capital loans which have to be taken due to business requirements.