Will Croatia’s rising prices impact visitor numbers?

Croatia

Croatia has become one of the more expensive tourist destinations in Europe. In just two post-pandemic years, the prices of hospitality services and accommodation have risen by approximately 40%.

The prices could well determine how appealing Croatia will be to visitors in the next tourist season.

Experts warn that the key, possibly decisive, factors for attracting tourists will be the balance between price and quality.

Higher prices for basic goods and raw materials, along with significant retail margins, have all contributed to the increase in hospitality prices, according to restaurant owners.

They claim that their costs are rising daily.

“We had to raise prices like everyone else. The hospitality sector is not the cause of the increases; the main reason is the rising costs in retail, which affect our inputs. Guests complain, and we’re not happy about charging more either,” Darko Grden, a restaurant owner, told HRT.

However, some are increasing prices unjustifiably.

“In most cases, I think the price hikes are justified, but in some cases, they’re not. The discrepancy between the mainland and the coast is worth discussing. Something that costs €1.60 here, like a coffee with milk, might cost €2.50 at the coast under similar conditions,” noted Gordana Halauš, a hospitality establishment owner.

Further price increases could negatively impact tourist demand, especially if quality does not keep pace with rising costs, authorities caution.

“Croatia has been the third fastest-growing economy in Europe in recent years. Unfortunately, this is not the case in our source markets, meaning that selling next year’s season will be particularly challenging. We will need to pay close attention to every aspect of our tourism offering, with the price-to-quality ratio and competitiveness being paramount,” said Tonči Glavina, Minister of Tourism and Sport.

“When we talk about the quality of our services and the price tourists pay, the message is clear: the service must offer value for money,” emphasised Kristjan Staničić, President of the Croatian National Tourist Board.

Hospitality professionals are calling on both national and local authorities for tax relief.

“The VAT should be set at 13% for all hospitality services, and we believe the time has come to abolish the consumption tax, as we are the only ones paying it in this region,” stressed Hrvoje Margan, President of the Guild of Restaurateurs and Tourism Workers of the Croatian Chamber of Trades and Crafts.

“Croatia is experiencing strong economic growth; it’s time to relieve some of the burden on Croatian restaurateurs and tourism professionals,” added Dalibor Kratohvil, President of the Croatian Chamber of Trades and Crafts.

Another reason for rising prices is the increased cost of labour. The shortage of workers, especially skilled ones, remains a major challenge for the hospitality industry.

Thus, there are calls for higher quotas for enrolment in vocational schools and more flexible employment options during peak periods.