Croatia's tourism price rise raises concerns among tourists and the economy

Croatia has long attracted tourists from around the world with its stunning coastline and historic cities, but the rapid rise in travel prices in recent years is discouraging many tourists. The country's price increases are greater than other popular destinations such as Greece, Spain and Italy, which has caused concerns among officials and industry insiders.

First, travel-related costs in Croatia have increased by about 50% over the past three years, far higher than the 15% to 20% increase in other Mediterranean regions. This has made Croatia's consumer costs higher than its main competitors such as Greece and Spain, affecting its economic appeal. Although energy prices and value-added tax have not risen significantly, Croatia's energy costs are relatively low in the eurozone, and tourism value-added tax has been reduced to 13%, rising operating costs in the hotel industry have become the main driving force. The rise in accommodation costs has led to a decrease in tourists' stay time and an overall decline in tourism spending.

Second, the price surge has hit tourist flows, especially in traditional markets such as Germany, the Czech Republic, Austria and Italy, where the number of tourists has declined. Last summer, Croatia's peak season foreign tourist revenue fell 0.7% year-on-year. Christian Stanicic, director of the National Tourism Administration, pointed out that tourists are increasingly paying attention to cost-effectiveness, and for them, travel costs are an important factor in determining destination selection.

At the same time, tourism insiders believe that one of the main reasons for price increases is the increase in operating costs caused by wages and inflation. As costs grow faster than revenue growth, hotel profits are being squeezed. Although hotel prices in Croatia only rose by 1.9% last year, the increase in other parts of the Mediterranean reached 4.5%. In addition, Croatian homestay operators have expressed concerns about the high commissions of international booking platforms, and some voices have suggested establishing a national booking system to reduce dependence on foreign platforms.

However, in addition to price increases, new entry regulations may also become another consideration for tourists. From 2026, travelers from non-EU countries will need to apply for permission through the European Travel Information and Authorization System (ETIAS) to enter Schengen countries such as Croatia. Although the application process for ETIAS is relatively simple, this additional procedure may become one of the factors affecting travel decisions for tourists with limited budgets. If prices in Croatia continue to remain high, some tourists may turn to alternative destinations with more price advantages.

Furthermore, the situation in Croatia is more complicated for long-term residents and immigrants. The country is fully integrated into the Schengen area, facilitating digital nomads and seasonal workers. However, Croatia is becoming less attractive as an affordable long-term residence as the overall cost of living increases. In particular, the country is becoming less attractive for non-EU residents looking for economic alternatives in Europe. This change could affect migration flow patterns, with middle-income tourists and residents preferring more affordable destinations, while wealthy tourists are likely to continue to visit Croatia.

Finally, the impact of rising prices in Croatia is not limited to the tourism industry, but could also affect the wider economy. EU immigration policy is often closely linked to economic conditions, and a decline in Croatian tourism could cause uncertainty in the labor market. With fewer job opportunities in Croatia, more local residents may move to other EU countries in search of work. This could have some impact on labor mobility and work permit policies across the EU, especially in sectors with labor shortages, which could further increase pressure.

In summary, the Croatian government hopes to achieve price stability by 2025, but the future remains unclear. Consumers are becoming more cost-sensitive given the slowdown in major tourist source countries such as Germany, Austria and Italy. If Croatia does not improve its price competitiveness, it may lose its edge in the Mediterranean tourism market. Policymakers and industry leaders need to find solutions to ensure that Croatia remains an affordable and sustainable tourist destination for domestic and foreign tourists while ensuring the quality of services.