Exploring the tourist industry in Croatia

Croatia, the country of coastal sea area. Croatia is located between central and eastern Europe. The country is surrounded by 56,542 sq.km of land area and 31,067 sq.km of coastal sea area. Zagreb is the capital of Croatia. The country experiences a mixture of climatic conditions. Its land is diverse, plains, lakes, hills, rocky coastlines and wooded mountains. Towards the north it is continental, along the coast it is Mediterranean. Central region experiences both highland and semi-highland climatic conditions. The gateway of Eastern Europe is Croatia. It shares the border with Bosnia, Hungary, Serbia, Herzegovina, Montenegro and Slovenia and lies along the east coast of the Adriatic Sea. The nation swings around like a bounce back from the Pannonia Plains of Slavonia between the Sava, Drava and Danube Rivers, across hilly, central Croatia to the Istrian Peninsula then thought the south side by Dalmatia along the rocky Adriatic coast.

Tourism in Croatia is mainly concentrated in the coastal areas. Crikvenica is located in the Kvarner bay , which is the Croatian part of Adriatic Sea know as Hrvatsko primorje(the Croatian Littoral . It is covered by an area of 30km square onshore and 28km off shore in the waters of Vinodol channel. (Urbanistica d.o.o. Zagreb, 2006).

The country has twenty counties added with the city of Zagreb. There are around 1185 islands in the Adriatic Sea are under the control of Croatia. Among those 67 of them are inhabited. The history says Croats are the Slavic people who migrated from Ukraine and settled in Croatia during the 6th century. During the year 1868, while remaining in the Hungarian power Croatia gained domestic autonomy. During the World War I and the failure of the Austro Hungarian Empire, Croatia joined the kingdom of Serbs, Croats and Slovenes. In the year 1929 the kingdom of Serbs, Croats and Slovenes became Yugoslavia. After the World War II, under the communist leadership of Marshall Tito Yugoslavia changed its name and became a new state Federal Socialist Republic of Yugoslavia and Unite Croatia. The Yugoslav federation began to loosen after the death of Marshal Tito and with the fall of communism all over Eastern Europe. Since World War II in 1990, Croatia held its first multi party elections. For a long period Franjo Tudjman nationalist of Croatia was elected as President after a year later Croatians got independence from Yugoslavia.

The economy of Croatia turned the corner in the year 2000 as tourism rebounded. In the year 2002 the economy expanded by 5.6%, moved by a credit increase by a newly privatized and foreign capitalized banks, capital investment especially road construction, continued by the growth in tourism followed by small and medium private enterprises. It has a growth in fueling, strong demand in construction and services with a comeback of 4.8% GDP growth in the year 2006. (www.state.gov, 2010)

Analysis of the tourism system that supports this destination:

After the study of the impacts and issues of tourism industries in Crikvenica, this part assesses the selected economic, regulatory and institutional policy (Taylor et al, 2003). The tourist eco tax does not exist in Croatia, since 1995 all guest are asked to pay tourist tax when booking their accommodation. The effects of an eco-tax is depend on the elasticity of demand and collected to provide a higher quality of tourism products in the long term (Ivana Logar, 2010). According to (Strucka, 2000) price increase will not compensate the loss caused by less number of tourists. But an eco-tax could improve the environmental quality of Crikvenica, which will in turn improve the image of the destination. Differential eco-tax in different periods of the year will reduce the seasonality plans. User fees are paid by the party using resources and services (Panayotou, 1994). This fee is been collected in Crikvenica several decades before in a form of entry fee to the town’s main beach. All beaches are public property in Croatia at the same time there are some concessions granted. Several beaches in Crikvenica have been given concession including the main beach at the same time the only one where a user fee is being levied. This improves the quality of the beach and the services provided.

They also stated that density at this beach is not lower than on the other ones where no user fee is charged. This has been proved in a study on tourist carrying capacity in Crikvenica, (Caric´ et al., 2007). As a result the user fee is ineffective in reducing beach saturation. In order to produce a major incentive effect the fees are mostly set too low (Povh, 2000). To encourage change either by increasing or reducing the prices of particular goods or services financial incentives are designed. Through reducing import tariffs, lowering taxes would improve the quality of accommodation facilities. Lowering tax burdens would reduce the number of illegal private accommodation. Tax increase to second homes and increase in bulding permit costs would be useful to reduce the construction activities (Ivana Logar, 2010)

Micro environment:

Croatia has a strong traditional orientation towards mass tourism. Croatia attracts majority of the tourist during the time of peak season. Among the tourist there are several million foreign travellers in those 75% of them are overnight stays in Croatia that too especially in the month of June and August which is the summer season. In the year of March 2008 Croatia hits the record of foreign tourist arrivals of about 160,000 which grows to 2.7mn during the month of august. During the recent years Croatia concentration moved away from mass tourism to more sophisticated travellers. Croatia attempts to fix a new style and modernise its infrastructure. This measure is followed for the necessity of the country. Croatia has become a more expensive place to visit for the international tourists, and somewhat a effort to secure a higher market value sector and to spread the revenue generated by tourism more evenly throughout the year. As a part of this strategy Croatia is concentrating to promote the cultural aspects of the country and it is also earning international recognition as a successful conference tourism centre.

During October 2005, same like all other countries the authorities confirmed the outbreak of the H5N1 virus which is the bird flu in Croatia. The damage was found in eastern Croatia. The virus had killed a very few in Asia but none has been diagnosed with it in Croatia. The government reacted very quickly for the outbreak through adopting a plan where a they started preparing for a national influenza pandemic – an obligation of every World Health Organisation (WHO) member state. If the outbreak was heavy it would have been a serious threat to the tourism industry.

As per the survey of January 2010, the foreign travellers figures goes down by 24% year on year and the domestic travellers numbers declined by 14% year on year. When it is compared with January 2009, the combination of both foreign and domestic travellers declined to 19%. By the end of 2010 the expectation of the foreign tourist arrivals is a positive growth of 3% year on year up from 1% growth in our last report. With related to this forecast there will be a small economic recovery in major foreign source markets with the eurozone slightly rising from recession in 2010 and growth likely to increase up to 1.8% in 2011. During the year 2009, despite of the eurozone recession the number of foreign travellers from major markets like Germany and Italy was reasonable. Croatia is expecting to become an EU member in 2012-2013 and this should be a major advantage for the tourism sector. Croatia has also has plans to continue diversifying its tourist source markets. It was discussed by the Croatian national Tourist Board to start an office in Tokyo, which will also take care of other markets in Asia like as India and China. The plans about diversification should work well and should help regaining the growth lost because of less foreign travellers arrivals from some major source markets over the next few years.

Croatia has made some structural changes in the tourism sector in order to upgrade the tourism sector and get the benefits. They found some new strategy like conference tourism and medical tourism. Medical tourism includes surgery, cosmetic surgery and dentistry which is expanding the business globally and rural side tourism such as ethnoeco villages. The view point also concentrates to improve the accommodation sector. The growth on the accommodation sector is of 8% year on year during the year 2005. During the year 2006 on the whole which includes both domestic and foreign travellers overnight stays is totalled 53mn increasing by 3% year on year.

The figures in overseas travellers’ nights in all accommodation establishments grown by 2% year on year to just over 47mn nights, about 89% of the total, compared with relatively strong growth in 2005, about 8% year on year. (Croatia Tourism Report, 2010)

Croatia’s tourism has less number of political risks. There were no terrorists’ targets in the Croatian tourism sector. Furthermore, the added strength comes from Croatia’s frequent ever closer ties with the EU, where the bulk of its tourists come from. Over the estimate period likely appreciation of the Croatian Kuna against the euro will retain the tourism growth to some extent but over the longer term the currency risk should improve, behind a quite favourable shock factor score. (Croatia Tourism report, 2008)

During the year 2007 Croatia has achieved the real GDP growth for the decade at an estimated 5.9%. The economy is motoring along strongly on the back of domestic demand. Although the promising signs in late 2007 suggest a customer spending slow down, which we see as the important reason behind a deceleration to 4.8% real GDP growth in 2008. During the year there was a sharp slowdown in global economy which was a risk, this will impact on Croatia through lower growth in tourism revenues and harder access to credit for domestic customers. During the year 2011-2012 the growth should be stronger because of the expected EU succession. Through the third quarter growth results it was seen that the Croatian economy is in good shape. Through a survey it was found that the customer spending is still growing at over 6% on an annual basis, while there is also a hopeful growth of 7.3% in exports which is still a doubtful area of the Croatian economy. The growth rate of government increased to 4.4% which is one of its fastest quarterly growth rates in this decade. Government spending growth accelerated to 4.4%, one of its fastest quarterly growth rates this decade. Investment was down from a stellar 11% performance in the first quarter, but we are expecting a solid performance in Q408 – notwithstanding the seasonal impact of colder weather on sectors like construction – as planned state expenditure sees the inception of physical projects, aided by private sector buy-in. During the year 2007, many factors like general election, strong European growth and a good tourism season supported the Croatian economy. The headline rate for Q307 was 5.1%, a consistent, but not worrying deceleration from an impressive performance in Q207 (6.6%) and Q107 (7.0%).

Croatia’s domestic customers were been and being the same major drivers of the economy. During the year over the first three quarters the average private spenders are 6.6. Since the year 2002 the growth in this area has been above 5.4%. Croatians gained lot of financial sources through elections and as well as through the share from the global economic ‘feel-good’ factor. The elections prompted strong public sector wage settlements, as well as a one-off payment of a massive 1.3% of GDP to pensioners in Q307, which helped keep spending strong. The GFK survey suggest the average Croatian family earning during the Christmas time with bonuses a salary of above EUR700 is spending an average of EUR1.100 in December. Furthermore, with reference to the tourism revenues Croatia is a slowdown in richer European countries. During the year 2007 which is an excellent tourism year gained lot of revenues.

Tourism is likely to suffer openly from the fall in disposable incomes across the EU, other than that for many Croatians rely on a seasonal arrival of cash, this will create a sharp slowdown in spending money during late 2008. BMI expects growth of 4.8% in 2008, well below government projections of 6.1% expansion, an EBRD forecast of 5.2% and a market consensus of 5.0%. The risks to Croatian growth are obvious and these may sound different to our slight raising of growth projections for 2008 and 2009. The model rising from unemployment statistics is a key factor behind our optimism: at its peak in August, the official rate was just 13.8%, down from 17.0% at the end of 2006, and a hopeful sign of growth creating new jobs especially in services.

The economy of Croatia is still growing up faster and meeting with Western Europe continues to urge investment. However, with its high foreign debt quantity, consumer dependence on credit and small overall value of the domestic economy in relation to other countries, Croatia is more than usually exposed to swings in European growth and credit trends. The Croatia’s main trade partner EU should be protected from the worst damage of US slow down and on the domestic front Croatia’s EU bid will sharply arouse investment, which should see growth in 201 (Croatia Tourism Report, 2008)

Marketing strategy of Croatia:

Some sort of selective tourist activities are not been used till now. Tourism market has huge scope in rural cultural tourism, especially in wider prospective of the same tourism like archaeologic, action, hunting camp, trip, speleological, curative, wellness and gastronomic tourism. List of alternative tourism which Croatia can be succeeded in the field of tourism industry are as follows.

Adventure tourism:

Adventure tourism is one of the major and attractive forms of selective tourism in Croatia. Croatia is surrounded by natural resources and healthy environment which is a comparative advantage. So Croatia has a very good opportunity to develop the tourism revenues through adventure tourism.

Health tourism:

In the tourism sector, in 18 health establishments it has 6000 beds. During the year around 22,213 tourists visited the health resorts and there were around 202859 overnight stays in the hotel. The ecological quality of Croatian regions supports for the future developments of the health tourism , diversity of natural resources, medicinal water, favourable sea climate and healthy food.

Cultural tourism:

The supply for the development of Croatian culture tourism is the wealth of Croatian material and non material tradition. Culture tourism is manifested in heritage tourism, museums, UNESCO sites, archaeological sites, rural cultural tourism and ecotourism. Croatia has to offer the autochthonous atmosphere of Mediterranean coastal towns. Traditional rural areas and urban centres are on the other sides.

During the year 2005 there were around 309 tourist rural households registered in republic of Croatia taken 84 beds out of which 68% provided with food and drink and 54% has brandy and wine tasting facilities. County of Istria found the largest number of registered travellers rural households almost 52% of the total number of beds in Croatian rural tourism industry.

Nautical tourism:

Fifty marinas are there in Croatia. It has been noticed in the recent days there is an increase in the sea traffic. During this year of 2006 there was about 320 private leisure and charter companies with approximately 2600 vessels’. The tourists to Croatia marine are mostly from Croatia, Austria and Germany. It has been determined that nautical tourism will be growing up. Croatia has great features to shine as a leading Mediterranean country in nautical tourism (G Jasmina, 2007).

Marketing strength:

Striking Adriatic coastline

During the year 2008, the sector is directly accounted for estimated GDP of 17% and approximately 14% of employment.

During the year 2012 or 2013 Croatia is to join the EU. This is the sign to grow in the important structural reforms in the areas of the judiciary and public administration.

Despite disputes in the Balkans over Kosovan independence security risks will remain low.

Joined the NATO in April 2009 will help to maintain regional stability.

Since 1990s the country is recognised for a record of solid growth and low inflation.

Real GDP growth has averaged 4.0%, with inflation in low single digits

accompanied by exchange rate stability. Growth is forecast to average 4.5% for the 2007-2011 period.

Stable democracy and ultimate EU prospects are increasing the country’s attractiveness to foreign investors. (Croatia Tourism Report, 2010)

Marketing weekness:

Even though there is raise in investment during the last few years the hotel industry still needed significant modernisation.

monopoly system is followed by Croatian Airlines which may hamper competition and resulting in capacity problems.

Institutionally weak and judicial improvement is a needed. Lack of judicial independence can make checks on government ineffective and democratic norms are not sufficiently fixed.

After the year 2007 election the government rely on support of small parties based on ethnicity or special interest, whose potentially different objectives could lead to political problems.

Domestic investment has outpaced savings since the mid-1990s, resulting in

persistent current account deficits. Credit growth has also sparked a number o restrictive measure from the Croatian National Bank (HNB), but 90% foreign

ownership of domestic banks often renders these steps ineffective.

The fiscal deficit is gradually being brought under control, but expenditure on social

services remains extremely high by regional standards. We expect budgetary

tightening to remain a challenge over the forecast period, especially if growth is slow.

Bureaucracy in Croatia remains entrenched. The opportunities for corruption provided

by impenetrable thickets of red tape are also a worry.

The judicial system is cumbersome and inefficient, with large case backlogs. This

Means that some business disputes can run for years without resolution. (Croatia Tourism Report, 2010)


In the European countries specifically in the continuous action of globalisation tourism is having a major role in developing the regional. The major role in positioning the strategy of Croatia is played by small Travel and Tourism companies which in turn increasing the destination attractiveness. The same is a brighter instrument to achieve economic and social objects. The potential for tourism to contribute to regional development will depend on a quality level of all offered tourism events in Croatian tourism. (G Jasmina, 2007).

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