Croatia’s tourism alarm: record prices drive summer slump

Croatia’s 2025 tourist season has delivered a sobering wake-up call. Despite years of effort to extend the season and position the country as a year-round destination, the peak summer months saw a sharp drop in visitors and revenue.

At the annual Hoteliers’ Congress held on 3 and 4 December, both Tourism Minister Tonči Glavina and Croatian Tourist Board director Kristjan Staničić sounded the alarm: the country has become one of the most expensive destinations in the Mediterranean – second only to France, and tourists are voting with their feet by going elsewhere.

The numbers are stark. In July and August alone, Croatia recorded 745,000 fewer overnight stays than in the same months of the previous year. Given that these are the months that generate the highest revenue, the financial impact is severe. When average daily spending is factored in, the country earned roughly 140 million euros less during the main season — a figure that has sent shockwaves through the industry.

“We are more expensive than anywhere else in the Mediterranean,” Minister Glavina told the gathered hoteliers. “If we do not adjust prices for the same level of service next year, or if those who keep high prices do not significantly raise quality, we will see a further decline. The later we make these adjustments, the greater the consequences will be.”

Since 2020, Croatian tourism prices have risen by around 50 per cent – far more than most competing destinations. Empty hotel rooms last summer were the first visible symptom; negative headlines about five-euro ice creams, seaweed-clogged beaches and alleged shark sightings were the second. Officials believe many of these stories have been amplified, if not orchestrated, by rival tourism boards in countries such as Germany, Austria and the Czech Republic, eager to keep their citizens holidaying closer to home.

A tale of two realities

While private accommodation and some segments stagnated, hotels and campsites actually reported higher turnover – up 2.4 per cent and 2.2 per cent respectively, and occupancy rates remained strong. Yet beneath the surface, profitability is eroding fast. Labour costs in the tourism sector have surged more than 50 per cent in five years, and food prices rose 4.9 per cent in the first nine months of 2025 (compared with a 2.8 per cent EU average). As a result, hotel the financial indicator EBITDA margins have slipped from 28.2 per cent in 2024 to an expected 26.6 per cent this year, even though accommodation revenue grew 8.2 per cent in the first ten months.

Veljko Ostojić, president of the Croatian Hotel Employers’ Association, insisted that price increases are not about greed but survival. “Cost growth is directly reflected in the prices we have to charge,” he said. “We are trying to protect jobs and maintain quality, but if costs continue rising faster than revenue, 2026 will bring lower profitability for many operators.”

Structural weaknesses laid bare

The congress also highlighted long-standing imbalances. Out of nearly two million beds in Croatia, 1.5 million are in private short-term rentals — a ratio widely regarded as unsustainable and a drag on quality control, tax collection and year-round employment. Hotels and camps, by contrast, are the only segments consistently lengthening their operating seasons and investing in infrastructure.

Ostojić presented data showing that major hotel investments typically recoup their value within eight years and pay back the equivalent of the original investment to the state in taxes and contributions within twelve. “If the government is serious about expanding hotel capacity, incentives will be necessary,” he argued.

Reasons for cautious optimism

Despite the gloom, some positive signals emerged. Overall arrivals rose 2 per cent and overnight stays 1 per cent compared with 2024, while total revenue is expected to be higher. Germany remains the largest source market (supplying roughly a quarter of all visitors), followed by strong domestic tourism (over 11 million overnight stays) and growing numbers from Slovenia, Austria and Poland. Istria again led the regions with more than 25 million overnight stays, followed by Split-Dalmatia and Kvarner. Continental tourism, though still modest, continues its gradual upward trajectory.

Damir Krešić, director of Zagreb’s Institute for Tourism, offered a balanced verdict: hotels and package offers remain relatively competitive, but restaurants, cafés, taxis and other services have often become prohibitively expensive. “Tourism is the sum of everything a guest experiences and pays for,” he said. “If one part of the offer is overpriced, the whole destination suffers.”

The road to 2026

Both the minister and the Tourist Board promised action. The 2026 promotional budget will jump by around 40 per cent to €53 million, with the bulk directed at strengthening the pre- and post-season and pushing for genuinely sustainable, year-round tourism.

The message to the industry was unambiguous: restore value for money or risk losing market share permanently. As Krešić put it, “Whether something costs ten euros or fifty, if the guest feels they received nothing in return, it is money wasted. But if they leave with unforgettable memories, even a higher price feels fair.”

For Croatia, the coming winter will be decisive. Adjust prices and perceptions in time, and the country can preserve its hard-won position as one of Europe’s favourite seaside destinations. Fail to do so, and the exodus seen in 2025 may only be the beginning.

Sources: Siol.net, The Dubrovnik Times, 24 sata, Croatia Week

Caption: Tourists enjoy the view from Saint Ivan Fortress in Sibenik, Croatia, 19 April 2025. Sibenik is a historic Dalmatian town built in the 15th and 16th centuries, and today it is one of the leading tourist destinations in Croatia. EPA/ANTONIO BAT