Profitable Returns from Hotel Investments in Croatia
The Boom in Croatian Hospitality - A Golden Investment Opportunity
Mark your calendars, folks! The hospitality sector in Croatia is blooming, and wise investments are raking in hefty returns. As Katarina Kusec from Poslovni Dnevnik puts it, the summer season - the peak time for tourism - is the perfect moment to discuss improvements in this field.
The Croatian Tourism Association recently revealed the fruits of investments in Croatian hotels and campsites. Their research focused on 20 such investments made by six domestic companies, totalling 570 million euros, from 2016 to 2025.
Direct and Indirect Benefits of Investments in Croatian Hospitality
The findings are encouraging! These investments created a clear new added value in just eight years, equivalent to the investment itself. In 12 years, they will have paid back the full value of the investment through taxes alone. Additionally, high-class Croatian hotels and campsites bring various economic benefits. After the investment, direct and indirect tourism revenues increased annually by 319.75 million euros. This enabled approximately 1,500 people to get jobs.
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According to the study, for every million euros invested in accommodation in Croatian hotels and campsites, an annual increase in tourism revenue of 560.6 thousand euros can be expected. Furthermore, revenue generated outside the complexes themselves is also on the rise. Therefore, these investments should be actively encouraged rather than avoided.
A Pinch of Competition – Learning from Other Countries
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As a popular tourist destination, Croatia has tools to boost tourism and investment. But is it enough? Hotel accommodation comprises only 9.5 percent of Croatia's total accommodation capacities - significantly less than in competing countries. To improve the situation, an analysis of the competition of other countries, some Mediterranean, was conducted.
Countries like Austria, Montenegro, Malta, Italy, Greece, Serbia, Albania, Hungary, and Portugal have adopted various methods to entice investors. Austria, for instance, established a tourism bank offering favorable loans for the hotel industry, periodically adjusting conditions for those who receive the loans. Hungary also launched a special tourism development programme for infrastructure.
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Most of these countries use a combination of subsidized loans, grants, and tax breaks to reduce investment risks and the cost of capital. Additionally, they focus on strategic management of investments, economic support, and incentives in thematic areas like energy efficiency, digital transition, and social responsibility. Remarkably, almost all of the analyzed countries target investments in higher-category accommodation capacities.
Time for Change?
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"Without concrete actions and measures, change in Croatia's current accommodation capacities will be too slow," says Veljko Ostojić, director of the Croatian Tourism Association. He suggests specific instruments to encourage investments in hotel accommodation, as well as in the transformation of private accommodation into hotel capacities with higher added value.
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These include grants for building and expanding accommodation facilities in tourism undeveloped areas with high support intensity. Subsidized interest rates, grants for raising hotel categories, and grants for sustainable and ESG components in tourism are also on the table. The Development of hotel facilities and facilitating private investments in mixed-use projects are part of these proposals.
"By adopting similar practices that are standard in competing countries, Croatia will attract significant investments in quality hotel accommodation, boost tourist spending, extend the season, and redress excessive tourism during the peak summer months," concludes Ostojić.
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Stay tuned for updates on Croatia's hospitality sector and the proposed measures to encourage investments. Let's witness the transformation, one hotel at a time!
Struggling to wrap your head around all this? Head over to the Blue Billywig Video Player for a deeper dive into the world of Croatian tourism.
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Every investor should ponder the potential returns in Croatia's real-estate sector, particularly in the booming hospitality market. With investments in high-class hotels and campsites creating an annual increase in tourism revenue, it's worth considering real-estate ventures as part of a diverse business portfolio.
Countries like Austria and Hungary have shown success in luring investors through the use of subsidized loans, grants, and tax breaks. To attract similar investments, Croatia might consider implementing similar financial incentives, focusing on strategic investments in higher-category accommodation capacities, and reducing investment risks.
