Tourism, pricing and sustainability in Croatia

Observation

Recent price increases in Croatian tourism have raised concerns about the upcoming season. Professor Željko Garača of the Faculty of Economics in Split criticises the industry’s greed and emphasises that tourism is not a supermarket — it revolves around experience, not transaction.

Context

The price increases follow euro adoption and the post-pandemic tourism boom. Entrepreneurs are trying to capitalise on previous successes by raising prices, but data shows a surprising decline in foreign tourist numbers. This suggests that the price elasticity of demand has been reached.

Western European tourists, aware of the rising costs in Croatia, are beginning to consider alternative destinations. The comparison is becoming sharper: a holiday in Dalmatia that cost €1,600 last year now costs €2,600, while an all-inclusive resort in Egypt including flights and meals costs €3,200.

Reading

Tourism as experience requires a balance between price and quality. When price increases are not accompanied by improved service, the perception shifts from ‘affordable quality destination’ to ‘overpriced destination’. Croatia risks losing its position in the mid-range segment without a sufficiently developed premium segment to absorb the decline.

The impact affects both international and domestic visitors. Higher prices make holidays less accessible, leading to a potential decline in tourism.

Notes

The sector appears to behave as if demand is infinite. The data suggests otherwise. A sustainable tourism model requires price discipline and investment in quality rather than extractive pricing strategies.