Croatia Tourism Report Q4 2011 Market Research Report

After a modest recovery in foreign tourism in 2010 following a poor performance in 2009, latest data show further improvement in Croatia’s tourism industry. During the first four months of 2011 there was robust growth in foreign tourist arrivals, with visitors up more than 14% compared with the same period in 2010 (although there have been sharp swings in monthly growth rates). Domestic tourism, on the other hand, was largely stagnant year-on-year (y-o-y).

Overall, foreign and domestic tourist numbers increased a healthy 11% y-o-y, to around 1.0mn tourists. Conference tourism edged up marginally in Q111 with 1,153 meetings held in Croatia, an increase of just 1% compared with Q110. The business meetings were attended by 81,860 participants (down more than 6% y-o-y), of which some 91% were domestic residents and the other 9% were foreign visitors. The number of foreign participants, although accounting for a relatively small proportion of the total, increased more than 21% y-o-y.

Hospitality
Latest figures for the period January-April 2011 show a favourable pick-up in the hospitality sector (after a lacklustre showing in 2010), albeit driven by foreign tourism. Total tourist nights increased by 9% y-o-y to some 2.7mn, with foreign tourist nights (accounting for 71% of the total) up a solid 15% y-o-y. Tourist nights by domestic residents, meanwhile, fell by about 2% y-o-y. Tourist nights accounted for by visitors from Germany (which accounted for 14% of all overnight stays), rose by 9% y-o-y. Also of note, nights by tourists from Slovenia and Italy were up an impressive 29% and 15% y-o-y respectively.

Industry Forecast Scenario
Recent favourable market research report data on foreign tourist arrivals has led BMI to edge up its outlook for the tourism sector in 2011, with growth in arrivals now forecast at 5.5% y-o-y. Given that most of the visitors originate from the eurozone, economic conditions in the region are crucial for the outlook to the tourism sector. Our eurozone forecasts are for steady growth of 1.8% in both 2011 and 2012. Growth in Germany is forecast at 3.0% in 2011 and 2.0% in 2012 (from an estimated 3.6% in 2010), while Italian growth of 1.6% and 1.9% is expected over the same period. We also believe that the tourism sector is in a strong position to benefit over the short term from the political turmoil in Tunisia and Egypt, with some tourists seeking alternative holiday destinations in Croatia.

Zagreb Airport
The main international airport in Croatia, Zagreb Airport, recorded strong year-on-year growth in passenger numbers of 17.5% in the first five months of 2011.

Croatia Airlines
In 2010, the national flag carrier Croatia Airlines reported an operating loss of HRK124mn (US$22.3mn) and a net loss of HRK156mn (US$28mn), although both showed an improvement on the previous year. Passenger traffic declined for the second year running, falling an annual 6% to 1.64mn passengers. Scheduled domestic traffic fell by 10% y-o-y, while international traffic was down an annual 4%. The poor results for the year were blamed on continuing recession in Croatia, weak European demand, the volcanic ash cloud crisis in April 2010 and strike activity by cabin staff. In May 2011, Croatia Airlines introduced direct flights between Zadar and Munich, and re-introduced the Zagreb/Istanbul route.

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