The tourism economy expects an increase of 7% in earnings this year compared to 2018 however, an 8.6% increase in labour costs will reduce the profit by 5%, which leads to a 20% decline in investments, the Croatian Tourism Association (HUT) said on Tuesday. Therefore, having in mind a deceleration in bookings and uncertainties, repeating last year's results will not mean failure, the association said.
HUT president Veljko Ostojic commented on the forecasts for this year's tourism at a presentation of a quarterly publication on tourism results in Q1 2019 prepared by the HD Consulting company.
"The projected increase in labour costs in the tourism sector this year in the largest tourism companies that we polled, are greater than the expected increase in income, which is mostly due to increased wages without which it would be difficult to attract workers," Ostojic said, noting that this would affect investments.
"The reason for fewer investments lies in uncertainties, slowing down and redirection of demand which has impacted almost all Mediterranean tourism countries, with the exception of Turkey, which continues to be the most competitive in Croatia's business environment," Ostojic said.
He warned that a fall in tourism investments can be expected in the 2020 - 2021 period by about 33% compared to 2018 - 2019.
A survey was conducted of 15 leading tourism companies in Croatia, which Ostojic said accounted for 40% of the total tourism revenue and about 80% of overall profit.
They all expect slowing down in income growth, the profit margin and investments and do not expect a much better annual occupancy compared to last year's, which was the highest in hotels (44%) and expect a similar result this year again.
"The highest increase in income per bed/person this year is expected in camps (13%), followed by hotels (6%) and in resorts (3%) compared to 2018. The analysis showed the increase in revenue mostly refers to an increase in prices outside accommodation seeing as occupancy is stagnating or barely increasing," he underscored. (Hina/FaH)
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