VZCZCXYZ0014
PP RUEHWEB
DE RUEHVB #0732/01 3501216
ZNR UUUUU ZZH(CCY TEXT ADX:EE9D50 LOP5710 TMC)
P 161216Z DEC 09 ZDK
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 9737
INFO RUEAIIA/CIA WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS ZAGREB 000732
SENSITIVE
SIPDIS
C O R R E C T E D C O P Y (ADDING CAPTION)
E.O. 12958: N/A
TAGS: ECON EIND HR EINV
SUBJECT: CROATIA'S TOURISM 2009 REVENUES: BETTER THAN
EXPECTED
1. (U) SUMMARY: Croatia's 2009 tourism season, with 6.8
billion euros in revenue, was not as bleak as the GoC and
domestic tourism operators had feared. Increased numbers of
European tourists from Austria, Germany and Poland traveled
to Croatia during the peak summer season, offsetting declines
in longer-distance tourists and per head spending, and
containing the decline in tourism revenues to around 15
percent from 2008. Declining revenue did hurt profits,
however, which many operators attributed more to Croatia's
underdeveloped tourism infrastructure than to the economic
crisis. The Ministry of Tourism is already working with
industry to develop a new campaign to promote Croatia as a
tourist destination for 2010. END SUMMARY
SUMMER 2009: BAD, BUT NOT TERRIBLE
2. (SBU) Tourism is an important source of revenue for
Croatia and accounts for approximately 15-20 percent of GDP.
Croatia earned approximately 6.8 billion in the tourism
sector during 2009, according to the Croatian National Bank
(HNB). Senior Advisor to the Minister of Tourism Mate
Kupovic told econoff that the Ministry of Tourism had
predicted a 20 percent decline in 2009 from the 8 billion
euro in revenue earned in 2008, due to anticipated losses
from the global economic crisis. However, a 10 percent
increase in tourists from Austria, Germany and Poland helped
Croatia generate more revenue than projected. He explained
that a GoC survey of this target group revealed that Croatia
was a more attractive and affordable tourist destination for
European travelers than vacations to exotic locations outside
of Europe.
3. (SBU) Croatia's hotel industry's profits were down 10
percent from 2008, and the restaurant industry took a greater
hit, with a decline in profits of 25 percent, according to
Croatian Hotel Association General Manager Andjelko Leko.
Leko told post that a lack of tourism infrastructure such as
resorts, spas, and other leisure activities that would make
the price of hotels in Croatia more attractive bore more of
the blame for lower profits than the economic crisis. Hotel
profits would also have been greater if not for the
availability of 'private accommodations' for tourists. Leko
believes that many foreign tourists and about 90 percent of
domestic tourists opted for rooms in privately owned
apartments that are significantly below the market price for
commercial hotel rooms. Restaurants, particularly on the
coast, also suffered steep declines because more tourists,
particularly those in apartments, brought their own food or
purchased food from grocers instead of dining out. On the
other hand, Leko said that while profits were down for the
year as a whole and during the summer months, Croatia's
largest private hotel operator Maistra group reported 10
percent higher profits in September 2009 compared with the
same period in 2008.
4. (SBU) A bleaker indicator for Croatia's tourism sector,
however, was the recent announcement by Minister of Tourism
Damir Bajs on December 4 that Croatia's largest travel
agency, Adriatica.Net is in deep financial trouble. The
company is responsible for 10 percent of total bookings to
Croatia. Bajs said that state owned companies, including the
insurance company Croatia Osiguranje and the marina operator
ACI, will participate in a recapitalization plan. While
other tourism agencies criticized Bajs for this decision,
Bajs's said that the GoC considers Adriatica.Net a 'strategic
company' and will support financing proposals to keep it
afloat.
PREPARING FOR 2010: REACHING OUT TO NEW MARKETS
5. (SBU) Croatian tourism officials are already working with
private industry to develop a promotion plan to boost tourism
for 2010. According to the Ministry of Tourism, the Croatian
Tourist Association (HRZ) has prepared nine presentations for
promotional activities for foreign markets and has budgeted
9.9 million dollars for tourism-related advertising. The
Ministry of Tourism will also increase its online
advertising, prepare promotional campaigns individually for
certain foreign target markets and launch promotional
campaigns targeting tourists from China, Japan, and South
Korea. The Ministry of Tourism will also expand its
advertising campaign with its neighbors, including Serbia.
COMMENT
6. (SBU) The GoC breathed a sigh a relief that tourism
revenues were better in 2009 than analysts predicted.
Despite the good news, the 2009 experience still leaves them
in a quandary as to further development the tourism industry
in Croatia. Mid-market mass tourism saved GoC tourism
revenues in 2009, while the hotel sector continues to look
for investment in high-end infrastructure to support luxury
tourism in Croatia. With the continuing economic crisis
hampering investment, however, it is doubtful that much
additional high-end development can be realized in the
immediate future.
FOLEY