Croatia Tourism Report Q4 2009

Tourism Overview After a marked weakening in the growth of foreign tourist arrivals in 2008, the most recent data show a decline in foreign visitors of 4% year-on-year (y-o-y) in the first four months of 2009. Domestic tourism, meanwhile, was down 9% y-o-y, while overall tourism (domestic and foreign) fell 6% to 1.0mn tourists.

Over the same period, arrivals from Austria and Slovenia recorded positive growth, albeit modest, while the number of visitors from Germany and Italy declined, compared with the same period a year earlier. A number of Eastern European countries, however, recorded strong positive growth in visitors, such as Bulgaria and Macedonia, although from a low base. In an attempt to help shore up tourism demand, the government is suspending visa requirements for some nationalities.

Hospitality Latest data for the period January to April 2009 show the number of tourist nights totalled nearly 2.7mn (for domestic and foreign tourists), down 4% y-o-y. The number of foreign tourist nights, however, held up reasonably well, declining just 1% y-o-y to around 1.8mn (67% of the total), with the average number of nights per tourist increasing marginally to 2.8mn from 2.7mn in the same period of 2008. By comparison, domestic tourist nights were hit much harder, falling 11% annually to about 0.9mn.

Interestingly, of the key source markets, only Italy recorded a fall in tourist nights, although the decline was sharp, down 9% y-o-y.

Industry Forecast Scenario BMI maintains a poor outlook for the Croatian tourism sector this year. We have revised down the forecast this quarter for foreign visitor arrivals to -6% y-o-y. Moreover, we also now expect slight negative growth of 1% y-o-y in arrivals in 2010 (adjusted down from a forecast of modest growth in our previous quarterly report). Underlying the forecasts are the deteriorating economic conditions in major source markets - particularly the eurozone. In addition, along with expected weakness of the Croatian currency, the kuna, against the euro in the latter part of 2009, we believe that much of the medium-term appreciatory pressure on the kuna has been alleviated. This will help support the competitiveness of the tourism sector for foreign visitors from the eurozone over the forecast period.

Air Passenger Traffic As expected, Croatian international passenger air traffic in 2009 is feeling the effects as the tourism sector contracts. According to official figures, during Q109, international passenger numbers (on Croatian carriers) declined a sizeable 7% y-o-y.