Summary

With a growing economy, Croatia has been recording a growing number in terms of revenues and investments in the hospitality industry. In Q4 2018, the GDP grew by 2.3% according to the Croatian Bureau of Statistics, which was an 18th consecutive quarter of economic growth and the country made 2.6% growth in overall GDP for 2018. This positive growth in the economy helped the hospitality industry to attract more investors and a good number of deals in the industry for the same year. The number of visitors to the country is on the rise and the overall growth number is motivating budding investors to invest in the region in the hospitality industry. The hospitality industry is Croatia is moving forward in a slow yet steady manner. The industry seems more favorable to the European born brands than the international players and due to stringent policies, thus dominated largely by most of the European brands yet the hotel projects construction pipeline looks promising as it is being dominated by international players. Even with the existing hotels, International brands are mostly restricted to Zagreb and a few other major cities along the Adriatic coast. For the year 2018, Croatia scored a 16% year on year increase in RevPAR and the high seasonality in terms of tourism is slightly inhibiting the industry to grow in rapid manner.

Key Market Trends

The European Grown Brands are Dominating the Market

The European brands are expanding their footprint in different locations of the country in a faster manner when compared to international players. The brand chains are registering a high growth number year on year than the individual ones. The overall chain penetration recorded 11% year on year difference in 2018 when compared to 2017 with more than 30,000 rooms belong to different large and small brands in the region. Even though there are around 15 international brands in the country and are offering more than 8,500, the total number of rooms that they occupy is less than the total rooms that domestic chains hold. The total number of rooms that domestic chains offer is more than 30,000 in Croatia which clearly explains the domestic brand chain dominance.

The Hotel Construction Pipeline is Aiming to Address the Growing Demand

The industry is expanding in a way it which it is aiming to cover all the major tourist destinations along with the locations where business travel is also increasing. The recent transactions (recently opened hotels and construction projects that are pipeline) are adding a great number of rooms to the existing total, which is expected to address the growing demand for new developments. The hotel projects in Porec are going to address total demand with more than 5,000 rooms, out of which few are already opened and a few are in construction pipeline that is scheduled for opening in or before 2021.

Competitive Landscape

The hospitality industry in Croatia is dominated by domestic players and covers almost 70% of the market. The main barrier for medium international players to enter the market is majorly the stringent policies (Croatia stood at 123rd place in ease of doing business rankings and 159th in dealing with construction permits) and the high seasonality tourism. Whereas Croatia stood at 27th place in the travel and tourism competitiveness index which is motivating a majority of the players to spread their operations in the region.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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