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