Croatia is to reduce VAT to 10% on accommodation and food in 2013 and plans to add up to 60,000 hotels beds by 2020 as it seeks to boost tourism arrivals.
The country has had a record year in 2012 with overall overnight stays up 6.3% and arrivals up 5% on 2011.
The UK is 10th on the list of source destinations with just over 300,000 arrivals expected this year, on track to return to 1980s levels of half a million within five years.
This year will see UK visitors increase 22.5% and room nights increase by 22.3%, and the country was recently chosen to host the 2013 Abta Travel Convention which will take place in Dubrovnik.
Dynamic packaging supplier On Holiday Group has also announced a five-year deal with the country’s largest ground handler, Atlas, saying the country will be the next big DIY destination.
Veljko Ostojic, Croatia’s minister of tourism, said currently only 14% of the country’s accommodation is hotels and he wanted to see this rise to 20% by 2020.
However, he said this would not be large all-inclusive complexes, but targeting upmarket visitors with an interest in gastronomy, wine and activities like sailing.
Ostojic said Croatia was not interested in the “ghetto tourism” associated with large all-inclusive resorts. “We are not positioning ourselves as a cheap destination but value for money.
“We would like to see tourism in the cities. We think tourism works if we are able to improve the lifestyles of our people. People see them enjoying themselves and that will be good for the tourists.
“One of our main advantages is our coastline is almost 6,000 kilometres long and we have only four and a half million people, so we have space and space is a luxury.”
Ostojic said he doubted the UK will ever become Croatia’s main inbound market because it is so accessible for much of central Europe by car.
Tourism is Croatia’s biggest single contributor to GDP, accounting for 15.5%, and the country is using its tax and regulatory regime to incentivise investment in the tourism infrastructure.
“We expect the average level of prices to come down next year [due to the reduction in VAT], we expect more employees and we expect more investment in the sector,” said Ostojic.
“I would like to invite British investors to invest in Croatian tourism. We have certain green and brown field projects which will be up for tender looking for investment.”
Ostojic revealed he had been in talks at WTM with two budget carriers interested in adding capacity from airports in the north and south of the UK.
Meri Matesic, who until recently has been running the Croatian tourism board in the UK but who has become the new director, said the country had two main goals.
One was to increase arrivals pre and post the main season and the second was to encourage more visits into the Croatian hinterland.
She said the country will increase investment in online marketing including engaging more with travel bloggers.