Here are the measures proposed by hoteliers for a more competitive tourism

The Association of Employers in Hospitality of Croatia believes that the Ministry of Tourism should have a more significant role than before in creating and leading policies for the development of the sector, as well as that VAT on accommodation and hospitality services should be reduced from 13% to 5% and that lower VAT rates should be introduced for other services in tourism.

This is just part of about 10 short-term measures that should and could be implemented during this year, as learned from the Association, which has submitted these, as well as a series of medium-term (to be implemented in the next three years) and long-term measures (to start being implemented in the next three years) for the development and improvement of the sector to the relevant Ministry and other relevant institutions after they were accepted by the executive board of the association at the end of March.

– We discussed all measures individually and then at the Executive Board meeting with the Minister of Tourism Anton Kliman, who accepted it with great attention and understanding, emphasizing that he has already initiated the resolution of part of the problems and that mechanisms have been established to resolve them as soon as possible, says the director of UPUHH, Iva Bahunek, who also announced the upcoming electoral assembly of UPUHH at the end of April this year.

Bahunek noted that as part of its activities, UPUHH, in cooperation with HGK, will prepare a new analysis of the impact of the intermediate VAT rate on the operations of hoteliers and tourism.

Short-term measures for implementation this year

In addition to reducing the intermediate VAT rate from 13% to 5% and introducing a lower VAT rate for other services in tourism (e.g., wellness, thermal, congress, and others), UPUHH lists the need to analyze the effects of the potential introduction of property taxation (of facilities) outside of function and with the abolition of the utility fee because, according to them, the new tax should not have a greater impact than that fee.

– A significant advancement would also be the optimization of the number and grouping of the currently large number of parafiscal levies, with particular attention to levies that ‘demand’ major changes, such as ZAMP, say UPUHH.

They also consider it important to ease the existing visa regime as much as possible for individual markets that have great potential and to use the experiences of competing Mediterranean EU member countries in this regard, as well as to intensify the already initiated process of liberalizing the previously conservative and exclusive methods of categorizing facilities, along with the gradual introduction of a points system and ‘points rewarding’ of the facilities’ content.

They believe that Croatia urgently needs to introduce legislation that applies the EU’s opinion and the practices of France, Italy, and Germany, which through competition protection agencies prohibit online travel agencies from contractually obliging accommodation providers to price equality across all online providers of the same service, including their own website.

– The Labor Law should be liberalized as soon as possible, due to the needs of tourism and seasonal employment, and contributions on wages should be reduced, as Croatia is at the very ‘top’ of tourist countries in this regard, while at the same time, in terms of net wages for workers in tourism, it is at the bottom. Changes should lead to new employment, better wages, and consumption, emphasize UPUHH, adding that the application of the Investment Promotion Act should be expanded so that incentives can be used to relieve various tax burdens, not just through the exemption of future profit tax.

Medium-term and long-term measures for the next three years

Among the medium-term measures to be implemented in the next three years, they highlighted the encouragement of investments, especially greenfield, which would also be contributed by more active changes to spatial plans, and certainly the adoption of amendments to the law on tourist land, which in its current form, they say, is impractical.

It is extremely important to adopt a law on the maritime domain and seaports and align it with the law on concessions, as well as to align the existing legal framework for providing services in tourism with the new EU directive on travel and package arrangements. Among the medium-term measures are also the continuation of the privatization of state tourism capacities and ensuring double the level of funds for incentive credit lines from HBOR from 2016 to 2020 compared to the previous four years.

In long-term measures, which should start being implemented in the next three years, UPUHH highlighted the development of human resources for tourism, along with changes to curricula in vocational schools and faculties, the development of destinations, and the redirection of tourist boards into destination and regional management organizations (DMO and RMO) with an emphasis on modernizing national promotion and strengthening air and health tourism as well as utilizing natural resources for sustainable business while enhancing energy efficiency.