Since 2010, revenues of travel agencies have increased by 54% to 5 billion kuna

In the period from 2010 to 2017, the number of active travel agencies in Croatia increased by 44 percent, from 870 to 1,254, and revenues grew by 54 percent, from 3.3 billion to 5.1 billion kuna. The number of employees reached a total of 5,540 in 2017, which is 20 percent more than in 2010, reported HGK.

The number of overnight stays mediated by domestic travel agencies has recorded a decline of about 13 percent since 2007, but this industry has continuously increased the added value of its services since that year. This has resulted in a nearly 70 percent growth in their business revenues and a 17 percent increase in the number of employees for the period from 2007 to 2017. During the crisis, there was a decline in revenues in the sector, and the market began to recover in 2016.

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Domestic travel agencies generate over 80% of their physical turnover from receptive business, which also contributes to the development of high added value tourism products. In the group of micro and small entrepreneurs, 99 percent of travel agencies are present, where nearly 80% of the total number of employees generate 80% of total revenues – some of the conclusions of the Analysis of the Business Operations of Travel Agencies and Tour Operators in the period 2007 – 2017., conducted for HGK by the Institute for Tourism.

“This revenue growth in the industry alongside a simultaneous decrease in the number of overnight stays confirms that agency guests are those who generate high spending and utilize non-board services packaged into high added value arrangements. These include eno-gastro, adventure, health, cultural, and all other products of special themes and interests that simultaneously move Croatia away from the image of a sun and sea destination, fill accommodation capacities outside the season, and enable year-round tourism,” emphasized the president of the Association of Travel Agencies HGK Boris Žgomba, commenting on these results.

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Despite the extremely positive trends in the financial aspect, Žgomba particularly referred to the decline in the number of overnight stays organized by domestic agencies and their share in the total turnover of the tourism sector: “Unfortunately, the data indicates that the share of travel agencies in the total turnover of the tourism sector is declining, which is a result of the unequal market competition faced by domestic agencies against other market participants. I am referring to certain foreign online platforms, which is somewhat regulated by the new European directive on package and linked travel arrangements that came into effect in Croatia through the Tourism Services Act in July this year. But also to accommodation providers, who, due to the application of a special taxation procedure for travel agencies with VAT, are placed in a more favorable position compared to agencies, especially in the business travel segment,” Žgomba emphasized.

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Namely, if a company books accommodation for an employee directly from the hotel, it has the right to deduct input tax, while when it does so through a travel agency, it does not have that right. This is about EU regulation that is directly related to package arrangements, and in this case, such a service does not fall under the directive. This was also confirmed by a study on the impact of the special taxation procedure on the operations of agencies in the EU commissioned by the European Commission last year, which recommended that B2B sales be excluded from the scope of the directive in the future. “Since a large number of EU member states are already applying this, we expect that our Ministry of Finance will positively resolve the situation even before the mandatory application at the EU level,” concluded Žgomba, adding that the Association is in intensive contact with the Ministry of Finance on this matter.