Most hoteliers slightly optimistic for 2025, but concerned about rising costs

Most hoteliers in Croatia are slightly optimistic about the tourism year 2025, but they are concerned about the rise in operational and labor costs, as this reduces their profitability and investment potential, according to a study on the expectations of the hotel sector presented on Tuesday.

The research was conducted by the Croatian Tourism Association (HUT), the Employers’ Association in Hospitality of Croatia (UPUHH), and Deloitte, whose director in Croatia Helena Schmidt emphasized that the challenges for hoteliers include labor force issues and administrative processes affecting business operations. She stated that the survey was conducted in March on a relevant sample of 178 hotels and camps with 58,000 accommodation units, which represents 30.5 percent of the total hotel capacity in Croatia.

Growth in bookings with expectations of revenue growth, but also costs and last-minute demand

The director of UPUHH, Bernard Zenzerović, positively assessed that 80 percent of hoteliers have six percent more bookings than last year at the same time and that the majority, or 56 percent, expect revenue growth above six percent.

– It is also good that 72 percent of respondents see an increase in bookings from foreign markets, such as the USA, UK, Hungary, and Slovenia, while 60 percent do not see any decline from the market compared to last year, although 40 percent see a decline from Germany and Austria – said Zenzerović.

However, due to all the circumstances in the world, including increased attention to prices, 83 percent of respondents expect a rise in last-minute demand.

In the pre- and post-season, 70 percent of hoteliers expect an increase in the number of overnight stays compared to last year, especially for Easter, while in the main season, given the small share of hotel capacities of 9.5 percent in the total accommodation for tourists in Croatia, there is not much room for growth, and about 70 percent of respondents expect overnight stays to be the same as last year.

The research showed that two-thirds of hoteliers have increased room prices by two to three percent, which is in line with inflation, while food and beverage prices are rising on average by about five percent.

Despite the optimism, about 50 percent of respondents predict an increase in operational costs, particularly labor costs, with the majority, or 75 percent, expecting an increase of more than five percent compared to last year, due to rising wages and the unavailability of domestic workers.

Hoteliers need more qualified workers than last year, and they will invest more

According to the research, 70 percent of hoteliers will need more workers this year than last year, with 95 percent believing they will not find them in the domestic labor market. They primarily need waiters, chefs, bartenders, and pastry chefs, particularly those who are more qualified, due to the increase in quality and hotel categories.

The rise in costs does not mean that hoteliers will not invest, as 90 percent of respondents said they will increase investments in 2025 and 2026, but that obstacles include urban planning and investment permits, unresolved issues regarding tourist land and maritime property, as well as reduced profitability and difficult return on investments.

Almost all (98 percent) will invest primarily in existing facilities, while about 40 percent are considering greenfield investments, and even fewer are considering acquisitions, said Vjeran Buljan from Deloitte, adding that in investments they primarily rely on commercial banks and HBOR, followed by their own funds and investment funds.

It is also interesting that 95 percent of respondents believe that sustainability reports are not that important to their guests, which are quite demanding for hoteliers, especially large ones, and that almost all believe that new technologies will significantly impact business operations.

Currently difficult to assess the impact of new U.S. measures on tourism, but no cancellations

The director of HUT, Veljko Ostojić, concluded by emphasizing that the research was conducted before the new U.S. tariffs were announced and that it is currently difficult to assess their impact on tourism.

– Currently, there are no cancellations of reservations, nor does it affect new ones in hotels. I believe that some agreement will be reached and that tourism will proceed as expected this year. This is supported by yesterday’s high-level meeting, including the Ministry of the Interior, where we heard that most of our requests regarding the labor force have been acknowledged, so everything is going better and faster than in previous years – said Ostojić.

He predicts that, similar to last year, slightly more than 50,000 work permits will be issued to foreigners for tourism this year, but he still believes that there is significant potential in the domestic labor market.