Investments in the Croatian tourism sector, particularly in higher-category facilities such as hotels and campsites, represent a significant engine of economic growth. Such investments not only directly strengthen the business operations of the entities in which they are made but also generate a series of multiplier effects that extend to the entire economy. This involves an increase in total tourism revenues, both at the destination and national levels, a boost in employment, and a noticeable inflow of funds into local and state budgets.

A recent analysis, conducted for the Croatian Tourism Association (HUT) by the consulting firm HD Consulting, has shed light on the concrete economic benefits of these investments. The research focused on a sample of 20 investment projects in hotels and campsites, carried out by six leading domestic tourism companies. The total value of these projects, realized in the period from 2016 to the end of 2025, reaches an impressive 570 million euros. The key finding of the study is that such investments return the invested value in a relatively short period. More precisely, new added value equivalent to the initial investment is generated within eight years. Observed over a longer period of twelve years, the state collects the entire investment amount solely through the collection of fiscal and parafiscal charges.

Detailed breakdown of economic effects

The analyzed investments, according to the aforementioned research, resulted in an annual increase in direct and indirect tourism revenues of as much as 319.75 million euros. This financial inflow is accompanied by a significant creation of new jobs – 1,483 direct and an additional 1,175 indirect jobs were created. The contribution to public finances is also exceptional, with annual fiscal and parafiscal charges reaching 47.27 million euros. In addition, it is worth highlighting the one-off indirect payments to the state, stemming from the salaries and incomes of contractors and VAT on procured equipment and furniture, which amounted to 54.14 million euros.

Translated to a practical level, every million euros invested in accommodation capacities in hotels and campsites brings an annual increase in direct and indirect tourism revenue of 560,666 euros. At the same time, such an investment creates 2.6 new direct jobs and 2.1 indirect jobs. The annual increase in fiscal and parafiscal charges per million euros of investment amounts to 82,836 euros, while one-off payments to the state reach 94,880 euros. These data undoubtedly indicate the high profitability and economic justification of investments in quality tourism capacities.

Accommodation structure and the challenge of overtourism

Veljko Ostojić, director of the Croatian Tourism Association, emphasizes the structural problem of Croatian tourism. "Hotel accommodation in Croatia accounts for only 9.5 percent of total accommodation capacities, which is significantly below the average of our Mediterranean competitors," Ostojić points out. It is precisely this disproportionate accommodation structure, with the dominance of private accommodation, that has been identified as the main cause of the overtourism phenomenon, which increasingly burdens numerous Croatian destinations during the peak season. Consequently, this also leads to lower average daily tourist consumption in Croatia compared to competing countries in the Mediterranean.

Hotels, on the other hand, have the potential to generate longer tourist traffic and attract higher-spending guests, resulting in higher average consumption. Importantly, hotel accommodation, especially of a higher category, creates a significantly smaller burden on natural resources and local infrastructure. "By encouraging investments primarily in hotel accommodation, we can simultaneously increase the economic benefits of tourism and reduce the negative effects that the current model has on local communities and the environment," explains Ostojić. He also points to the practice of countries in the region which, with the aim of strengthening their tourism potential, apply a range of instruments to encourage investment in high-category hotel accommodation. These measures, which are still insufficiently represented in Croatia, include combinations of subsidized loans, grants, and tax breaks. In most competing countries, mixed-use project models are recognized and legally regulated, significantly contributing to the profitability of tourism projects, investment attractiveness, and strengthening the market position of destinations in the global competition. By adopting such practices, which are standard in the competitive environment, Croatia could attract significant investments in quality hotel accommodation. This, in turn, would lead to increased tourist spending, an extended season, and a reduction in the pressure of overtourism during the summer months.

Comparative analysis and modern incentive policies

In this context, Ostojić also presented the results of a benchmark analysis of investment incentives in tourism prepared for HUT by Horwath HTL Zagreb. The analysis included Austria, Montenegro, Malta, Italy, Hungary, Portugal, Greece, Serbia, and Albania. One of the key conclusions is the trend of gradual strengthening of the state's strategic role in shaping tourism investments. Modern policies for stimulating tourism investments go beyond the framework of classic subsidies and increasingly take on the role of active development strategies. Incentives are therefore not limited exclusively to financial support; practice shows that it involves managing the direction, structure, and effects of investments through sophisticated, multi-component models. In addition to the already mentioned combinations of subsidies, grants, and tax breaks, a shift towards thematically oriented incentives is noticeable. Special emphasis is placed on the areas of energy efficiency, digital transition, and socially responsible business (ESG).

Proposals for strengthening the investment attractiveness of Croatian tourism

To avoid a further decrease in the investment attractiveness and competitiveness of investments in Croatian tourism, the Croatian Tourism Association proposes the adoption of a series of concrete instruments. These instruments are aimed at encouraging investments in new and existing hotels and campsites, but also at transforming existing private accommodation into hotel accommodation of higher added value. The proposed measures include:

• Grants (non-refundable funds) for the construction and expansion of accommodation capacities in touristically underdeveloped areas. The aid intensity would be high (up to 40 percent of eligible costs), and the funds would be directed to 4 and 5-star hotels and campsites. This measure could stimulate tourism development in regions such as Slavonia or inland Dalmatia.


• Grants (non-refundable funds) for the construction and development of hotel capacities in touristically developed areas, with a lower aid intensity (up to 20 percent of eligible costs). This measure would apply exclusively to hotels, encouraging further quality improvement in established destinations such as Istria or Dubrovnik.


• Subsidized interest rates for the construction and development of hotel and so-called mixed-use capacities, with medium and higher aid intensity.


• Grants (non-refundable funds) for upgrading existing hotels to 4 and 5 stars, with medium aid intensity (up to 30 percent of eligible costs).


• Grants (non-refundable funds) for the development of diffuse and integral hotels, with high aid intensity (up to 40 percent of eligible costs). This measure aims to transform existing private accommodation into quality hotel capacities through diffuse and integral hotel models, which is particularly interesting for preserving the authenticity of smaller towns.


• Grants (non-refundable funds) for investments in sustainability and ESG (Environmental, Social, Governance) components in tourism. High aid intensity (up to 70% of eligible costs) is envisaged for investments in energy efficiency, renewable energy sources, digitalization, and the implementation of socially responsible business models.


• Investment incentives for the development of additional hotel facilities and quality improvement, for example, for investments in new spa and wellness centers, conference halls, sports fields, and raising the level of gastronomic offerings.


• Encouraging and precisely legally regulating so-called mixed-use projects, which include branded and non-branded residences. Such models, as already highlighted, significantly contribute to the profitability of projects, attract investments, and strengthen the market position of destinations in global competition. Examples of successful mixed-use projects worldwide show their potential for year-round operation and diversification of offerings.

The implementation of these measures, according to the Croatian Tourism Association, is key to ensuring the long-term sustainability and competitiveness of Croatian tourism, while simultaneously increasing its positive economic effects and reducing the negative consequences of mass tourism. Creating a more favorable investment environment would attract the capital needed for the transformation towards a higher quality, more resilient, and more responsible tourism sector that contributes to the prosperity of the entire country.

A strategic focus on improving the quality of accommodation and the overall tourism offer, with an emphasis on sustainability and responsible resource management, is a prerequisite for repositioning Croatia as a high-value destination. This implies not only investments in "bricks and mortar" but also continuous investment in human potential, innovation, and digital transformation. The development of year-round tourism products, the dispersion of tourist traffic to less developed areas, and strengthening the sector's resilience to external shocks, such as pandemics or climate change, must be an integral part of the new development paradigm. In this sense, the proposed incentives represent an important step towards achieving the vision of Croatia as a leading Mediterranean destination for sustainable tourism.