Tourism Overview Final data for 2008 show a marked weakening in the growth of foreign tourist arrivals (compared with 2007), with an increase of just over 1% year-on-year (y-o-y) to some 9.4mn. Domestic tourism was down a marginal 0.5% y-o-y. Overall tourism (domestic and foreign) numbers increased 1% to almost 11.3mn tourists. The top two source markets, Germany and Italy, both recorded falls in the number of arrivals, with German visitors down slightly on an annual basis, but Italian arrivals were down a sizeable 7% y-oy.

Indeed, of the top five source markets, only Slovenia recorded positive growth in visitors, up 3% y-o-y, while Austria and the Czech Republic recorded declines in arrivals of 3% and 7% y-o-y respectively.

After strong growth in the previous two years, growth in arrivals from Japan and Australia remained buoyant in 2008. Arrivals from the US, however, were noticeably weak, down 13% y-o-y. Croatia also continued to attract more foreign visitors from Central and Eastern Europe, with buoyant growth rates in arrivals from Romania, Poland and Bulgaria. Cruise ship tourism, meanwhile, recorded a considerable 35% y-o-y increase in passenger numbers to about 940,000.

Hospitality The hospitality sector recorded a particularly weak performance in 2008, compared with a year earlier.

The number of tourist nights totalled just over 57mn (domestic and foreign tourists), up just 2% y-o-y, with the number of foreign tourist nights up by around the same amount to 50.6mn (just under 89% of the total). The average number of nights per foreign tourist arrival increased slightly compared with a year earlier to 5.4 nights. Domestic tourist nights increased by a mere 1% annually to about 6.5mn. Out of the five main source markets, only Germany and Slovenia recorded positive (but marginal) growth y-o-y in tourist nights in 2008, equivalent to 1% and 2% y-o-y respectively. The number of tourist nights by arrivals from the UK and the US in 2008 were down 4% and a significant 12% y-o-y respectively Industry Forecast Scenario The most recent data shows growth in foreign tourist arrivals of 10% y-o-y in the month of January 2009, but this is down sharply compared with 17% y-o-y growth recorded in the same month in 2008. In line with the overall slowdown in growth in foreign tourist arrivals recently, the report predicts the number of visitors will continue to fall this year (revised down further this quarter to -5% y-o-y) but modest recovery in 2010. The forecasts are underpinned by the deteriorating economic conditions in major source markets – particularly the eurozone – with arrivals from Germany and Italy anticipated to fall relatively sharply in 2009.

Air Passenger Traffic As reflected in the sharp slowdown in foreign tourism arrivals, international passenger air traffic declined 1.2% on an annual basis in 2008 to approximately 1.78mn. As the downturn in the tourism sector continues to bite, we anticipate further negative growth in international passenger numbers in 2009.

Indeed, the most recent data from Zagreb Airport – the main international airport in Croatia and the primary hub for the Croatian flag carrier Croatia Airlines – show total passenger numbers fell almost 5% y-o-y in Q109.