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Domestic tourism companies expect a very good season, 95% of them record a higher level of reservations in March compared to March last year, the same percentage of them expect an increase in the number of overnight stays in the pre-season (until July 1), and 94% of them expect an increase in the number of overnight stays in the level of the entire year, the research showed Croatian Association of Hotel Industry Entrepreneurs (UPUHH) and Croatian Tourism Association (HUT) on a portfolio of 165 hotels and campsites in Croatia.
Despite the optimism before entering the tourist season, the research highlighted the biggest challenges that travel companies face. As the main business challenges in 2024, domestic companies highlight the availability of staff in the first place, then rising costs/inflation, and the geopolitical situation and bureaucracy. The order of key challenges has been slightly changed compared to last year's survey, when rising costs were perceived as a major challenge. This year, 14% of them expect an increase in costs of up to 5%, and the remaining 86% expect an increase of up to 10%. According to the structure of costs, the respondents expect that the biggest impact on the growth of costs will be the growth of labor costs, followed by energy costs, and in third place the growth of purchasing costs of food and beverages.
The continued rise in costs this year also limits the return of the sector's profitability to pre-pandemic levels. What the research clearly showed is that there is very limited room for raising prices this season, so the majority, 56% of companies expect an increase in average daily income per accommodation unit of up to 5% compared to last year, i.e. an increase in food and beverage prices of up to 5%. 67% of them.
When looking at the ratio of income and expenses, 68% of companies do not expect that the increase in expenses will be greater than the increase in income, in contrast to last year when only 18% of respondents thought so.
But 31% of them believe that the growth of expenses will exceed the growth of income this year, which implies that we will record a drop in profitability in a significant part of the sector. The majority of tourism companies, 67% of them, believe that due to the limited possibility of price growth and cost pressure, and in the absence of any significant regulatory changes, profitability will not increase significantly in the next five years, no more than 5% per year compared to 2023.
Challenges with the workforce continue to burden the tourism sector, considering that most companies, 56% of them, express the need to increase the workforce compared to last year. Although in the structure of the labor force, domestic employees lead the way with 77% of the total number of employees, when it comes to the necessary employment of foreign workers, the biggest challenges they single out is the bureaucracy during employment, as much as 67% of them, while finding qualified workers and accommodating foreign workers are in second and third place . There is a visible shift compared to previous years, when finding qualified workers was the number one problem, while this year, the bureaucracy in employment was rated as the biggest problem. Among the new employees who are employed for the first time in hotel companies, the expectation is that there will be approximately the same number of them from Asia and the regions of Eastern and Central Europe, with slightly more employees from Asia.
Considering the necessity of restarting investments after their freeze in the pandemic years, the research shows that 98% of companies plan to increase the amount of investments, that is, 62% of them plan an increase of more than 30% this year. The largest part of the increase in investments will go to the reconstruction of accommodation, investments in sustainability, but also to the construction of new accommodation and the reconstruction of public facilities.
