Croatian Tourism Prices Driven by Short Season, Not Greed, Expert Argues

High prices along Croatia's Adriatic coast are a direct consequence of the tourism industry's reliance on a short, intense season, according to economic expert Damir Novotny. He refutes claims of greed among service providers, stating that elevated prices are essential for businesses to survive the off-season.

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When you want to earn for the whole year in two or three months, then prices must be high so that you can cover costs outside the season.

Novotny explained that providers must earn enough during the two to three peak months to cover expenses for the entire year. He emphasized that consumer willingness to pay ultimately dictates prices, suggesting that if tourists were unwilling to accept current rates, they would naturally decrease. The government, he added, has limited power to intervene directly in these market dynamics.

The expert also pointed to the significant issue of the grey economy in Croatia, estimating that around 30 percent of economic activity operates untaxed. He noted that Croatia, alongside Turkey, Serbia, and Montenegro, has a high proportion of its economy in the informal sector. Novotny believes that repressive measures alone are insufficient to combat this, citing Italy's successful shift to a flat-rate tax system as a potential model.

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It's not greed, it's simply that in order to survive, they have to have such high prices.

He criticized the government's targeted approach, which he believes unfairly burdens small accommodation providers while ignoring broader systemic issues. Novotny argued for a more comprehensive strategy that addresses tax imbalances across the entire tourism sector, rather than focusing on isolated segments. The current situation, he concluded, is a result of decades of socio-political tolerance for the grey economy, which has benefited political elites by masking other societal problems.

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You can have an inspector for every landlord, and there will still be those who don't pay.