Hotel accommodation prices to grow less than labor and food costs in 2025

The Croatian Tourism Association has published the results of a comparative analysis of prices and costs in the hotel sector in Croatia and competing Mediterranean countries, which indicated the continued rapid growth of costs in Croatia compared to the competition, which negatively affects the profitability and investment potential of the sector, the Croatian Tourism Association (HUT) announced.

In the first six months of this year, hotel accommodation prices in Croatia an increase of 4,6 percent compared to the same period last year, they monitor the price trends of hotel accommodation of Mediterranean competitors from the EU.

At the same time, key costs grew twice as much as the same competition, so labor costs increased by 11,7 percent (the EU Mediterranean competition average is 4,2 percent), and food prices by 5 percent (the EU Mediterranean competition average is 2,6 percent), according to a comparative analysis by HUT based on Eurostat data. 

The data for the first six months of this year only confirms trend of faster cost growth in the domestic accommodation and hospitality industry compared to Mediterranean competition, which has been pronounced since the beginning of 2023.

The biggest increase was in labor costs, which have been growing at double-digit rates in the domestic accommodation and hospitality industry for the last four years (11,3 percent in 2022, 15 percent in 2023, 13,6 percent in 2024 and 11,7 percent in 2025), significantly more than the EU Mediterranean competition, where the average increase in none of those years exceeded 7,5 percent.

As for food, only Slovenia had a higher increase in food prices in the first half of the year than Croatia (5,7 percent), while none of the other observed countries had an increase of more than 4 percent, while Cyprus, for example, even recorded a drop in food prices of 0,2 percent.

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Domestic hotel accommodation prices cannot keep up with such an increase in costs, so after last year's increase in hotel accommodation prices in Croatia of only 1,9 percent (more than half the average of the EU Mediterranean competition of 4,5 percent), in the first half of this year, a price increase of 4,6 percent was recorded, only slightly higher than the growth rate in competing EU Mediterranean countries of 3,9 percent.

HUT's comparative analysis included France, Greece, Cyprus, Italy, Malta, Spain, Slovenia and Portugal. 

"Hotel accommodation prices in Croatia have grown less than the growth of key costs in the hotel industry, specifically labor costs and food costs, and costs in the domestic hotel industry continue to grow faster than the Mediterranean competition, which weakens the position of domestic hoteliers in relation to the competition. The declining profitability of the sector reduces its investment potential and the attractiveness of investing in hotels in Croatia, which in turn undermines the competitiveness of the entire domestic tourism sector, given that the hotel sector generates much longer tourist traffic and higher average consumption, in addition to developing local destinations, creating year-round jobs and opening up opportunities for the development of additional tourism-related businesses, but also significantly less burdens the local infrastructure. Croatia, with the worst accommodation structure in the Mediterranean, with only 9,5 percent of hotel accommodation in the total accommodation capacity, needs to encourage significantly more investments in the hotel sector, especially since the demand for such accommodation is growing year after year, so the occupancy rate of hotels of the highest categorization (4 and 5 stars) at the peak of this season, which means even at the highest prices, is above 90 percent.", he stated Veljko Ostojic, director of HUT.

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