HOK: Restaurateurs continue to invest, so quality increases even with rising costs - without increasing prices

Catering companies are the last in the price chain, so they cannot be to blame for the price increase, warns the Croatian Chamber of Crafts (HOK), recalling the continuous increase in input costs.

This is a reaction to the statement of the Governor of the Croatian National Bank (CNB) Boris Vujčić on the impact of prices in the hospitality industry on inflation.

Namely, the Governor of the CNB recently commented on the consequences of the high inflation rate in the tourism services sector, which, as he stated, has the highest contribution to inflation growth, primarily relating to hotel accommodation and catering services.

They led to real decline in consumption foreign tourists, which has been expressed for a long time, he emphasized. He reminded that in the main part of the tourist season there was a drop in the number of overnight stays along with stagnation of income growth, which implies that the share of income from tourism in GDP fell.

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As Vujčić said, this decline is expected to continue, and the tourism sector must be careful with prices. We have significantly higher price growth than competing countries, which leads to a loss of competitiveness, "and when you start losing guests, it's usually hard to get them back quickly later," he warned.

CNB: Economy will grow, but more slowly

According to the latest estimates from the Croatian National Bank, the Croatian economy continues to grow, but more slowly than previously expected, while inflation will fall more slowly than predicted.

It is estimated that GDP could grow by around 3% in real terms this year. At the same time, inflation measured by the national index will be around 3,7%. This is higher than last year (primarily due to rising energy and food prices).

In earlier projections, published in mid-September, the CNB expected economic growth of around 2,9% and inflation of around 2,6% (according to the national index) for 2026.

According to these estimates, inflation should have calmed down more quickly and economic growth should have slowed only slightly. The latest forecasts reveal a slightly worse picture. 

In the new projections, the CNB has corrected its forecasts:

• GDP growth in 2026 is now estimated at 2,8%
• Inflation could be around 3,1% in 2026

In other words, the economy will continue to grow, but somewhat more slowly, while inflation will remain higher than previously expected.

The CNB clarifies that growth continues to rely primarily on domestic demand, however, slower growth in wages and real incomes is expected, fiscal policy will be less supportive, and investments and government spending will no longer have as strong an impact as in previous years

In terms of inflation, additional pressure comes from rising regulated energy prices (gas, electricity, thermal energy) and further increased food prices. 

Inflation could be lower than expected if economic growth weakens due to external factors, such as trade tensions and weaker foreign demand. On the other hand, stronger wage growth, especially in a tight labor market, could further push up prices, especially in the services sector.

If everything remains as predicted, Croatia will continue to grow, and inflation will gradually fall - but both more slowly and worse than previously expected.

HOK: Catering companies have high costs

President of the Croatian Chamber of Commerce and Industry Dalibor Kratohvil In his reaction to the words of the CNB Governor, he points out that "caterers cannot be the initiators or culprits of the price increase trend, if they are the last in the chain."

Prices have risen, he says, but at the same time all input costs have risen, and the overall margin in the hospitality industry has fallen from 12 to 9 percent this year.

"Employers, in addition to the almost double increase in wages, are also faced with higher contributions, more expensive energy products and margins of large retailers. I must point out that in neighboring countries, the input costs of goods are significantly lower, and thus our restaurateurs are in a significantly less favorable position", said the president of the Croatian Chamber of Commerce and Industry.

He also recalled the statements of an expert from the Institute for Tourism, Ivan Kožić (from this year's 37th Congress of Hospitality and Tourism Workers), who cited retail sales and wage growth as the main causes of inflation and price increases in the hospitality and tourism industries.

He further explained that it is necessary to change the perspective and look at the context, noting that coffee, for example, is a product in which around 40 different costs are implemented. It should also be noted that the 25 percent VAT and consumption tax burden only Croatian caterers compared to foreign competitors.

"There was an increase in prices, but only in order to survive and work, not to make extra profit. This claim is confirmed by reduced margins. Craftsmen are not the ones who work for extra profit and are very careful not to let down and lose their guests", notes Kratohvil, adding that they are aware that guests will be the first to show them if they are not satisfied with the value they received for their money.

"The market has shown that it almost immediately punishes those who unjustifiably and excessively increase prices without proportional investment in quality. I emphasize that the demands placed on caterers are impossible - investments and raising quality, with a continuous increase in costs, and without increasing prices.", concluded Kratohvil.

The Croatian Chamber of Commerce and Industry also reported that on the last day of November this year, 11.858 businesses were operating in the Catering and Tourism Guild, 101 more than at the same time last year, or 11 fewer than at the end of October this year. Over the past year, there have been 11.766 more businesses operating in Croatia, for a total of 135.251.

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