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August 2020


4 - 5 Minutes

Croatia, COVID and CroCard: The payments innovation helping domestic tourism

Tourism in Croatia has nearly doubled in a decade.

Last summer, nearly 21 million holidaymakers visited its picturesque coastal and inland resorts, compared with just under 11 million in 2009. Now Croatia wants to develop year-round tourism and promote less well-known destinations. It also wants to nurture its domestic market, particularly in the wake of the sharp drop in international travel that resulted from the global COVID-19 pandemic.

It does this by incentivising locals with the CroCard, a tax-friendly payment initiative, designed to stimulate spending by Croatians at home. Employers preload the cards, issued by a commercial bank, with up to 330 euros of an employee’s pre-tax income. Cardholders can then use CroCard at hotels and other accommodation, restaurants, and shops at resorts with the opportunity to receive discounts.

Tonči Glavina, Secretary of State at the Ministry of Tourism, joins Visa Navigate to further explain the initiative.

Visa Navigate (VN): Firstly, how did the CroCard scheme come about?

Tonči Glavina (TG): CroCard – short for the Croatian Tourist Card – is modelled on the SZÉP card used in Hungary, which has been issued to about 1.5 million people and accepted at more than 24,000 merchants. Research has shown that, on average, cardholders spend more on the SZÉP card and tend to stay longer at resorts compared with tourists who use other forms of payment.

CroCard is one of several ideas designed to bolster domestic tourism. Encouraging local trade will help the industry all year round. We’ve wanted to increase domestic tourism since well before coronavirus. In a way, the health scare has helped CroCard because more Croatians have been holidaying at home this year.

VN: So, for the uninitiated, tell us about Croatia as a holiday destination?

TG: People love the sun and the sea, of course. Summer temperatures here average 30 degrees Centigrade. That’s mid 80s Fahrenheit. We have 1,750 kilometres of mainland coastline and more than 1,000 islands. The cities of Dubrovnik, Zagreb and Split – my hometown – draw big crowds as does the unspoilt lakeland beauty of the Plitvice National Park. Inland, there is much to discover.

VN: Croatia seems to be popular with holidaymakers in Western Europe fairly recently. Is it fair to say that tourism expanded in recent years?

TG: Yes. We’ve seen growth of around 30 per cent between 2016 and 2019. There were 20.7 million arrivals last year – the equivalent of five times Croatia’s own population. Around 90 per cent were international travellers. There were 108.6 million overnight stays.

VN: Where is the growth coming from?

TG: We see stable growth from our traditional and closer markets such as Germany, Austria, Italy and the Czech Republic. Improving air links means we have welcomed many more people from further afield. Nearly one million people came from the United Kingdom in 2019. Visitors from the USA rose 85 per cent to 655,000 and China 174 per cent to 280,000.

VN: What about the domestic market?

TG: Compared to other countries, the domestic market is relatively small. Only 12-13 per cent of turnover is domestic tourism.

VN: Overall, what’s the contribution of tourism to Croatia’s economy?

TG: Tourism accounts for one-fifth of Croatia’s national income. That’s twice the European average. It earned us 10.5 billion euros last year. Around 50,000 Croatians are employed in tourism directly with many more in family rental and linked leisure and hospitality sectors. In all, travel and hospitality accounts for around one in every eight Croatian jobs. It’s a vital industry for the country.

VN: It was all going so well. Then COVID hit?

TG: Yes, it’s been quite a blow. We were expecting another record year but it was not to be – not this year, anyway.

VN: Initially, trade came to a stand-still, I understand. Are you back in business now?

TG: Yes, we have worked hard on health and safety measures. We have opened up to all tourists from EU countries and the Schengen area, where there is unrestricted movement of people across 26 countries. Anyone else can come to Croatia with a booking for accommodation or similar confirmation and negative PCR test. Right now we have some of the best tourism results in the Mediterranean.

VN: What are your expectations for foreign visitors this summer?

TG: We originally planned for 30% of last year’s tourism traffic, but we are now actually closing on 50%, which is tremendous success.

VN: CroCard will help domestically. What have been your expectations for the scheme this summer?

TG: It’s hard to be sure about this summer but in the longer term we think it could bring between 2.7 and 5.4 billion kuna (350-700 million euros) additional spending and create between 10,000 and 21,000 new jobs.

VN: What has the response been like from employers and merchants in resorts?

TG: We are only in the start-up phase so we are growing from a small base. There has been a lot of interest so far.

VN: Do you have a sense of how many people will apply for the card?

TG: It should do well. Tax breaks are always popular! It will make domestic holidays more affordable for Croatians. We believe that more and more companies will allow their employees to take part and benefit, especially after the end of the pandemic and the gradual stabilisation of the economy.

CroCard partnership: HPB

Anto Mihaljević, is a Member of the Management Board at HPB, the issuing bank that partnered with the Ministry of Tourism on the CroCard initiative.

Mr Mihaljević said: “As part of our mission – which is to create the conditions for a better life in Croatia – we recognized the opportunity to provide additional value for our tourism sector, as well as for the Croatian citizens.

“In the short term, looking at the 2020 season, the impact will probably be lower than expected, bearing in mind the COVID-19 situation.

“However, in the mid to long term, we definitely see great potential for the entire community. CroCard, as a product with non-taxable funds up to a certain amount, can make tourism services more widely available to Croatians. It will also hopefully increase the share of domestic tourists each year."

VN: Will you enhance the CroCard in future?

TG: We want to add discounts to the CroCard as well, redeemable at participating hotels, restaurants and other tourist attractions. We expect that will give domestic tourism a further boost.

VN: Have you other plans for local tourism?

TG: The Government has set up a fund for tourist boards and there are some exemptions on value added tax. We’re getting 10 billion euros of support from the EU and while that is for the economy as a whole, some of the money will go to support the tourist industry.

VN: So CroCard is part of a bigger long-term plan to support tourism in Croatia?

TG: Yes, very much so. We have been in reorganisation mode for some time. Local tourist boards are amalgamating for instance. In the sense of adding urgency to the efforts, the pandemic has helped the process.

VN: Will that mean spending on marketing and advertising will be more coordinated and effective?

TG: Definitely. It will also help planning for future improvements in infrastructure such as hotels and transport links.

VN: Do you see an opportunity to make tourism in Croatia more resilient over the long-term by attracting a new domestic audience?

TG: Absolutely. Domestic tourist traffic is crucial for strengthening the industry all year round. When it comes down to it, holidays are all about spending spare cash or savings. The CroCard initiative is going to be a really important part of the programme.

Visa partnered with the Ministry of Tourism in Croatia and HPB to launch the CroCard initiative.

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