Croatia and its sparkling Adriatic coast are on course for another record tourism year, with authorities aiming for even stronger growth despite stiff competition from Asia and North Africa.
"The past four years were a record but 2007 is above all expectations," Tourism Minister Bozidar Kalmeta said.
Croatia expects to book record tourism income of €7.0-billion ($10-billion) in 2007 and has forecast this to rise by up to five percent next year. It is targeting revenues of €11-billion by 2011.
In the first nine months, the former Yugoslav republic hosted 9.2 million tourists and posted 53.4 million overnight stays, up six and five percent on year respectively. Most visitors were from central Europe.
"Croatia has an excellent geographical position as it is close to tourist markets," Eduard Kusen of the Tourism Institute, a state research agency, told AFP.
"It has a developed infrastructure which will improve further as more highways are constructed, while its amazing and numerous tourist attractions allow it to offer a rather colourful tourist product."
Virtually all tourists head for the coast, which is dotted by more than 1000 islands and islets seen as "national jewels".
The number visiting Zagreb is also growing. The capital city hosted more than 460 000 tourists during the January-September period for an annual rise of 15 percent.
In spite of repeated government pledges to do more to lure tourists inland, Croatia's interior remains rather under-utilised. But experts still believe the country's rural environs have great tourism potential.
"Croatia has the advantage that it is already on the tourist map," said Klaus Ehrlich, head of the European Federation of Farm and Village Tourism.
"It is known as a fashionable destination in Europe at the moment which makes it easy to launch new projects and new products, people will simply jump on it."
Among inland features are plains in the east covered by oak forests along the Danube and Kopacki Rit, one of Europe's largest wetlands with an abundance of flora and fauna, and the rustic vineyards of northwestern Istria peninsula.
"All this could lure tourists of different profiles and ages," Kusen said.
Currently Croatia only has accommodaton at some 360 holiday farms and it is estimated that rural tourism makes up less than one percent of the sector's figures.
Experts believe that with a national-level strategy and taxation changes, it could accout for up to 20 percent of the sector within the next decade, a figure comparable with some European countries like Austria.
Cause for concern
But despite reasons for optimism, there are some concerns regarding the future of the industry which is Croatia's main growth driver making up nearly 19.5 percent of gross domestic product in 2006.
The main worry is that foreigners will be turned off by high prices, particularly in comparison to destinations in the southern Mediterranean such as Egypt, Morocco, Tunisia and Turkey.
The cost of organised stays, which accounts for 36 percent of tourists and 50 percent of hotel customers in Croatia, have increased by up to 30 percent with the past two years.
Local tourist authorities warn that unless prices are slashed, the country risks being left off lists offered for package tours by major foreign travel agents.
"In July and partly in August, many hotels sold up to 70 percent of their capacities at lower prices, which confirms their prices were too high," said Ivan Puksar of the Association of Croatian Travel Agencies (UHPA).
More aggressive marketing needed
Foreign experts say Croatia should adopt a more aggressive marketing approach if it wants to continue positive trends and cope with competition in the Mediterranean and elsewhere.
Rather than just tourist fairs, Croatia should do more to promote itself on the internet, said Eulogio Bordas, head of the Spanish consultant company THR.
"You should focus on blogs, forums, advertising on YouTube and consider how to unite the overall tourist offer on the internet," said Bodas, whose company helped prepare Croatia's 2008-2012 tourist marketing plan.
This would enable the country to adapt to new demands of the market and be competitive with other destinations that have recently emerged, such as Saudi Arabia and Vietnam, he added.