REPUBLIC OF CROATIA – THE COUNTRY OF SUSTAINABLE TOURISM Overall area: 87,661 km² (land: 56,594 km², sea: 31,067 km²) Population: 4.4 million Total length of the coastline: 6,176 km Number of islands: 1,246 (inhabited: 49) Protected regions: 19 (8 national parks, 11 nature parks) – 9% of Croatia’s territory 6 UNESCO heritage sites (5 cultural, 1 natural) Blue Flag Programme: 117 beaches and 20 marinas

CROATIAN TOURISM HIGHLIGHTS Croatia - a predominantly coastal destination coastal area accounts for 95 percent of all visitation Accessibility accessible by all modes of transport (road, sea, air, rail) road is the main mode of transport used by tourists (over 80 percent)

CROATIAN TOURISM HIGHLIGHTS BRIEF HISTORY The 80s Croatia was a developed tourist destination, but not an independent state Main tourism product was “sun and sea" The prevailing concept was “mass tourism” The 90s Tourist traffic decreased to below of 20% of pre-war level Nearly a half of all hotels were damaged Start of a long recovery process

CROATIAN TOURISM HIGHLIGHTS Post-2000 12 TOURIST ARRIVALS (mil) 11.2 60 OVERNIGHTS (mil) 56.0 10 50 6.6 38.4 8 40 6 30 4 20 2 10 2000 2001 2002 2003 2004 2005 2006 2007* 2000 2001 2002 2003 2004 2005 2006 2007* *2007 estimate based on Jan-Oct data Source: Central Bureau of Statistics DOMESTIC Structure of Tourists in 2007 INTERNATIONAL 9% 11% Croatian tourism has demonstrated steady growth since 2000 In 2007 tourist arrivals rose 7.5% and overnights 5.6% year-on-year Domestic EU countries 80% Non-EU countries

IMPACT OF TOURISM ON CROATIA’S ECONOMY 8 25 18.4% 7 20 6 15.1% Revenues 5 Contributition to the GDP %) 15 from tourism Revenues fromTourism (B €) 4 6.9 6.0 6.3 3 5.6 5.5 10 Contribution 2 4.0 3.0 3.7 5 to the GDP 1 2000 2001 2002 2003 2004 2005 2006 2007* Source: Croatian National Bank Given its high contribution to the GDP, tourism is a strategic industry in Croatia’s economy

NAUTICAL TOURISM The most stable and the most lucrative tourism in Croatia Nautical tourism is generating 10% of revenues from tourism Nautical tourists on average spend twice as much as other tourists 550,000 nautical tourists in 2006 Currently 83 nautical ports 50 marinas 33 anchorages, berths and dry marinas Total capacity 21,500 berths in nautical ports 16,000 wet 5,500 dry Additional 15,000 berths available in other ports

CROATIAN ISLANDS Every 5th tourist spend a holiday on an island Island Act Construction of municipal and social infrastructure facilities on Croatian islands – water supply and sewage systems Subsidies for line coastal maritime transport (for islanders and tourists) Construction and modernisation of ports open for public transport

NEW STRATEGY New strategy is based on following principles: Space is the most valuable tourism resource Physical planning to support sustainable development of tourism Local communities have a key role to play in planning decisions Protection and preservation of natural, historical and cultural heritage a key to sustainable tourism development These principles summarized in the logo “The Mediterranean as it once was” Transition from “mass tourism” to “quality tourism” Upgrading of accommodation to international standards Presence of international hotel brands in key destinations Introduction of boutique hotels offering personalized service Sustainable growth is the key to prosperity A long-term sustained growth rate of tourism is a key to the stability of Croatia’s economy Investments required to achieve a balanced development

PROTECTION OF THE COASTAL AREA ISSUES Huge demand for new construction on the waterfront Tourist facilities construction without communal infrastructure Regulation on the Arrangement and Protection of Protected Coastal Area of the Sea (PCA) (September 2004) - Area under special regulation Definition of PCA mainland belt with the width of 1.000 m from the coastal line sea belt with the width of 300 m all islands

PROTECTION OF THE COASTAL AREA Measures enforced in the PCA ban on construction in the belt of 70 m from the coastal line outside of the urban areas ban on construction in PCA without preliminary constructed sewage system ban on expanding the construction area where 70% of existing area is not constructed maximum capacity of 400 berths per marina environmental report (EIA) is obligatory for project with significant environmental impact Maritime Domain (public domain under special protection) minimum of 6 metres from the coastal line right of ownership or any other property right can not be acquired under concession regime

CROATIA THE MEDITERRANEAN AS IT ONCE WAS Croatian Adriatic Sea - the cleanest sea in the Mediterranean (as tested by ADAC) Coastal Cities Water Pollution Control Project Water Ballast Management Rule Croatian Initiative for the designation of the Adriatic Sea as a PSSA (Particularly Sensitive Sea Area) International covention on the control of harmful anti-fouling systems on ships Supporting environmentally-friendly activities Nautical Tourism Strategy 15,000 new berths in the next 10 years (10,000 wet/5,000 dry) Strategic environmental assessments is obligatory Ban on construction in pristine parts of the coast and in national parks Sustainable Development Cruising Tourism Strategy

REPLACING ‘DIRTY’ INDUSTRIES WITH TOURISM ZONES Cement factory in Umag shut down Construction of tourist resort “Terra Istriana” under way A similar process occurs at several seaside locations

SUSTAINABLE DEVELOPMENT BASED ON CULTURAL HERITAGE The “key” to future sustainable development The “added value” of Croatian tourism product UNESCO Heritage Sites 5 cultural properties (Dubrovnik, Trogir, Split, Sibenik, Porec)

SUSTAINABLE DEVELOPMENT BASED ON NATURAL HERITAGE 8 National Parks 10 Parks of Nature Two archipelagos (Kornati and Brijuni), the island of Mljet, Plitvice Lakes and Krka are national parks with a well-developed visitation Other protected areas, too, are reporting increasing visitation across all types of activity

SUSTAINABLE DEVELOPMENT BASED ON TRADITIONAL HERITAGE Concepts and programmes of revitalization of: old traditional houses- incentive program «Under the centennial roof» old crafts, arts & skills - like ship building (Ars Halieutica), old cuisine rural areas by incentives to develop rural tourism and ecological agriculture cultural preservation self-employment unique experiences

MID-TERM STRATEGIC GOALS OF CROATIAN TOURISM Strategic goal up to 2012 is achievement of physical volume of traffic of: 12,000,000 tourist arrivals 66,000,000 tourist overnights This volume of traffic represents optimisation of tourist achievements given the number of inhabitants in Croatia (4.42 million): 2.7 tourist arrivals “per capita” 15 tourist overnights “per capita” FINANCIAL INDICATORS TO TSA-WTTC METHODOLOGY (UP TO 2010) 12 billion EURO Total tourist demand (2715 EURO per capita) 8 billion EURO Spending of foreign guests (1810 EURO per capita)

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