Determinants of the Croatian Pre-pandemic Inbound Tourism Demand

Tourism is a vital sector for the Croatian economy. During the pre-pandemic period, Croatia reported increasing numbers of tourist arrivals and experienced a significant contribution of tourism to GDP and earnings. This research aims to investigate the impact of economic and supply-side determinants on inbound tourism demand. The analysis was conducted on panel data with a five-year long-time dimension and forty-seven incoming countries included in the cross-sectional dimension. In order to investigate determinants of Croatian inbound tourism demand, this research relies on the Two-step System Generalized Methods of Moments (GMM). The results suggest that supply-side determinants and tourist arrivals from the previous year positively affect inbound tourism demand. However, none of the economic determinants proved to have a significant effect on the number of tourist arrivals. Consequently, our findings suggest that infrastructural enhancements and quality services that could lead to an increased number of repeated visits and recommendations are crucial for Croatian inbound tourism demand.