A touch of the Riviera in Croatia

The Croatian island of Hvar is being touted as a rival to the French Riviera. But the yachties haven't taken over completely. Author James Hopkin reveals its charms

Everybody's talking about Hvar. Condé Nast Traveller voted the island one of the 10 most beautiful in the world. The Croatian National Tourist board has promoted it as "the Mediterranean as it once was". Western journalists, creeping back to Dalmatia after the war in the former Yugoslavia, have deemed it the "Balkan Cannes". The first word is ill-chosen, considering Croatia's return to independence and a reluctance to be lumped together with its neighbours. The second, Cannes, relates to escalating prices, a growing exclusivity, and harbours with luxury yachts: Roman Abram-ovich, Bill Gates and Formula One's Bernie Ecclestone among the owners. Hvar has come of age.

Most of the island's life centres around two towns: Stari Grad, the northern ferry port situated at the bottom of a five-mile bay and sheltered by densely forested hills, and Hvar town, on the south-west coast, a fashionable harbour resort of glittering bays and nightlife. Though they are linked by a scen-ic 20-minute bus journey, it feels as if they are centuries apart.

Favoured by the Zagreb bohemian set during the summer, Stari Grad originated in the fourth century BC, around the time of Aristotle's birth, and was known by the Romans as Pharos. In 1331 it became "old town", and has managed to retain an old-fashioned aura even through modern times because the majority of tourists stepping off the ferry immediately rush to Hvar town.

Stari Grad is a blissful retreat where artists and artisans live side by side in little stone houses that line the twisting alleys. Fishermen sit outside their one-floor dwellings mending their nets. At dusk, hundreds of pairs of green shutters are flung open as residents take the evening air, while starlings screech up and down the alleys above the sound of water slapping the dock. In the morning, cockerels and donkeys (one of the beloved symbols of Dalmatia) serve as wake-up calls, to be followed by a buzzing of bees (lavender honey is an island speciality), and church bells so clear you can still hear them humming minutes after they have been struck.

A swim in the clear Adriatic waters is an unforgettable experience, though most beaches are pebble or stone and can be treacherous without footwear. The coves of Stari Grad Bay, especially the tree-shrouded Lucisce, are the most beautiful. Indeed, Lucisce was once a favourite of the 16th-century Stari Grad poet, Petar Hektorovic. You must visit his house, Tvrdalj, with its baroque portal, "sparrowtail" tower; a pond teeming with his favourite mullet; and an exquisite garden of palm leaves, grapevines, flowers and shrubs.

Throughout the old town, you'll find a quiet but distinctive café and gallery culture of handicrafts and art-work alongside the island's natural produce of wine, olive oil and lavender. This homemade aspect, untainted by marketing, is reflected in the prices with everything from a cup of coffee to car hire and accommodation being around 30 per cent cheaper than Hvar town.

Of the restaurants, I'd recommend Konoba Zvijezda Mora, a single row of wooden tables in a charming stone courtyard at the harbour's edge. Choose from an iced tray of fresh-caught fish to be grilled in olive oil from the groves beyond the bay while you sip the local wine. There is a Croatian saying: "A fish must swim three times: in the sea, in olive oil, in wine." At Zvijezda Mora, this feast will cost you little more than £15 per head.

And so, to Hvar town. What did the Hvar Hygienic Society, one of the first tourist associations in Europe, let itself in for in 1868 when it announced a desire to "provide everything to ensure visitors a comfortable stay"? Nowadays, the population of 4,000 swells to almost 40,000 from late July to the end of August. At times it feels like every male Italian under 25 is in town. This season, there has been a huge increase in UK visitors due to cheaper flights and hotel packages from the Suncani Hvar hotel group.

Three years ago, Suncani bought up the communist-era hotels and so far it has renovated three: the Riva, a small, stylish hotel on the harbour in an old stone-house; the Adriana, which dominates the harbour with its glass and purple neon; and the Amfora, with its cascading pools, sea-view restaurants and post-beach parties. Despite the small rooms (a legacy of communist design) all three hotels are effortlessly cool, though one wonders why British not Croatian designers were used – presumably to make them more Westerner-friendly? Still, if that's your style, you won't find better.

The downside, of course, is that the group's efforts at exclusivity is forcing up prices in the town. Over the past three years the average nightly rate went up from €29 to€€49 and now to €79. Traditionally, Hvar town has also been a destination for backpackers who somehow manage to co-exist with the Prada brigade and it would be a shame if they, and many like them, were priced out of the town. Yet there is another Hvar town, a family-based version, of storytelling, folklore and traditions. And it is customary, as well as providing a vital source of income, for families during the summer months to take visitors into their homes. Groups of women meet every arriving bus, and there is a growing number of private apartments available on the internet.

I stayed as a guest of the Basic family. The son, Ivan, works in Split during the winter (in fibre optics, and he organises the annual international FibreWeek conference at the Amfora), but in summer he runs his Never-Better apartments in one of the gleaming white stone alleys of the old town – the stones are so well polished they are slippery. Indeed, the whole town is spotless. Another legacy of the Hvar Hygienic Society? In any case, it's a joy to wake up in the morning to the chatter of locals and open the shutters over an alley no wider than a corridor and smell the salt and sunshine beneath a sky of such a brilliant blue that you will never forget it.

Ivan's mother, Margareta, proved to be an expert on island history and she told me stories each evening as we swam in the sea among the moored boats. She talked of monasteries and of the poet Hanibal Lucic; of St Stephen's cathedral – a fine example of late Renaissance Dalmatian architecture – that presides over the main square (the largest in Dalmatia) and glows like the moon at night; and she told me of the emptiness of the town during the recent war; of Vucetic, the man who devised fingerprint tests in the house on her street; and of the capers growing in abundance on the walls and cliffs of Hvar. I was invited to a family meal to celebrate her wedding anniversary. This view of the town felt a world away from the revamped hotels across the bay.

In the evening, I sat with Ivan in Caffe Gromit, a fine café-bar right on the harbour and a perfect place for watching the huge cruising yachts illuminated at night. It's also a good spot for observing the dressed-up party-goers on their way to one of the hottest venues in town, Carpe Diem, an impressively run dance and lounge bar frequented by sailing teams in Polo shirts, sheiks and mysterious Russian entourages, not to mention, in the past, Paul Allen of Microsoft and Gérard Depardieu. If house music is not your thing, you should slip across the harbour to Kiva Bar for a less fancy crowd and rock'n'roll with a cold beer. Jazz bar is also a nice spot where relaxed drinkers sit on cushions on the old-town steps overlooking the harbour.

There are plenty of reasonably priced restaurants, but the more upmarket ones can be found in the Groda district of town, on Petar Hektorovic street. Only, watch out for the waiters of the Paladini, who will sweet-talk you into parting with every penny. Instead, go to the restaurant opposite, the Luna, and relax on its lovely roof terrace beneath the stars where I opted for the delicious Lobster Lunatic, cooked in tomato, white wine and brandy sauce and served over linguine. Do also sample the paski sir, ewe's cheese from the island of Pag.

The owner of Caffe Gromit, Mislav, with a voice to out-boom Barry White, suggested I try some home-made or "domestic" (as it's known here) Dalmatian food. So we smacked across the waves on his small speedboat (dislodging a few of my vertebrae) to one of the nearby Pakleni (meaning "pine resin") islands, St Clement's, and to Bacchus on Palmizana Bay. (Dionis restaurant between the bays of Soline and Vlaka is also recommended.) Sitting at wooden tables in the shade of olive trees and overlooking the sea we were served hearty portions of kid goat's meat with potatoes and salad, followed by tasty local cheeses, fruit and patés. Also overlooking the sandy beaches of Palmizana, you'll find the sophisticated Zori restaurant, ideal for a romantic meal.

Should you want to spend a little time away from the unrelenting heat and noisy happenings of Hvar town, as I did, then take a yacht trip to the island of Vis and a jeep excursion to the lavender fields up in the hills. Both are run by Hvar Adventure, a friendly and professional group that will show you much of the breathtaking natural beauty of the island. Keen swimmers, meanwhile, can combine a day in this sparkling sea with a trip round the Pakleni islands on the Oruda boat, which takes bookings in the harbour most evenings for the trip the following day.

Back in Hvar town, amid the designer boutiques and the striking buildings of many eras and occupations (Venetian, Austrian, and French), there is still space for a gallery or two. In the 17th-century building that's home to the oldest public theatre in Europe (currently being renovated) as well as the Arsenal (once used for repairing war galleys), you'll find the Galerija Hvaroom and the Caffe Terasse, both owned by the same family. In the gallery, Maja Jelusic sells her joyfully idiosyncratic paintings of St Stephen's cathedral, while her mother runs a small flower shop. Meanwhile, Maja's brother, Marko, manages the Caffe Terasse upstairs. It's an ideal late-night spot for leaning on the stone balu-strade and gazing at the 16th-century fortress while hoping that the island will never become too expensive for those who truly cherish its beauty.

COMPACT FACTS

How to get there

Easyjet (0905 821 0905; easyjet.com) offers return flights to Split from £87. Jadrolinija (00 385 51 666 111; jadrolinija.hr) runs ferries from Split to Stari Grad every 90 minutes in high season, from 42 kuna (€6.5) per person one-way, journey time one hour and 40 minutes.

Never Better apartments (00 385 91 463 6120; never-better.net) cost from €120 per night, minimum stay a week in August.

Activities can be organised by Hvar Adventure (00 385 21 717 813; hvar-adventure.com).