No, it's probably just a hotel owner trying to recover some of the business
he's lost because of the war and bad publicity.

I was in the Red Sea in November on a Livaboard and also at Sharm El Sheik
and there was no evidence of any issues related to the current war in Iraq,
except for the drop in tourist numbers, much as in the same way that some
people are still wary of travelling to parts of former Jugoslavia following
the conflict; however my wife and I and her father drove from England to
Croatia via France, Belgium, Holland, Germany, Austria and Slovenia in July
and we encountered nothing except friendly, helpful and welcoming people in
all these countries.

BTW, the diving in Croatia is excellent.