Hotels in Riga sprouting like spring daisies

  • 2006-02-08
  • By Julia Balandina
RIGA - Only the blind wouldn't know that the hospitality industry in the Latvian capital is undergoing a complete transformation. Not a week goes by without a grand hotel opening or an announcement of a new hotel project.

In 2004, Latvia had a total of 45 hotels accommodating 8,693 people, and by the end of 2005 it had 62 hotels. And according to authorities issuing construction permits, 50 new hotels are to be commissioned within the next two years. Estonians, Lithuanians and Norwegians are all scrambling to grab a share of the lucrative market.

With the number of tourists on the rise 's receipts from tourism increased 25 percent last year and now accounts for 2 percent of GDP 's and the World Ice Hockey Championship set for May, industry operators can't open their doors fast enough. As expected, hotels have responded to the rising demand by jacking up their prices.

"Some hotels in Riga have raised their prices by 10 's 20 percent, and I think it is ridiculously too much," says Mike Johnson, the general manager of Patricia Tourism LTD. "In a year or two they will be sitting with empty rooms."

Johnson isn't alone in his opinion. Over the past few months, tourism agencies have been quick to point out the city's lack of economy-class hotels, which would accommodate groups at lower prices.

Latvia's recent influx of discount-airline travelers, predominantly from England and Ireland, has drawn special attention to this market deficiency. Since fall 2004, when discount carriers Ryanair and easyJet entered the market, the number of tourists in Riga has boomed. But that's the catch: these people are here on a budget.

"Usually tourists ask for cheap accommodation, choosing hostels where the highest price for a single bedroom is about 37 euros per night," says Baiba Pigozne, a representative of the Riga Tourist Information Center. For those who prefer to stay in a four-star hotel, they should be ready to pay up to 1,000 euros per night, she adds.

But there are other options, such as renting an apartment or guesthouse.

"It's a personal choice. I guess more adventurous people prefer apartments, but business tourists 's hotels," Johnson says.

During the summer of 2004, Riga suffered from an extreme shortage of hotel and apartment accommodations, and then again during the New Year holidays, Johnson points out. The situation was even worse during 2005, he says.

The Tourism Development State Agency recently announced that the number of tourists for 2005 was approximately 3.5 million, a 20 percent rise year-on-year. What's more, the industry is bracing itself for similar growth this year.

Indeed, with the hockey championship coming in three months, there's more hardship to come. Because although new hotels are on the drawing board, realistically, it will be late 2006 when the necessary number of new rooms opens up.

"Everybody involved with tourism will be struggling in May," says Johnson. "If we didn't have enough rooms to place tourists last summer, then it will be even worse during the championships."

For all those planning to visit Riga this spring, it's already getting late to book and confirm a room. Championship or not, travel agencies recommend that tourists book their accommodation six weeks in advance during the off-season 's fall and winter - and six months in advance during the peak season, which has basically already begun. For groups over five, the confirmed reservations should be made about nine months in advance for any season.

Latvian Central Statistics Bureau data shows that hotels accommodated 290,400 foreign guests in the third quarter of 2005, which is a rise of 23.5 percent year-on-year. The country accommodated some 61,600 guests from Germany, up 28.5 percent from the same period last year 's accounting for 21.2 percent of all foreigners staying in the Baltic state.

More than 10,000 visitors from Finland, Lithuania, Estonia, Great Britain, Sweden, Italy and Russia registered in Latvia's hotels.

The number of guests from Sweden increased the most - 75 percent year-on-year. Visitors from Great Britain grew 61.4 percent, and the number of tourists from Italy climbed 41.9 percent.

On a final note, although Riga's skyline is dotted with swinging cranes and supporting rods, the trend isn't confined to the capital. Rural areas have also seen rapid development 's approximately two-thirds of Latvia's 326 lodgings are located in the countryside.