Easy access key to investment

  • 2011-05-25
  • By Matt Garrick

POWER CENTRAL: Kaunas Town Hall in springtime, where a new mayoral cabinet is getting on with business.

KAUNAS - Lithuania’s second city, Kaunas, has of late thrust aside its reputation as having a downtrodden economy, as booms hit several sectors, from hotels and restaurants, to tourism, retail and construction, bringing renewed vigor into the city.
Growth in these sectors can be attributed to a number of factors, including rising numbers of drawcard tourist events, and most profitably, a high level of accessibility for foreign visitors to the region since low-cost air carriers began flying to the city in 2010.

Freshly inaugurated mayor of Kaunas and former orienteering expert Rimantas Mikaitis has claimed the opening of the low-cost air service base of Irish-owned Ryanair in Kaunas last year, the first of its kind in Eastern Europe, has resurrected the town from the brink of collapse. “Our Old Town was nearly dead, and now tourists have helped it very much. Small businesses and enterprises feel quite good already after one year,” he relayed.
“Galleries, souvenir shops, they were happy starting from May last year. It was a very positive decision to get Ryanair into Kaunas.”

Hoteliers and restaurants have reported large upswings in rates of occupancy and patronage for 2011, with statistics showing the highest rates since well before global recession in 2008.
“This year, Kaunas hotel occupancy [rates] increased by six percent in January compared to January in 2010, and 10 percent in February, in comparison to February 2010,” said the managing director of the Lithuanian Association of Hotels and Restaurants, Egle Dilkiene. “Ryanair flying there has improved the situation. We have been told by hotel industry entrepreneurs in Kaunas: it keeps increasing.”

With some of the largest events in the city’s history taking place over the 2011 spring and summer months, commercial sector markets are expected to continue rising. The first of such events, International Hanseatic Days, a gathering of members from former Hanseatic Leagues of Europe, held from May 19 until May 22, brought delegations from 86 cities of different countries around the continent into Kaunas.
During the four-day medieval spectacle, over 100 events took place in multiple locations around the city, watched by thousands of tourists and locals alike.

“We expect more and more people from outside the country will come for these kinds of events. We will attract more, and we will be building infrastructure for our guests,” Mikaitis told The Baltic Times.
The second massive-scale event on the city’s agenda will be the finals of the European basketball championships, EuroBasket 2011, to be played at the still-to-be-completed Zalgiris Arena in September. The event was expected to fill a majority of the 17,000 spectator seats on offer per day for the five days of the competition, having already sold 80 percent of available tickets.

Officials have speculated the benefits to Kaunas tourism sectors caused by individual spending during the event could be grand. “We could presume an ordinary fan would spend, per day, around 100 euros for their hotel, and on average some 15 euros for lunch, 10 euros for drinks, 15 euros for dinner and 20 euros for souvenirs and entertainment. That would make about 150 euros per day. That’s 750 euros per person in five days,” estimated Public Relations Manager for EuroBasket, Rytis Sabas.

Even after the EuroBasket championships have finished, the new arena is expected to continue drawing a steadily heavy income for local businesses, as hopes are it will become a new feature attraction for the city. “It’s not only for sports. It’s for culture and concerts as well. But we can expect more sports tourists,” relayed Mikaitis.
“After EuroBasket the arena will be used for the LKL (Lithuanian Basketball League), the BBL (Baltic Basketball League), the VTB (United League with Russian, Lithuanian, Ukrainian, Latvian, Estonian teams) and Euroleague games. The people of Kaunas are true fans, and they’re attending basketball games in large numbers. Kauno Hale, the old arena, was usually sold out when [local team] Zalgiris played,” affirmed Sabas. “The Zalgiris Arena will be profitable.”

Although due to funding problems, which led to completion deadlines for the Zalgiris Arena construction process being missed, a spokesperson for the construction company in charge, Vetruna, has stated optimistic horizons are opening to Lithuanian firms such as themselves, as the local market begins to upturn. “Despite the fact that economic recession sank the construction market to the deepest bottom and sent a lot of companies to bankruptcy, we see quite bright perspectives to rise from this bottom,” said Vetruna spokesman Dzeraldas Kauneckas.

Indeed, prospects for Lithuanian industries to recover from any recession slump appeared to be fully possible, with recent figures from Statistics Lithuania showing month-to-month retail turnover in the country had increased by 15.8 percent in March, and over one year, “the turnover of retail trade enterprises, except for those trading in motor vehicles and motor cycles, increased by 4.1 percent at constant prices,” reported news outlet New Europe.

“The worst time has passed. Starting with the first spring weekend, we could see positive signs in the labor market,” said Mikaitis. “Not only from figures, but from people; we can feel it. From business people, from those who were getting new proposals for better jobs with better salaries and so on. Head-hunters were looking for people. This is just after a two-year period when nobody proposed new good positions. Now we can feel that the situation is getting better.”