Inbound tourism sees new hubs in the East and the West

KLAIPEDA - With Midsummer behind us, summer switches gears to the hotter and faster pace of the much-anticipated high season, both in the serene Lithuanian countryside and at resorts. With tourist numbers going up rapidly, the tourism sector experts assert unanimously that the worst days for the industry are in the past. It saw rampant plunges in the years through 2008 and the first half of 2010, down by up to 35 percent from the successful years.

“No doubt, the sector is over the crisis. There is a robust scramble up in the numbers, seeing more inbound tourists in the country, and considerably more Lithuanians ready to spend money for their vacation here. The upping I would estimate at 15-20 percent this year,” Evalda Siskauskiene, Lithuania’s Hotel and Restaurant Association (LHRA) director, said to The Baltic Times.

Linas Zabaliunas, president of Lithuania’s Countryside Tourism Association (LCTA), concurs with her, “We already see a 10 percent rise in countryside tourism homestead bookings. With the much-awaited European Basketball Championship coming, I expect the occupancy will skyrocket before the event.”

Who are the folks ready to end up in Lithuania for some good and maybe sometimes not so good times?
Siskauskiene says that the number of Lithuania-bound Belarusian tourists has increased three-fold. “Most of the Belarusians are commercial tourists, as they, as a rule, come here, particularly to Vilnius, being driven by one desire - shopping in our malls. I expect they will add up considerably to the tourist numbers in our largest resorts, Druskininkai and Palanga,” Siskauskiene said. With the Belarusian ruble’s meltdown, however, she agrees it might be necessary to trim down the high expectations.

The LHRA president notes that, along with the increasing tourist numbers from “traditional” countries, new Lithuania-bound travel hubs are appearing in the map. “Ukraine has come this year, quite surprisingly, as a leader in the ranking of producing the largest number of Lithuania’s inbound tourists,” she noted. It seems that tourism directions have been creeping both to the East and the West.

“Recently, several hundred British travel agents representing over 200 British travel agencies, those that we have not worked with until now, came to Lithuania and were very interested in what they saw and heard here. As the result of the visit, I, definitely, expect to see considerably more British tourists in Lithuania. Moreover, Lithuania has good air connections with the country,” Siskauskiene said.

Lithuania’s State Tourism Department at the Ministry of Economy announced recently that, in 2011’s first quarter, compared to the last year’s same period, a 21 percent increase of British tourists was reported. Last year, 1.5 million tourists in total visited Lithuania. The expected turnout for this year is as high as 2 million foreigners.
What is influencing the bright outlook? “An array of positive facets should be considered. However, the generally improved economic outlook in the world, the decreased VAT by 12 percent, from 21 to 9 percent, new air connections and much-advertised events like the International Hansaetic Days in Kaunas and the Euro Champs are among those to have played the most important roles,” the LHRA president points out.

Lithuania’s high-ranking politicians laud their timely decision to slash VAT for hotels for one year, as the primal boost for the summer’s tourist high turnouts. Though the hard-fought lower VAT is attributed as a boost, the fight for it, it appears, might not be over just yet, as Lithuanian parliamentarians, angered by growing hotel prices, contemplate again sharpening legislative knives and returning the VAT to its previous level.

“Siskauskiene, lobbying for the lower VAT, had promised to decrease hotel prices by 10 percent and employ 1,000 new hotel staffers. However, once we gave in to her reasoning and calculations, she was quick to announce that her association recommends hotels to increase prices, asserting they’ve falled behind of those at foreign hotels in competitiveness. The Seimas feels they have been cheated by her. If she does not keep her word, the Parliament will return the 21 percent VAT,” Kestutis Glaveckas, parliamentarian and chairman of Seimas’ Budget and Finance Committee, threatens.

Meanwhile, the LHRA president chides the legislators for their shortsightedness, “The lower VAT has allowed us only to keep up competitiveness in the market. The Parliament and the government ought to think about how to remove Slavic tourism-crippling hurdles. If so, they (local hotels and restaurants) would cash in on the flow of Russians, Belarusians and Ukrainians in a geometric proportion,” Siskauskiene counter-argues.

This summer, as with last year, Lithuania’s embassies in Minsk, Moscow and Kiev have been overflowing with Russians, Belarusians and Ukrainians attempting to receive Lithuanian (Schengen) tourist visas. However, still downsized due to the austerity measures, the embassies often cannot handle the swarm, often making the residents wait for the visa for weeks.
“The 9 percent VAT was a hard-fought victory that has come following hotel closures. Due to the more than half lower VAT in Latvia, Lithuania had become a transit country, as a sheer majority of foreign travel agencies had opted for accommodating foreign tourists in Latvia instead of Lithuania. We still feel the adverse consequences of the policy, as foreign tourist agencies made bookings for travels to come, applying the 21-percent VAT,” she said.

The State Tourism Department at the Ministry of Economy announced recently that, in 2011’s first quarter, a 39.4 percent increase of inbound visitors was reported compared to the same time last year. In the period, the biggest number of tourists came from Finland - up 85 percent; Spain- up 71 percent; the United States -up 68 percent; Russia - up 61 percent; Belarus - up 53 percent; Poland - up 28 percent; Germany -up 31 percent; Estonia - up 34 percent; Great Britain - up 21 percent and Norway – up 57 percent.

“Having seen a nearly 50 percent slump, inbound tourism is rapidly recovering, as we see a lot of first-timers in Lithuania. Many of them arrive to Lithuania on travel packets, staying in the country for lengthier periods,” Siskauskiene says. She says that many tourists from neighboring countries tend to combine business and leisure in Lithuania in summer.
For some the “combining” goes to awe-striking extremes. You guess right: I have in mind the rich Russians who, for their audacity, make headlines in Lithuanian dailies.

“The wishes of some Russians make jaws drop, even of the very seasoned local realtors. Some can point to a house or an apartment block while taking a stroll, and say, ‘I want it.’ Quite recently, when I heard exactly this, I hurried to say to the millionaire that the house has an owner. Nevertheless, he shook his head stubbornly and said, ‘Tell him I am paying 3 million litas (nearly 1 million euros) for it immediately.’ It sounds insane, but, I guess, I will have to get in touch with the owner and tell him about the proposal. Frankly, the deal would be really lucrative for our agency. Since the house, from what I learnt, is used only for summer leisure, the owner might give in to the mind-blowing proposal,” Ona Mackeviciene, owner of Palanga-based real estate agency Rolijona, told the daily Lietuvos Rytas.

Even if tourism bounces back to the pre-crisis levels, the LHRA president warns that Lithuania has never fully unleashed its tourism potentials. “Like Latvia and Estonia, Lithuania has not yet prioritized tourism as an economic branch of state importance. We have long been futilely fighting to give tourism export’s benefits. However, the government insists that tourism is a commodity of domestic consumption. Like Latvia and Estonia, Lithuania has not yet established a Convention Bureau that would focus on conference tourism. This is where we are lagging. Regrettably, Lithuania lacks a clear direction in the tourism development,” Siskauskiene maintained to The Baltic Times.

In March this year, the World Economy Forum announced a 100-country list of the most attractive tourism destinations. Such important criteria as tourism legislature, environment protection, safety, health and hygiene, air transport infrastructure and price competitiveness have been taken into account. Lithuania was placed 55th in the ranking, 6 places down from the previous year, while Latvia was 51st and Estonia 25th.

If hotels, basically, benefit from the larger turnout of foreigners, countryside homestead occupancy primarily depends on purchasing power of domestic consumers. “Obviously, it [purchasing power] has increased lately, as Lithuanians tend to spend their leisure time in cosy homesteads in the countryside. We already see a 10 percent increase in homestead bookings this summer, and I believe the number will go up, especially before the hoop fiesta in the fall,” Zabaliunas, the recently elected president of Lithuania’s Countryside Tourism Association, said to The Baltic Times.

He is intending to focus more aggressively on marketing tools aimed to lure more foreign visitors to countryside homesteads. “Meanwhile, roughly 90 percent of all local countryside homestead guests are Lithuanian inhabitants, while, in Europe, countryside tourism has long overgrown national borders. Therefore, I am convinced the wave of inbound countryside tourism is just around the corner. First, the association will try to attract neighboring countries’ tourists to our countryside, and then we will look out wider, attempting to reach out to tourists from further countries,” Zabaliunas said.

He says that currently, his prime concern is the upcoming European Basketball Championship to be held in Lithuania this fall. “We are currently working on creating a homestead database, enabling foreigners to find out easily which countryside tourism homesteads are available. A countryside tourism homestead reservation system is to be started off soon. We already have foreign basketball fans who have already made some reservations,” the LCTA president said.

However, the LHRA president, Siskauskiene, utterly disagrees with her LCTA counterpart on Lithuanian countryside homesteads being attractive for hoop fans, “It is naive to expect that basketball fans will want to seclude themselves in a remote countryside homestead. They will be bored even in Druskininkai and Birstonas, two major Lithuanian resorts, where participants in a group tournament will be accommodated. Only Vilnius, Kaunas and maybe Klaipeda can live up to the expectations of players and reveling fans in terms of accommodation and good times,” Siskauskiene is convinced.
Zabaliunas asserts that demand for countryside vacations among Lithuanians is rising. “I think we are overcoming a stereotype that countryside homesteads are good only for having a wedding party or other family festivity, as more and more Lithuanians tend to choose countryside vacations,” he suggested.

According to Lithuanian Statistics, 227,500 vacationers stayed in countryside tourism homesteads last year. Of this number, 13,200 holidaymakers, or 5.8 percent, were foreigners. Breaking down the statistics to nationalities, most foreigners came from Poland, 29.3 percent of the total; Germany – 17.3 percent; Russia – 11.6 percent and Latvia – 10.6 percent of the total.