New adventure driving force behind travel industry recovery

KLAIPEDA - The last year marked a record-high in turnover for the Lithuanian tourism market, both in the number of travelers and money they left in Lithuania. The State Tourism Department (STD) estimates that roughly 1.75 million tourists visited Lithuania in 2011, 17 percent more tahn in 2010. An STD report says that foreigners spent 2.7 billion litas (782.6 million euros) in 2011’s first three quarters, compared to 2.9 billion litas in the entire 2010.

“I believe we can speak of 2011 as a record year, which meant the best time for the national tourism sector. We expect the numbers to be increasing from now on,” Raimonda Balniene, director of the department, said in a press report.
Growth in tourist and tourism-generated income was not only seen in Lithuania, but in Latvia and Estonia as well. “Obviously, the situation in the market has come back to the pre-crisis level. The department has contributed significantly to the recovery,” Balniene states.

However, some tourism sector experts argue that the impact of the department on the growth was minimal. “It is not very fair to rake in all credit when Lithuania’s economy is one of the most rapidly growing economies in post-crisis Europe. Besides, Lithuania hosted many international events, like the European Basketball Championship, Kaunas Hanseatic Days, the OSCE Vilnius meeting and some others, which all have had international coverage and acknowledgment. Sure, the preferential VAT for hotels [9 percent] also benefited the market,” Viktorija Steputyte, a travel agency director, said to The Baltic Times.

Evalda Siskauskiene, president of Lithuania’s Hotel and Restaurant Association (LHRA), maintains that the cornerstone in the tourist flow increase was the preferential VAT. “It has contributed most significantly to the growth. The smaller VAT has allowed Lithuania to regain its competitiveness in the Baltic market. Latvia, with 12 percent VAT in 2010, lured many Lithuania-bound tourists,” Siskauskiene said to The Baltic Times.

She denies the claims that the hoop fiesta in Lithuania in the fall of 2011 has been a major factor to the tourist increase last year. “On the contrary, for many organizers of international economic and cultural events, a big sports event, such as a European basketball championship, is a deterrence. Serious business and culture people try to avoid melees related to big sporting events which, let’s be honest, most often bring in rowdy and raucous crowds,” Siskauskiene pointed out.
The organizers of the Eurochamp 2011 had expected to draw approximately 30,000 basketball fans, but the actual turnout, of a bit over 10,000 sports fans, disappointed many.

The STD director also agrees that the European Championship has not been a boost for tourism in 2011. “Basketball is not the kind of sport that generates large sports fan turnover,” Balniene says. “The championship has spurned local tourism, and that is all,” she added.

To break down the visitor statistics, a bulk of the tourists consisted of Belarusians, Russians, Poles, Germans, Latvians and Brits. The LHRA president, however, notes that the volume of Latvian tourists shrunk by 6 percent in 2011. “It is pretty alarming, as Latvians have always been one of the main incoming tourist flows in Lithuania. As far as I know, the State Tourism Department scrambles to point out reasons why it was so,” Siskauskiene said.

Interestingly, Estonia’s tourist turnout in 2011 was composed largely of Finns, who made up half of all Estonia’s incoming tourists. “In that sense, Estonians are more lucky than Lithuanians, as Finland is an incomparably much more stable country that Belarus or Russia,” the STD director notes.

In recent years, tourist flows grew around 17 percent in Estonia, while in Latvia they surged even more – a whopping 30 percent. “During the crisis, Latvians invested 15 million lats (21.4 million euros) every year in its tourism expansion, and Estonians invested a bit over 1 million euros yearly. The year of 2011 was the first year ever when Lithuania put some money into its tourism expansion, 8 million litas. Therefore, we see the excellent result. Effectively, 2011 was the first year when tourism started to be considered a source of big income. We all see it pays back,” Balniene emphasized.
Speaking of the 2012 tourism outlook, Siskauskiene sounds pretty pessimistic. “Seimas’ decision to reinstate the VAT to the 2010 level, back to 21 percent, throws Lithuania back. Which Western travel organizer will want to plan travels to Lithuania when the VAT is smaller in the neighboring countries – Latvia’s at 12 percent, Estonia’s 9 percent, and Poles and Germans pride themselves in an even smaller number, 7 percent?” Siskauskiene asks.

VAT has been changed five times in three years in Lithuania and this, the LHRA president says, is a deterring factor. “The national tourism market is increasing rapidly; however, it is not due to the state policies,” Asta Jutaite, director general of Vilnius-based Amberton Hotel, stresses. She says the national tourism expansion strategy has little impact on the market. “The market is recovering because of other results – like a larger number of flights from Vilnius Airport, and a good choice of budget flights from Kaunas Airport.

Among several reasons why she does not see an input from the state into the recovery of the tourism market, Jutaite names the absence of a unanimous tourism policy and strategy. “It is not good for the market when they change every year. If not this uncertainty, the result would be better,” the hotel director said.
The director of the State Tourism Department is also cautious in estimating the tourism sector outlook for 2012. “It all depends on our neighbors. All our good projects could be easily marred by the conjecture that [they] do not belong entirely to us. In addition, the eurozone crisis and the threat to the euro, as well as the situation in Belarus, must be taken into consideration before planning anything for 2012,” Balniene says.

With a focus on traditional tourist flows, the Department is on an ambitious lookout for Chinese tourists. “With joint forces we are trying now to pave our way into China, working and investing in that direction a lot more than previously. It is estimated that in 10 years, the largest tourist flows to Europe will come from China. We have to fight for the ‘tidbits’ of the Chinese tourists. We have stepped our first strides in that direction already, and we expect a [strong] result soon,” Balniene said. She added: “The Tourism Department is currently engaged in looking for specialists of the Mandarin language, as well as entertainment which could be offered to the Chinese.”Another ambitious plan the department hopes for is the expansion of medical tourism. “The Ministry of Economy is to help medical institutions obtain international quality certificates. The strategy is being prepared for this kind of niche tourism. Medical tourism brings in a lot of money, and that is where our focus is. We are sure the prices for our medical services would be attractive to Russian tourists,” Balniene says.

She says Lithuania has got all the conditions to lure in tourists for medical tourism.
“We have got medical facilities that are very interested in this. They have specialists that have got expertise in dealing with foreign patients. I have in mind medical facilities in Druskininkai and Birstonas, first of all,” the STD director stressed.

Although the State Tourism Department rejoices over the sector’s recovery, Creditinfo Lietuva, a business risk management company, cautions that 15 percent of all Lithuanian travel agencies are insolvency-prone, and every tenth has unsettled financial commitments to creditors. “Every year there are several occasions when travel agencies collect customer’s money, then declare themselves insolvent, and file for bankruptcy,”  warns Alina Buemann, Creditinfo Credit Risk Department head. Star 1 Holidays, a major Lithuanian travel organizer, declared bankruptcy in 2011, bringing down a few travel agencies. This has been the most notorious collapse of a travel agency in recent years.
According to Creditinfo, Lithuanian travel agencies’ overdue debts make up 890,000 litas, going up by 80,000 litas in 2011 alone. A signal for hardships to come?

Despite the market’s shake-up in the wake of the bankruptcies, Lithuanians nevertheless are eager to accept novelties when it comes to travels and holidays, says Linas Aldonis, director general of Novaturas, one of the largest Lithuanian travel organizers. Looking at Novaturas’ first advance travel sales for 2012, new favorite summer travel destinations are turning up, he says. Among them, Sicily, in Italy, has drawn the biggest Lithuanian interest so far. In the segment of 2012 summer novelties, Spanish Andalusia and the resort of Malaga are runner-ups, while Greece’s Corse Island is third among the most popular summer destinations this year.

Croatia, Cyprus and Greek Thessaloniki, the director says, are slightly behind in the list of the most popular new summer holiday destinations in 2012. “The first ten days of advance sales is, certainly, a short period of time from which to make exact conclusions. From our experience, however, we have noticed that the first trends often reflect quite well the sales trends and results for the entire season. The leadership of Spanish and Italian resorts does not [come as a] surprise, as Lithuanians tend to choose them as well-known holiday destinations,” Aldonis said.

He says Novaturas’ expectations are high from Cyprus in the segment of lesser known travel destinations. “Having surveyed nearly 2,000 of our Web site visitors, we see that Cyprus is one of the most alluring travel destinations in 2012,” the Novaturas director says. Among the widely acknowledged traditional summer holiday destinations, Turkey stands out in the group, with Bulgaria a runner-up and Crete finishing third. “We are a bit surprised to see the Egyptian Hurghada resort be a frequent choice for 2012 summer holidays. Until now, it has been a major winter holiday spot. It seems, however, that a large part of Lithuanian tourists choose it willingly for summer as well,” Aldonis noted.
He also notices that, in deciding on the advance summer travel sales, many Lithuanians have opted to go on holidays in late summer, or early fall, instead of spring. “It means that the time of holiday planning draws out even to 6-9 months, instead of 3-4 months. That is also a bit surprising,” the Novaturas director says.

Algis Brazionis, director of Guliverio keliones, a travel organizer, says that the last year was very good. “We have seen a 25-30 percent increase in travel bookings in 2011, compared to 2010. Simply speaking, Lithuanians started traveling again. Most of them opt for making travel arrangements in advance. It is a sign that people feel confident about their financial situation. Also, it says that people are convinced that Lithuania is on a steady path of recovery,” Brazionis said to The Baltic Times.

He says he is slightly surprised by the increasing popularity of bus travel to such far-off countries like Italy and Spain. “Turkish and Egyptian resorts seem to top the most popular holiday destination charts in 2012 as well. With the unrest in Egypt in the beginning of 2011, travels have plunged considerably, but with the situation improving there, the popularity of the Egyptian resorts came back,” Brazionis says.

In the luxury travel segment, he says, Thailand has been an unchallenged leader for many years.
“With the holiday costs in Thailand dropping, that destination sees slightly increasing numbers of Lithuanian tourists every year,” the Guliverio Keliones director says.

In the popularity list in the luxury segment, Thailand is followed by India, the director says.
He notices, however, an increasing Lithuanian interest in Central and South American countries.
“Among the offered luxury travels, Mexico especially draws the attention of Lithuanians,” Brazionis notes.
Asked whether it is related to the Mayans’ predictions on the End of the World, he snickered: “Maybe. However, the people who bought the travel [packages] did not say anything about it.”