Hotels ready for EU presidency gold rush, but no scraps left for those in the sticks

  • 2012-08-08
  • By Linas Jegelevicius

UP-MARKET: Budget airlines won’t be bringing in the elegant Kempinski Hotel guests, says Evalda Siskauskiene.

KLAIPEDA - If New York and London hotel prices, at 233 and 217 euros on average, respectively, according to a trendy hotel booking site, are just too high for you, then it is high time to pack up for your trip to Vilnius which, according to the same survey, boasts hotel prices at the lower end, from 60 to 70 euros a night on average.

The anticipated opening of the posh Kempinski Hotel Cathedral Square Vilnius in the heart of the capital, now re-scheduled for the beginning of September, however, may yank the prices considerably higher, says the president of the Lithuania’s Hotel and Restaurant Association (LHRA), Evalda Siskauskiene.

“The newcomer will undoubtedly shake up the upscale accommodation segment, to which also belong such Vilnius Old City landmark hotels such as Stikliai, Narutis and some others,” says the LHRA head.
The 200 million euro Kempinski Hotel’s arrival will close the nearly five year delay of its launch. But it will not be enough to bring in hordes of well-to-do Westerners to the country if Lithuania fails to open more direct flights, says Noel Attard, Kempinski Hotel Cathedral Square Vilnius CEO.

“Lithuania needs its own national carrier if the country wants to prep up its tourism sector,” he says.
Siskauskiene concurs, saying, “Budget airlines are good, but they are of little use for Kempinski hotel-type guests, who are business-class passengers on British Airways, Lufthansa and Air France flights.”
EU presidency expectations
The Kempinski Hotel director expects that Lithuania’s EU presidency will speed up the hotel’s positive comparisons against other, same-class contenders. This task could be considerably eased by the chain’s solid inroads into the British, German and Scandinavian traveler markets, which are likely to provide the bulk of Kempinski guests for the Vilnius-based hotel.

The hotel chain has already announced that the price levels it is suggesting for its hotel in Vilnius will be 20-30 percent higher than in other Vilnius five-star hotels.
Besides the arrival of the long anticipated glitzy hotel, the Lithuanian capital is also eyeing the opening of another international chain hotel, the partly EU-financed Comfort Hotel. It is also due to open its doors in the fall.
Some media-shy local hotel industry developers are also about to complete construction of their hotels in the capital before the year winds down.

Is the line-up of new hotels in Vilnius a sign of a new tourism boom? “No, hardly not. The rush is essentially related to the strength of anticipation of the EU presidency which, undoubtedly, will turn Vilnius into a bustling spot for some time,” the LHRA head said to The Baltic Times. She added: “Developers are in a hurry to finish their projects before the 2013 presidency. Sure, the demand for hotels in Vilnius will be high. Those who possess funds rev up the pace.”
Palanga hotels are packed
Across the country, Palanga hotels, filled to 100 percent capacity with guests from as far away as Russia, Kazakhstan and Georgia, have to rely on another kind of “presidency” – the blistering summer heat that has brought in the slew of visitors.

“Nearly all hotels have been full, and those willing to book a room in Palanga have to do so way in advance. As early as a month before the planned arrival,” Alla Valuziene, director of Palanga’s Tourism Information Center (PTIC), said to The Baltic Times.

Some people, desperate to find lodging in the resort, line up at the PTIC door early in the morning, before its opening. “The question we are hearing is the same: do you have any rooms to offer?” the director says. She notes: “The center has been swarmed with phone inquires over free lodging.”
The Palanga summer season’s run-in was quite sluggish, but after picking up in the beginning of July, it has ended the month with record-number crowds.

“The abundance of guests was visible even after taking a walk through the center of the resort,” says Giedre Kvedaraviciene, president of Palanga’s Hotel and Restaurant Association (PHRA).
The private accommodation sector has also strained itself to the limit.
For Palanga’s Municipal Service Department (PMSD), the crowds are being measured in tons of collected and transported garbage. “Thus in July we scooped up roughly 150 tons of it daily, two times more than in June,” says Konstantinas Skierus, the PMSD director.

He notes, however, that the resort revelers are generally well-mannered, often older and belonging to a higher rung of the social ladder.
Somber situation in the sticks
Hotels in the countryside, far from the EU presidency buzz and the roar of the sea, are still going through hard times due to the lingering economic crunch and provincial somnolence. To make ends meet, many provincial hotels are offering extra activities. Most commonly, they rent out their rooms on a long-term basis.
“That is particularly good during winter when the occupancy rate hovers around zero,” says Dainora Vaineikiene, a hotel administrator in Alytus, in the south of Lithuania.

She regrets that the EU presidency events have been planned only in the Lithuanian capital, with some in Kaunas, but nothing is planned further out from the population centers.
“Sure, our hotels are not on par with those in Vilnius. But the events should have been spread out throughout the country to let the provinces feel the breeze of the presidency and, importantly, make some money,” Vaineikiene says.
Emigration’s heavy toll
Banga Hotel in Taurage, in the southwest, is in the process of expansion, which will add several new hotel rooms and some other premises for its restaurant and hotel. “Our hotel has not been refurbished for a while, so it made sense to cough up some money for its facelift. After the reconstruction, we will increase the room availability, from 23 to 27 rooms, and the place will become more attractive on the whole,” says Vytautas Kiminius, director of Senasis Medvegalis, which runs the hotel and the restaurant.
To cut costs, the venture is carrying out most of the work itself and invites professionals only for the most complicated work.

“The hotel business in the province is very sluggish. Domestic tourism is too slow and little developed to patch up the hotel management costs every year. Emigration has taken a heavy toll on our district as roughly 25 percent of our people have decamped over the last ten years. Emigration plagues all regions, so the number of potential clients is on the decline,” says the director.
He admits that the occupancy rate plummets to single-digit numbers in winter, but picks up to 50, or even 60 percent in summer.

“After the expansion is completed, we are planning on hiring a few more people. However, the service market situation is very complicated in Taurage region,” says the entrepreneur.
VAT hike will go against Lithuania
After the application of a 9 percent preferential VAT last year, the Lithuanian Parliament has reinstated the 21 percent tax tariff from this year, arguing that hotels had not invested the earned money into the creation of new jobs. Hotel industry representatives claim that the hike has an ill affect on the market.

“Some hotels have put their investment plans on hold. Some sacked part of their workforce in cutting the expenses. Most importantly, with the tariff, Lithuania is a lot less competitive, compared to the neighboring countries, Latvia and Estonia especially. No doubt, it will impact the tourist flows in the future,” says Arturas Vainora, director general of Centrum.
He notes that the recent VAT hike has been the fifth in three years. “In a sensitive market, this is very discouraging both for an established, and a rookie hotelier,” he says.

The National Hotel and Restaurant Association head, who is credited for the preferential VAT tax for 2011, lambasts the government decision, saying, “In our estimation, roughly 200 million litas (58 million euros) of investments, that may have reached the market with the lower VAT, are now likely to bypass Lithuania. And Lithuania’s EU presidency won’t turn things around. The government stance is simply unwise,” says Siskauskiene.