Evalda Siskauskiene, president of Lithuania’s Hotel and Restaurant Association (LHRA), is a well-known and well-connected person in the food and hospitality sector. Having run three restaurants in the past, and in making decisions at the helm of LHRA, she combines a personal entrepreneurial experience with the practical facets of the challenges Lithuanian hoteliers and restaurateurs deal with. Siskauskiene agreed to answer questions from The Baltic Times.
As Palanga, perhaps quite deservedly, is dubbed Lithuania’s capital of summer, how do the resort’s hotels and restaurants stand up against other, similar establishments in the region?
Well, if I were first to compare Druskininkai and Palanga, Lithuania’s two largest resorts, the former does a lot better, as it has a very well developed sector of local tourism and wellness services. Therefore, Druskininkai is not affected at all by seasonality, which is still a major issue for Palanga. On the whole, Estonia’s and Latvia’s resorts do a whole lot better for a single reason- a lower VAT. I remember well before the 2008 downturn, we’d collaborate very closely with the Latvian and Estonian resorts. For example, as a joint project in efforts to market the Baltics as a single market, we’d put out several booklets about the resorts. But with the VAT’s steep rise for hotels in Lithuania [from 9 to 21 percent] in 2009, the cooperation started working against the Lithuanian interests, so we cut it out. With the VAT hike, all travel agencies tried to avoid Lithuania and lodge all the guests in Latvia and Estonia instead. After the lawmakers voted for preferential VAT for hotels in 2011, I was hoping that things could be turned around, but it was not the case. The standard VAT of 21 percent for hotels was reinstated last year.
But the MPs argued that the hotel tax privilege had failed to achieve its goal – to boost the sector.
That is sheer nonsense. I am dumbfounded that even officials in the economy and finance ministries juggle with the numbers. So can one expect that the parliamentarians will see the gist of this? In fact, the VAT decrease has boosted the occupancy of our hotels and restaurants by some 13 percent. Speaking of competitiveness, Lithuania is in a very disadvantageous situation. It is enough to say that the average VAT for hotels and restaurants in Europe is 10 percent. Taking into account that the bulk of the traffic flow in the sector, around 70 percent, is export, i.e foreign tourists, we’re cutting the branch on which we all are sitting, to speak illustratively. It is a kind of mockery that the VAT level has been changed four times over three years. This is one of the reasons why some major hotel projects stall. For example, there are signed letters of intent with Hilton, but, namely due to the instability in the taxation legislation and, therefore, banks’ unwillingness to give loans, no one so far has come forward to pursue the investment.
Speaking of major hotel chains, like Hilton, there are very few of them in Lithuania. What is to blame for that?
Well, the answer is the same: Lithuanian taxation and, therefore, uncertainty for investment. Sure, the seasonality and small market also have to be taken into consideration. Sometimes I doubt whether something will change for the better in the near future. Look, we still do not have a national tourism strategy, and there have been perhaps eight different economy ministers while I have been in the LHRA. I can just reiterate what I’ve said hundreds of times: there must be an institution directly in charge of popularizing Lithuania abroad. But our officials believe that there is no need for it. Instead they put out dozens of glossy, expensive brochures and believe the work is done. It isn’t! We could envy the Estonians who, every year, set a separate line in their budget for popularization of their country. I believe they allocated some $6 million for that this year.
What is the respective number in Lithuania?
A mere $200,000. You cannot even make a decent video presentation with that money. My estimation is that tourism funnels some $2 billion into the national budget every year, but the attitude we show to it is tepid.
Lithuania boasts of having launched its national air carrier, Air Lituanica. But does it, as well as those foreign budget airlines, do the job in luring the well-to-do, service-pampered foreigners?
I’d disagree that this is an obstacle for people to reach Lithuania if they want to. Do not forget that with the airlines, we also have SAS, Lufthansa and some other major airlines. But the problem is the scarcity of flights, which is a result of an insufficient popularity of Lithuania. I believe that Vilnius Airport has to be a hub for traditional airlines, especially with the intentions to develop conference tourism in the capital.
Budget airlines should be based in Kaunas and Palanga.
The disparity of Lithuania’s regions is a major issue for the government and, surely, for the hotel and restaurant sector.
Indeed, it is. Vilnius gets a large part of the tourist traffic while other towns, in that sense, languish. Look how the increased air traffic to Kaunas had boosted the economy in Kaunas. At the peak of the numerous flights, the until-then deserted Laisve promenade has bustled and hustled. And with a part of the flights gone, the city is again becoming stagnant. For Nida and Palanga, seasonality is the killer. In fact, if the VAT won’t be lowered, I believe that some hotels on the coast will be forced to refurbish their hotel rooms into housing units for rent.
What can the Baltic resorts do to avert that?
There’s no single answer. I’d say it is a very weird situation where, for example, in Palanga, only the most luxurious hotels do the best. Meanwhile, the rest, two-star and three-star hotels, struggle, unable to compete with them. In addition, the private sector that has of late started for guests, providing breakfast and some other services, has hammered another nail. So what I now see happening is that the three-star hotels are slowly being turned into accommodation for everyone’s short-term or long-term rental.
A new hotel classification has gone into effect in Lithuania. How will it affect Lithuanian hotels?
We needed to have it comply with the new European hotel classification regulation. I believe it is a good thing, [it is] quite liberal. And, importantly, it encompasses both the Baltic and Nordic hotel markets; therefore it can be marketed as a single unit. The previous classification requirements were often too stringent and sometimes made little sense. Like the necessity, for a three-star hotel, to operate a restaurant until 10 pm. To comply with the regulation in order to maintain the three-star classification, some hotels in Vilnius had to open restaurants in their cellars. No need to say, they were empty all the time. Now for the hotels, it is enough to provide breakfast to keep the classification.
Since you also represent restaurants, I want to ask you a couple of questions in that regard. Seeing new restaurants popping up in Vilnius, sometimes I can hardly stave off the impression that most with a business idea start a restaurant.
(Grins) Indeed, a good observation. Even during the economic crunch, restaurants would close and open on the same block. That would happen against the relentless statistics: nine out of ten new restaurants usually are shut down within a couple of years from when the first dinner is served. The striving to launch restaurants was, and still is, pretty weird, even to me. In fact, a big part of the visitors I meet in my office inquire about free premises for the activity. And there are few of them to be offered. I’d run three restaurants in Vilnius over the past ten years, so I am well aware of the peculiarities and difficulties of the business. It seems that most restaurateurs don’t.
What peculiarities do you have in mind?
Well, for example, as weird as it sounds, you cannot always find quality products in Lithuania. For example, the best restaurants bring in fish and seafood from France or Italy, not from the local markets. The same when it comes to rabbit and lamb. When the season is over, you won’t get fresh rabbit or lamb meat here. French meat markets are like five Lithuanian Maximas [major supermarkets] in size and have an astonishing variety of meats and methods in their processing.
Can a gourmand try out any world culinary art in Vilnius?
I reckon not yet. Our market is too small. Sure, we’ve got a variety of cuisines, but their quality is sometimes in doubt. But, generally, it’s very encouraging to see that the dining and food preparation culture is strongly improving in Lithuania. Some sommeliers, for example, can already afford extensive travel and introduce the novelties and trends to local restaurateurs. Also, gourmand clubs are being established, another sign of the growing culture. But this could be said only of Vilnius.
But, nevertheless, it seems Chinese restaurants do best in Lithuania.
Asian restaurants, as do McDonalds and Coca Cola, heavily use glutamates in their products that target our taste buds. In other words, the substance-rich sauces spur the appetite. And, sure, the price factor also is important in choosing the cuisine. Besides, Asian restaurants, unlike most of the other new restaurants whose quality fluctuates due to the skills of a particular [work] shift, tend to provide a quite similar food quality.
And here we come to another problem: a shortage of our own excellent chefs. We do not have a decent school for chefs and their teachers. Our association is about to start organizing chef courses to those willing to improve their culinary skills. Unfortunately, most of the teachers of would-be chefs are coming from the Soviet era. It is needless to say that one can expect them to be cognizant of the Italian or French cuisine specialties.
Interview by Linas Jegelevicius