Baltic Hospitality: Satiated with room space - for the time being

  • 2003-11-27
  • By Steven Paulikas
VILNIUS - While a quick survey of the Vilnius skyline reveals a panorama of intensive change, perhaps the most important alteration in the city's landscape of interest to visitors as well as city managers this year is the mushrooming in hotel capacity.

Although experts agree that last year the Lithuanian capital was lagging behind its Baltic neighbors in the hospitality industry, with abnormally high occupancy rates and poor diversification in the market, the hotel scene in Vilnius now appears to be maturing.
"One of the most remarkable things going on in the city right now is the huge number of hotels that have opened," said Nijole Beliukeviciene of the tourism division in Vilnius' municipal government.
"The number of rooms available has increased twofold in recent years. Whereas just a few years ago we only had 2,500 rooms, we're now reaching 5,000," she said.
This spring saw the opening of hundreds of hotel rooms across the city, from the Reval Hotel Lietuva, which has become the largest hotel in the area, to more modest establishments that will cater to more modest travelers.
In all, no less than 10 hotels opened their doors to guests for the first time in the second quarter of this year, the traditional season for hotel openings.
The market also appears to be correcting an earlier defect in which a glut of high-priced establishments crowded out more affordable accommodation. Smaller operations such as Ecotel in the suburb of Zirmunai, which greeted its first guests this spring, hope to cater to less well-off travelers or those uninterested in breaking the bank.
Ecotel has space for 322 guests, and its room prices are as low as 158 litas (46 euros).
This increase in economy hotel space in Vilnius is essential to the development of the city's tourism industry as a whole, experts say.
In 2002, the largest number of tourists that paid the city a visit according to country were Polish, and the majority of these visitors were of material means comparable to those of Lithuanians - i.e., few of them could afford to stay in one of Vilnius' fancy hotels.
Another key development in Vilnius' hospitality industry has been the expansion of quality conference space - an absolutely essential attribute to market the city a viable venue for large group meetings.
The largest facility to appear this year was the massive conference center at the Reval Lietuva, with capacity for 1,000 guests.
"The conference center has exceeded all our expectations," said Reval Lietuva's general manager Juha Mahanen.
According to Mahanen, the recent expansion of conference space in Vilnius, including the facility at the Radisson SAS that opened in mid-November, has finally allowed the city to compete both for local business and for major international meetings.
And city officials are eager to promote Vilnius as a conference destination.
"We are hoping that Vilnius will become a natural conference city. We are already seeing a steep increase in conference business, and the people I have worked with who have participated in conference here have seemed to be highly satisfied," said Beliukeviciene.
In spite of the conference facilities boom, industry insiders claim that immediate demand has largely been met.
"I wouldn't open a new conference center for the next three to five years," Mahanen said.
In terms of the prospects for overall hotel capacity growth in the city, the consensus among experts holds a mixed forecast.
While a modest decline in demand this year, combined with the surge in supply, would spell a slow-down in hotel-capacity expansion, the prospects for sustained economic growth in the Lithuanian capital mean that a medium-term lull could eventually yield to renewed construction and renovation.
Mahanen pointed out that his native Helsinki, a city the same size as Vilnius, has three times the hotel capacity of the Lithuanian capital.
"I think that with the Novotel we will be meeting the quota for the next couple of years. But after that I'm really confident that the market will grow once again," he said.
Yet with the recent dearth in hotel rooms that had placed a frustrating limit on the development of the city's tourism potential, the recent surge in Vilnius' hotel industry is providing the residual benefit of allowing the tourism industry of the city as a whole to expand.
"The development of hotels is something that we have been agitating for quite a while," said Beliukeviciene.