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Baltic Hospitality: Hotels need state cooperation to boost occupancy

  • 2003-11-27
  • By Elizabeth Celms
RIGA - Despite the strong growth in Latvia's hotel industry over the past year, hotel owners and managers complain that the government is falling short in its efforts to promote Latvia as a tourist destination and to develop a national tourist-accommodating infrastructure.

The development of a strategic national tourism plan, which includes transportation, cultural and seasonal attractions, leisure activities, restaurants, hotel accommodations and advertising, should be the driving force behind a thriving hotel industry, and its absence in Latvia is clearly the biggest criticism of hotel directors.
For until this cohesive business plan is fully drawn up and implemented, they say, the occupancy of Latvia's hotels will continue to lag behind that of its Scandinavian and European competitors.
According to Charles Otter, sales director for the Hotel Radisson SAS Daugava, Riga's hotels have an annual average occupancy of approximately 45 percent. Comparably, Stockholm has an average of 80 percent.
"You can't bring another hotel in until you have more airlines coming into Riga, clear up visa issues with Russia and develop strategies for low season business," Otter said.
"If you don't have the government supporting tourism, its not reasonable to open more hotels - not until hotels have a higher occupancy."
Although the average occupancy of Riga's hotels is almost half that of its Scandinavian counterparts, travel to Latvia has increased over the past year. According to a survey conducted by the Central Statistics Bureau, the number of foreign visitors to Latvia increased by 7 percent in 2003. Out of the 48 percent of visitors that stayed in Latvia longer than 24 hours, 40 percent were accommodated in hotels.
Arild Sjodin, who managed the Park Hotel Ridzene for four years, accounts this increase to growth in the Baltic and Russian economies, as well as the fact that the Baltic states are a new, and therefore interesting, region.
"The knowledge of the Baltic region is low, so people are interested," Sjodin said. "The EU and NATO also have much to do with [tourism growth]. The EU stamp means that it now safe to go to the Baltics."
The development of the Baltic economy and its path towards EU membership has boosted local tourism significantly. Of the total number of visitors in 2003, 83 percent came to Latvia by road, according to the Central Statistics Bureau.
With the current EU plans to develop Latvia's roads, railways and transportation system, hotel owners are re-evaluating the local tourism market.
This is especially true for smaller, privately owned hotels. Unlike the two international chains Hotel Radisson and Best Western, most of Latvia's independent hotels lack the money and the channel systems to make overseas advertising a priority.
Entrepreneur Juris Balodis, who opened a small rural hotel called Lacu Miega in Ligatne two months ago, is focusing his advertising entirely on the local market.
"All of my ads have been for local people," Balodis said. "The clients are mostly companies coming from Riga for seminars or tourists interested in the nearby wild animal park. For a small place like us, it's easier to go local. However, for many small Latvian hotels it's still a foreign concept."
To a large extent, Latvia's regional tourist development remains in its infancy. The Baltic states have not yet achieved the middle-class luxury where people can afford a few days for travel and leisure.
Yet statistics show that this is changing and that local tourism is a steadily growing market.
"What we, and especially politicians, forget is that when developing a tourism infrastructure we're not doing it for only tourists but for locals as well," Sjodin said.
"It's money that's going to our citizens as well, who are here 12 months a year."
The balance between the big international chains and the more regionally geared independent hotels will continue to foster competition and growth within the industry. While chain hotels can afford to invest more money in international marketing, private hotels have the flexibility to change their prices, image and advertising campaign to meet the desires of local clients.
As the general welfare of Latvia continues to increase, the future for both international and private hotel venues looks bright.
Yet hotel directors agree that only when the government, with help from the EU, develops a strategic national tourism infrastructure, can Latvia match the success of its Scandinavian neighbors.
"Politicians need to understand that this country is a business," Sjodin said. "We need to be organized for the structure to go the right way - we need to have all the right horses. This is the challenge for Latvia."