Tourism industry will need 3 years to recover after Covid-19 pandemic - Mogotel

RIGA - The tourism industry will need three years to recover from the impact of the Covid-19 pandemic, Ivans Dokicans, head of development at Mogotel hotel operator, told LETA. 

The Mogotel representative indicated that this summer and winter is going to be difficult for the tourism industry in Latvia and the whole Baltics, with many hotels even postponing reopening to next year. 

Dokicans said that if the situation in Ukraine stabilizes, which he hopes to happen soon, the tourism sector will start recovering as well, but that a full recovery would take three years. 

"Let's put it that way - it will not get worse after the Covid-19 situation. This is clear. From March 13, 2020 to June 15 hotels' occupancy rates were very low - the occupancy rate of the only hotel operating in April was roughly 3 percent. The current situation cannot be compared to the pandemic period. People keep traveling, holidaying and local residents of Latvia are staying at Riga's hotels more and more often. Before Covid-19, Latvians made up around 3 percent of the total number of guests at Riga's hotels, but now they are in the top-three. Lithuanians, Estonians and Latvians are the three main customer groups both in the corporate and tourist segment," said Dokicans. 

The Mogotel representative noted that rising costs are currently causing one of the greatest problems, especially for SPA hotels that consume a lot of electric power. 

"Energy prices represent a major challenge for the whole industry. But it is not just energy prices, food prices are also rising, and this is having a direct impact on hotels that provide food services to their guests. Labor costs are growing, and the situation in Latvia is particularly worse because we are a country with very high labor taxes - they are higher than in Lithuania and Estonia. Food here is definitely not cheaper than Estonia and Lithuania and energy prices are the highest in the Baltics. All these components increase costs considerably," the Mogotel representative said. 

Dokicans added that there are many problems in the tourism industry that have to be dealt with. 

"Before Covid-19 and the war, we used to be a transit point for goods, commodities and people who flew from the east to Europe through Riga. This greatly benefitted the airport and also contributed to the tourist traffic. The situation has worsened now, because we are no longer a transit point but rather a dead end. It is important to figure out what will happen with Rail Baltica, it is essential to advance this project as it will resolve the problem of the dead end," Dokicans said.