In tourism, forecasts for this summer are not optimistic, which is largely influenced not only by the slow growth in the number of guests, but also by the belated allocation of funding for the tourism industry as a whole, said the head of the Latvian Hotel and Restaurant Association (LVRA), Andris Kalnins, reports LETA. He noted that the Latvian hospitality industry this year in the first five months has not undergone significant improvements compared to the previous year, the number of guests has grown minimally. This trend, as Kalnins emphasized, is alarming, since in 2023 Latvia experienced a decline in tourism of approximately 25% compared to pre-pandemic levels, ranking last among European Union (EU) countries. “Forecasts for this summer are also not optimistic, since there is no certainty that the number of guests will exceed the previous year,” said the head of the LVRA, adding that the situation is mainly caused by insufficient and belated government funding for marketing activities of the Tourism Department of the Latvian Investment and Development Agency (LIAA ), as well as limited opportunities to attract new markets without additional funding. “This year’s budget was adopted only shortly before the start of the active tourist season, which, unfortunately, is too late, and it is also smaller than in our neighboring countries,” Kalnins added. At the same time, the head of the association emphasized that the hospitality sector is an important component of Latvian exports. In order for the industry to develop and attract more tourists, timely and sufficient investments are needed. Kalnins explained that, for example, in 2023, foreign tourists contributed 1.2 billion euros to the balance of Latvian exports, and with proper support, the industry could bring an additional 200-400 million euros. According to Kalnins, Latvia should promote itself as a safe and attractive tourist destination, emphasizing nature, cultural heritage, hospitality and high-quality services. “Security aspects should be particularly emphasized to increase tourist confidence,” Kalnins said, adding that appropriate marketing activities could increase tourist confidence and promote the image of Latvia as an attractive destination, thereby stimulating hospitality industry growth and economic benefits. Along with this, Kalnins mentioned that the state’s tax policy also hinders the development of the hospitality sector. In Latvia, labor taxes are uncompetitive compared to neighboring countries, and catering services do not have a reduced value added tax (VAT) rate, unlike most EU countries. “This has a negative impact on our competitiveness in the region and the final prices that the hospitality industry can offer its customers,” said the head of the LVRA. As already reported, in June the Sejm Commission on Budget and Finance (Taxes) conceptually supported the proposal to apply a reduced VAT rate of 12% to individual catering enterprises whose labor costs exceed 10-15% of turnover. Businesses that have lower labor costs, according to the commission, should apply the standard VAT rate of 21%. The commission asked the ministries to find the most objective criteria for introducing such a division. LVRA brings together hotels and catering companies for professional cooperation in order to improve the quality of customer service, bring order to the Latvian hotel market and represent the Latvian hotel and restaurant business in the world. LVRA is a member of the association "Hotels, Restaurants and Cafes in Europe".
