2024-07-24 00:14:35
He pointed out that the Latvian hospitality industry in the first five months of this year did not experience significant improvements compared to the previous year, with the number of guests increasing minimally. This trend, as emphasized by Kalniņš, is alarming, because in 2023, Latvia experienced an approximately 25% decrease in tourism compared to the pre-pandemic level, taking the last place among the European Union (EU) member states.
“The forecasts for this summer are also not optimistic, because there is no certainty that the number of guests will exceed the previous year’s indicators,” said the head of the LVRA, adding that the situation was mainly caused by insufficient and delayed state funding for the marketing activities of the Tourism Department of the Latvian Investment and Development Agency (LIAA). as well as the limited opportunities to attract new markets without additional funding.
“This year’s budget was adopted only shortly before the start of the active tourism season, which is unfortunately too late, besides, it is smaller than in our neighboring countries,” added Kalniņš.
At the same time, the head of the association emphasized that the hospitality industry is an essential part of Latvian exports. In order for the industry to develop and attract more tourists, timely and sufficient investments are needed. Kalniņš explained that, for example, in 2023, foreign tourists brought 1.2 billion euros to Latvia’s export balance, and with proper support, the industry could bring in an additional 200-400 million euros.
According to Kalniņš, Latvia should promote itself as a safe and attractive tourist destination, emphasizing nature, cultural heritage, hospitality and high-quality services. “Safety aspects should be especially highlighted in order to increase the trust of tourists,” said Kalniņš, adding that appropriate marketing activities could increase the trust of tourists and promote the image of Latvia as an attractive destination, thus stimulating the growth and economic benefit of the hospitality industry.
At the same time, Kalniņš mentioned that the state’s tax policy also hinders the development of the hospitality industry. Among them, labor taxes in Latvia are currently uncompetitive compared to neighboring countries, and public catering services are not subject to the reduced rate of value added tax (VAT), as is the case in most EU countries. “This has a negative impact on our competitiveness in the region and on the final prices that the hospitality industry can offer its customers,” said the head of LVRA.
LETA already announced that in June the Saeima’s Budget and Finance (Tax) Commission conceptually supported the proposal to apply a reduced VAT rate of 12% to certain catering companies whose labor costs exceed 10-15% of turnover. Companies with lower labor costs should, at the Commission’s discretion, be charged a standard VAT rate of 21%.
The commission asked the ministries to find the most objective criteria for implementing such a division.
LVRA unites accommodation and public catering companies for professional cooperation in order to improve the quality of customer service, organize the Latvian hotel market and represent Latvian hotel and restaurant business in the world. LVRA is a member of the “Hotels, Restaurants and Cafes in Europe” association.
2024-07-24 00:14:35