EU countries, led by Latvia, progressively recoup and revive their tourism sectors following the pandemic's impact.
In the heart of the Baltic region, Latvia's tourism industry is grappling with a challenging situation. The industry, a significant contributor to the country's economy, is seeking strategic support and tax reductions to bolster its financial stability.
The potential loss of the tourism industry is a serious concern for entrepreneurs, with the number of tourists in Riga, the capital, suggesting a decrease in tourist activity. Foreign guests' overnight stays in Latvia have decreased by 26% compared to 2019, painting a stark picture of the industry's current state.
To aid the recovery of the tourism sector, Latvia has implemented several strategic support measures. These include increasing the marketing budget to promote Latvia as a tourist destination, reducing VAT on catering services to lower costs for hospitality businesses, and enhancing air connectivity to attract more visitors. These measures aim to boost visitor demand, enhance visibility internationally, and make the sector more competitive and attractive.
The rebound in tourist arrivals, supported by improved air travel links, has contributed to a 16% year-on-year increase. However, the start of the 2021 season has been weak, highlighting the need for continued support.
If the government does not provide the necessary assistance, the tourism industry in Latvia may not survive another winter. Industry representatives suggest reducing VAT on food to 12%, similar to many European countries, to make businesses more sustainable. Many entrepreneurs risk losing their businesses without government support.
The main problem for the Latvian tourism industry is the lack of strategic support. The situation is urgent and requires immediate action. The potential loss of the industry could result in lost jobs, taxes, and investments. Coastal resorts, which rely heavily on the summer season, are particularly struggling. Staff is leaving, and seasonal workers are not staying in the industry.
The Latvian tourism industry is experiencing a more significant decline compared to other EU countries. Despite a lower decline in Estonia, Latvia's industry remains at risk of collapse without government intervention. The industry's stability is still elusive, and the weather, unfavourable for tourism, has not helped matters.
In summary, Latvia’s strategic support for tourism recovery centers on fiscal relief (VAT reduction), increased marketing efforts, and enhancements in air connectivity to attract more visitors and strengthen the sector post-pandemic. The industry's survival hinges on the government's ability to provide the necessary support, ensuring the industry's continued contribution to Latvia's economy.
[1] Source: Latvian Tourism Development Action Plan 2021-2025 [2] Source: Central Statistical Bureau of Latvia [3] Source: Riga International Airport [4] Source: European Tourism Association (ETO) [5] Source: Latvian Association of Travel and Tourism Agencies (LATTA)
[1] The tourism industry's recovery in Latvia is largely dependent on the government's provision of strategic support, such as tax reductions and increased marketing efforts, to boost visitor demand and make the sector more competitive.
[2] Amid the challenging situation, the potential impact of a decline in the tourism industry on entrepreneurs is evident, as shown by the decrease in the number of tourists in Riga and the 26% decrease in foreign guests' overnight stays compared to 2019.
