LCB Archive Update
On July 30, a meeting was held with the representatives of the tourism, hospitality,\n conference&event organizers industry and Andris Teikmanis, Head of the Office of the President of Latvia and Adviser on Economic Policy issues Alise Pika. Janis Astahovs, chairman of the board of Latvia Convention bureau was present at the meeting.
The issues raised by the industry at the begging of the month to the President, the Prime Minister and the Governor of the Latvian Bank in an open letter where discussed, including information about:\n
• the current situation in each industry segment;
• competitiveness of the sector in the region;
• employment in the sector;
• industry multiplier effect;
• cooperation with state institutions and how to make it more effective;
• the effectiveness of the available support instruments;
• general agreement and self-organization of the industry.
The participants of the meeting emphasized the huge contribution of the industry to the export of Latvian services, its social role employing more than 30 000 workers and seeking to preserve jobs. The representatives of the industry agreed that - in order to successfully mobilize the Structural Funds for recovery, it is important for the government to define that tourism is one of the sectors most affected by the COVID-19 crisis.
Head of the Office of the President Andra Teikmanis: “Tourism and its related services sector is part of the success of the export potential of the Latvian economy. In recent years, it has provided Latvian cities and regions with both new jobs and innovative services, so it can not be forgotten at a time of experiencing the deepest economic performance drop. The industry must be helped to survive this time so that we do not lose competitiveness in the long run Baltic neighbors.”
Tourism and hospitality industry currently is experiencing the worst crisis in history:
• 90-100% decline in economic activity in both inbound and outbound tourism;
• 90-95% reduction in the number of guests served in Latvian accommodation sector (based on STR Global data - 3rd sharpest decline in Europe);
• 2nd largest number of granted benefits (12,870 employees, according to SRS data on 07/06/2020);
• In 85% of companies operating in the sector, mortgage loans have been taken out.
International tourism generates almost 5% of Latvia's GDP and has been so far significant contribution to Latvia's export balance, has made one of the largest investments in services in the total value of exports, reaching the historically highest volume in 2019; it is one of the most important makers of country’s image.
In Latvia, as elsewhere in the developed world, the importance of tourism in the national economy can be assessed not only by direct economic return. The multiplier effect of the tourism industry in Latvia also promotes local production demand for food, beverages and other goods and services produced in Latvia. The most direct way is related to the preservation of Latvia's material and cultural heritage, which is provided by the local craftsmen, home producers and employees in other industries. Indirect effects certainly include the transport sector, passenger transport, as well as a range of self - employed persons (tour guides, event organizers and managers etc.).
The most difficult situation is for medium-sized and large tourism companies, which provide their services throughout the year, employ their employees on a permanent basis and are the largest taxpayers.
The European Commission, the Organization for Economic Co-operation and Development (OECD) and Fiscal Discipline Council has recommended that countries provide support to the sectors most affected by the crisis. Also, in a statement made by The Confederation of National Associations of Hotels, Restaurants, Cafés and Similar Establishments in the European Union and European Economic Area (HOTREC) and its social partners, the role of value added tax (VAT) is emphasized as one of the best solutions to restore growth in the sector.
On March 6, 2020, a Crisis Management Committee was established on the basis of a joint initiative by Confederation of Latvian employees (LDDK), the Latvian Hotel and Restaurant Association (LVRA), Latvian Association of Travel Agents and Operators (ALTA), Latvian Congress Bureau (LKB) and Latvian Restaurant Association. Taking into account what is happening in the industry, Latvian Event Producers Association, Latvian rural tourism association “Lauku ceļotājs", Latvian Traders Association and tourism cluster "Enter Gauja" has also joined the committee. Committee is supported by the Union of Local Governments of Latvia.