Rural tourism growing but problems from unfair competition

More and more tourists are discovering the charms of the Latvian countryside, but their hosts are increasingly plagued by unfair competition and mounting bureaucracy, says Lauku Ceļotajs (LC), which represents hundreds of countryside entrepreneurs running guesthouses, rental properties and attractions.

The results of the 2017 season were discussed at four regional entrepreneurs' seminars run by LC, which identified current areas of concern.

"This season in all regions the season has been stable in terms of number of tourists... however rural tourism entrepreneurs now perceive specific threats and trends that have a detrimental effect on the market and entrepreneurship," LC said in a statement.

Municipal companies compete with private sector

Rural tourism entrepreneurs in several municipalities of Latvia reported on situations where they found themselves in competition with the municipality in which they were located.

"Such behavior distorts the market and poses a risk to the existence of local business," said LC.

"Municipalities will say that local businessmen are unable or unwilling to secure a successful tourism offer. However, this excuse does not withstand criticism, because after a failure of one entrepreneur, one can not generalize the private sector as a whole. For example, Sigulda City Skiing is currently managed by the municipality, which results in a city competing with its own entrepreneurs. Similarly, in other districts there are similar examples: the municipality leases premises for events (e.g. Burtnieks) at a significantly lower price than the entrepreneurs of the surrounding area, or even opens its own hotel (Rezekne), thus reducing the volume of business in the surrounding area. The largest camping site in Ventspils has been owned by the municipality for years. There are also examples of tourism services owned by state-owned enterprises that are in contradiction with existing legislation and business logic. What chance is there for entrepreneurs?"

The umbrella organization goes even further, alleging that anti-competitive collusion is taking place among officials to put privately-owned businesses at a disadvantage or run them out of business altogether.

"In a number of cases, entrepreneurs who dare to express their dissatisfaction... have observed a coincidence of circumstances," LC said.

They cite an example of a road in appalling condition that was paid to be repaired by a private country tourism entrepreneur so that clients could maintain access.

"The road is repaired, but shortly thereafter, employees of the local departments of the various controlling agencies come to the employer with a grossly unfavorable attitude to finding mistakes and punishing them. This suggests cooperation between local authorities and local controlling officials, with the aim of eliminating entrepreneurial initiatives," LC said.

As if that is not enough, legal businesses must also cope with competition from unregistered businesses who do not pay taxes or comply with public safety and health requirements.

"A registered entrepreneur not only pays taxes but also devotes considerable time to meeting the requirements of inspections of at least ten controlling authorities. Unregistered offers are easy to find, for example, by booking online via Air B & B, Booking.com, etc." LC comments.

Tourist numbers increasing

Yet despite the obstacles to tourism entrepreneurship and although the weather in summer in Latvia this year was not as good as would be hoped for, the number of foreign tourists in Latvia this year has increased by 12%. Inese Šīrava, director of the Tourism Department of the Investment and Development Agency of Latvia (LIAA), said in an interview with Latvian Radio December 12.

 

About two million foreign tourists visit Latvia annually, and tourism in general gives the Latvian economy about a billion euros in revenue," she said.

Germany and Russia, which are the main markets, while Asian countries - Japan, China and South Korea, are among the fastest-growing. It is hoped that next year's centenary celebrations will provide a further boost to the figures.

Related articles
0 comments
Comment
Comment using your social media profile
Business
Economy