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Countries covered: Estonia, Latvia, Lithuania
Tourism Overview
Official tourism arrival data for the whole of 2008 has not yet been released by the authorities in all threeBaltic states. The clearest picture is emerging from Estonia, which welcomed some 1,285,017 tourists(excluding EU citizens) over the January-November 2008 period. 11-month data for the country pointstowards a modest decrease in the number of tourist arrivals to Estonia over the full year, in the order of 3-4%.
The headline picture in Lithuania is less encouraging, with provisional tourist arrival data (which alsoexclude EU citizens) for the January-September 2008 period showing a 45.5% decline in the number oftourist arrivals, to 1,114,281. However, airport throughput data, which we use as a proxy for overalltourist arrivals, has shown a strong 20% rise during 2008, although this figure includes EU citizens. Notourist arrivals data for 2008 have yet been made available for Latvia. As a proxy, we have used numberof visitors to hotels and other accommodation data from the central statistics bureau of Latvia. Theseshow that some 1.276mn visitors stayed in hotels over the first three quarters of 2008, marking anincrease of some 8% y-o-y on the 1.179mn visitors for the same period in 2007. Consequently, we believethat Latvia will have seen an increase in tourist arrival numbers across 2008, unlike its two Balticneighbours.
We believe that the overall picture for Baltic tourism is somewhat mixed at present. First and foremost,the ongoing global economic credit crunch will impact on tourism industries around the world, and thewill be Baltics no exception. Indeed, the Baltic area may feel the crunch worst than others, as cruisetourism could be one area that is particularly hard hit by a retrenchment of consumer spending. Inaddition, the cost advantage enjoyed by the Baltic states during the early years of the 21st Century hasfaded somewhat, as prices rise towards EU norms. It seems likely that all three Baltic states will see adecrease in tourist arrival numbers and tourism revenues over 2009. This is primarily due to the ongoingglobal economic credit crunch. Within the Baltic markets, Lithuania should fare the best, as Vilnius is aEuropean City of Culture for 2009. We then feel that 2010 will mark a short-term low point, beforerecovery can begin in 2011.
New company profile
For our 2009 Baltics report, BMI has added a new company profile: Olympic Entertainment Group(OEG). OEG was established in 1993 by Estonian businessman Armin Karu. Since then it has expandeddramatically across neighbouring states. OEG is listed on the Warsaw and Tallinn Stock Exchanges.flyLAL ceases operations
On January 17 2009, it was announced that Lithuanian flag carrier flyLAL was to suspend operations,effective immediately. The move follows the failure of a proposed buyout deal by Swiss investment firmSCH Swiss Capital Holdings. The airline has debts of some LTL90mn (roughly US$26mn), most ofwhich is owed to Vilnius International Airport. At the end of 2008, the Lithuanian government turneddown the chance to buy back a 51% stake in the airline and provide a state-guaranteed loan to ensureflyLAL’s continued operations, which had been negatively impacted by the current credit crunch. If nonew buyer is found within the coming weeks, the airline will file for bankruptcy.
Data Difficulties
A key problem when dealing with Baltic tourism data is the different approaches to tourist arrivalsadopted by each country. Whereas Latvia counts all incoming travellers, Lithuania and Estonia have notcounted arrivals from EU countries since their accession in 2004. A standardised approach to datacollection could do much to help the development of the tourist sector in the region, as a joined-upapproach would clearly identify where tourists are coming from and how best the Baltic states can tailortheir tourism product offering to meet this demand.
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