Post-enlargement Baltic states gain stronger tourist industry

By Dace Akule

Date: 30/09/04

IT MAY sound strange, but a greater influx of tourists is what many in the Baltic states consider to be the most visible change flowing from EU enlargement.

Traditionally, Latvia, Estonia and Lithuania have mainly welcomed Germans, Finns, Russians and visitors from the Scandinavian countries.

But, since 1 May, it has no longer been a surprise to hear Italian, Dutch or even Chinese spoken in the streets of the Baltic capitals. The number of tourists in all three countries has risen this year by around 20% in comparison to the same period in 2003, authorities report.

The Latvian economic ministry reported last week that two million people have visited the country since January and it expects another million to arrive before the end of 2004. The ministry has ambitious plans to triple the national income from tourism from approximately 2% of gross domestic product (GDP) last year to 7% in 2008. This would mean that the country of 2.3 million people would each year welcome up to 10m tourists.

However, to be able to live up to these ambitions, the industry has to develop. There are not enough hotels, rural roads need repairing and the frequent lack of street-signs hinders tourists' attempts to find places of interest.

Wise application of EU structural funds might improve the quality of the transport and tourism infrastructure and so attract even more foreign visitors.

"This summer [the increasing number of tourists] is a signal to private companies," Uldis Vitolins, head of Latvia's tourism development agency, told European Voice, because EU structural funds can be put into tourism. Indirectly, EU money can be invested in infrastructure and maintenance of the landscape while directly around €16m will be available to Latvian municipalities and public institutions for the reconstruction of historical sites.

There is also a separate programme that promotes tourism in rural areas, encouraging land workers to quit farming. Vitolins said EU membership had given all ten Union newcomers a "sign of quality", erasing the "psychological barrier alleging that things are not working well there".

In Lithuania, too, industry this summer has enjoyed an income increase of 15% on last year. Hotels by the sea were fully booked all season and 80% of all other accommodation was full. Lithuania's national bank reports that the income of hotels and restaurants has risen by 30% this summer and the tourism industry is developing smoothly. However, investment is also needed in this area for building bicycle lanes and internet cafés, as well as information services for tourists.

Estonia's strength is its sea transport, which has made Tallinn the undisputed leader among Baltic countries' ports.

The capital and Parnu health resorts are the most popular destinations, with many new hotels and spas. One in ten foreign tourists (more than 110,000) visited Estonian spas in 2003, said Ene Palmiste from the Estonian tourist board.

"Union membership has certainly eased travel for EU nationals, thus assisting tourism. But Estonia's success as a tourism destination is not just due to EU membership, but due to the framework for success that has been built up over many years," said Palmiste.

According to the Bank of Estonia, investments in hotels and restaurants in 2003 amounted to €14.5 million, or 2% of total foreign direct investment inflow. This year, around €4.8m from EU structural funds will be channelled into the tourism industry of a country where, currently, tourism contributes some 8% of GDP.

But the fact that low-cost budget airlines Ryanair and EasyJet have chosen the Latvian capital, Riga, rather than Tallinn, might endanger Estonia's leading position in attracting tourists.

Currently, only Italian Volareweb operates from Tallinn but EasyJet plans to start operating from the city later this year.

• Dace Akule is a freelance journalist based in Latvia.

Article reports on the growth of tourism in the Baltic States since their accession to the European Union in May 2004.