Latvia, infrastructure investments to support tourism industry

In spite of its position and dimension, Latvia is a Country which is registering interesting results in the Travel & Tourism industry. As highlighted by in the World Travel & Tourism Council’s “Travel & Tourism Economic Impact 2017”, in 2016 the direct contribution of tourism to GDP was 994.6mn euros, namely the 4% of the total. This is expected to grow up to 4,8% in 2027, with a direct contribution of 1.585,5mn euros. The total contribution, including the indirect and induced ones, was 2.222mn euros, representing 9% of GDP. Latvia is characterised by a strong leisure demand. In 2016, in fact, 85,9% of direct contribution to Travel & Tourism was represented by the domestic and inbound tourism expense in this segment.

As underlined in the “Travel & Tourism Competitiveness Report 2017” published by the World Economic Forum, last year Latvia welcomed more than 2 million international tourists. In the capital city Riga, overnights grew by 4% in 2016, in particular of tourists coming from Russia (19,9%), Estonia (10,3%), Lithuania (10%), UK and Germany (7%). The most relevant growth was registered in tourists from the USA (+40%), Sweden (+20%), France and Russia (+14%).

According to the report, Latvia ranks 54th out of 136 analysed Countries for tourism competitiveness. The strong points of the destination are the price competitiveness of accommodation facilities (5th), the sustainability which characterises the tourism industry development (31st), port and ground infrastructure (41st) and tourism infrastructure (48th). Weaker points can be found in the relative closure towards the bilateral air agreements (92nd), the cultural resources and business travel services (98th) and the minor importance that the Government dedicates to the Travel & Tourism policies (99th). Notwithstanding, as reported by the country report “Travel in Latvia” edited by Euromonitor International, at the end of 2014 the plan “Infrastructure Development of Riga International Airport” was completed, supported by the European Cohesion Fund, and which improved the Country’s accessibility. An example is given by the route Riga-Madrid, served by airBaltic.

Even if the “Latvia Tourism Marketing Strategy 2010-2015” was not renewed, and at the moment Latvia lacks of a proper National Tourism Plan, this subject can be found in other development plans. The “Sustainable Development Strategy of Latvia until 2030”, for instance, includes various improvements of the infrastructural system, in order to enhance Latvia’s accessibility.

The infrastructure priorities encompasses also “Rail Baltica”, considered by the European Commission as one of the most important interregional projects, and which by 2025 will connect Estonia, Latvia and Lithuania with the European rail network, linking them with Berlin, Warsaw and even Venice. For the project implementation, Latvia allocated almost 2bn euros, 80% of the first period financed by the “Connecting Europe Facility” fund. A survey realised by European Railways, the state-owned company responsible for the Latvian part of the project, showed that 89% of the residents is in favour of the initiative, which is expected to increase the employment rate as well as the tourism appeal of the destination. For this reason, the Riga central station is being renovated, with a project which is worth 186mn euros.

In Latvia there are also many festival planned to attract tourism flows. The “Rigas Ritmi Festival” is among the most important musical events in Latvia, and includes several jazz concerts around the capital. This year it is planned from the 28th of June to the 2nd of July, but events are organised also during the winter period. Also the celebrations to welcome the beginning of summer are popular, this year during the night of the 10th of June, with the “Summer Solstice Celebration at Valmiermuiza”. This event includes a night around a bonfire, with traditional music and dance, ancient rituals and a magic atmosphere. Finally, eight times a year, in many Latvian cities the local community comes together to celebrate traditions, in particular culinary ones, through a festival called “Savour the Flavour”.

At Twissen we observed that Latvia is aiming at improving its infrastructural system in order to attract potential tourism flows, also through international cooperation projects. The destination also offers various cultural events and festivals which support the leisure demand that it is becoming increasingly appealing European origin markets .

Francesco Redi

President and founder at Twissen. Manager in Local Development, Tourism Policies,  EU Funds. He cooperates with several European universities, public bodies, development agencies, DMOs and enterprises.