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Riga: Thoughtful travels during uncertain (economic) times

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Tough times have left empty seats in Riga's restaurants. Photo: Stephen Downes.
Tough times have left empty seats in Riga's restaurants. Photo: Stephen Downes.

I awoke this morning to hear a story on National Public Radio about the financial crisis affecting certain Eastern European countries, especially Latvia, Hungary, and the Ukraine.

Edward Lucas, of The Economist magazine, pointed out that Latvia’s situation is pretty dire: a bank recently collapsed, the nation’s debt is swelling, and the country’s economy shrank by more than 10% in 2008. Furthermore, violent protests this year led to the collapse of the coalition government in February.

Difficult times

I noticed this myself last month, when I spent six days visiting Riga.

Of course, I mostly concerned myself with inspecting hotels and visiting the city’s historic sights. However, one couldn’t escape the signs of economic strain: I saw very few tourists (granted, it was early February), restaurants were empty (or closed), and prices were cheap.

Here was a city that poured millions of euros into reinventing itself as a magical, tourist-friendly destination–and hardly anyone was there. That wouldn’t normally be a major cause for concern in February. But this year was different. There seemed to be an uncertainty about whether or not tourists would return.

Across town, I visited beautiful hotels, freshly renovated (or newly constructed), often with sizable rooms and lovely bathrooms. Many sported eclectic, “boutique” decor. In almost any of the other cities we cover, these hotels would have been out of our Cheapo price range.

Yet, they were quite affordable in Riga. When I asked hotel owners for rates, they often frowned. Should they give me last summer’s rates? The off-season rates? What are this year’s rates? The prevailing attitude seemed to be, “we’ll see.” There was, after all, a big difference between the posted hotel rates and the bargain rates being offered online by the same hotels.

A great time to travel?

I found it all a bit unnerving. To encourage budget travelers to visit Latvia because of ever-discounted prices exploits a nation grappling with an economic crisis. Yet, tourism plays an incredibly important role in the nation’s economy, and it would follow that Latvia would benefit from an influx of tourists, eager to pump their euros (and lats) into the nation’s struggling economy.

Hotel owners, waitresses, the cashier at the opera… people were very friendly to me and seemed hopeful that more tourists would return to the city as the weather heats up.

Upon my return, I’ve raved about Riga. I had a great experience and found it fun, educational, delicious, and, yes, a bargain. Despite my sensitivities, I find myself bragging about what a good deal the city is for visitors.

And yet, I’m cautious when describing the budgetary benefits of visiting Riga.

Something strikes me as distasteful about choosing a destination based solely upon what you can “get” for your money. That may be a great way to purchase a beach resort getaway or a family cruise, but it strikes me as an un-thoughtful way to choose a travel destination.

Isn’t traveling about learning and experiencing? Doesn’t it call for a little more compassion and a little less consumption?

What do you think?

I’m eager to hear from our readers on this issue. Have you every traveled to a foreign country while they were experiencing difficulties? Did that affect your decision to go there? Would you consider going to a country with a shaky economy in order to stretch your travel budget?

Let us know in the comments section below.

For more information about Latvia’s financial troubles, also see an article in this week’s Der Spiegel (in English).

About the author

Tom Meyers

About the author: Tom Meyers created and launched EuroCheapo from his Berlin apartment in 2001. He returned to New York in 2002, set up office, and has led the EuroCheapo team from the Big Apple ever since. He travels to Europe several times a year to update EuroCheapo's hotel reviews. Tom is also a co-host of the New York City history podcast, The Bowery Boys. Email Tom. [Find Tom on Google Plus]

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12 Responses to “Riga: Thoughtful travels during uncertain (economic) times”

Jacky says:

I tend to always support the underdog, whether it’s in an election or while I’m traveling. I would think this is a fabulous time to visit places like Latvia, to support their economy and to strengthen the world’s hold on travel as an industry and pasttime.

What an interesting topic. There are possibly two issues here.

1. Your perception, Tom, of how to interpret recession. Economic downturns play out in different ways, and in Latvia – which enjoyed a long succession of boom years with year-on-year growth rates that had west Europeans looking on with envy – the present mood is very gloomy. This is an economic onslaught of a kind that Latvians NEVER experienced in the days of the Soviet Union and have not experienced since independence. Brits, Germans and North Americans who have long experience of long wave economic cycles are unnerved, but have the experience of history which suggests (rightly or wrongly) that, if we are but patient, all will come good again.

Your observation about uncertainty in hotel rates is interesting, but no clear indication of an economic downtown. Head into a small town in Bavaria (where the notion of market pricing is virtually unknown) and you’ll be told, come rain or shine, that “a bed costs €20.” And the idea of deviating from the fixed price is just unheard of. But Latvia has gone hook, line and sinker for an Anglo-American model of market pricing, and I think you would find the same waryness about giving any clear rate in boom times just as much as in recession. The same may be true of your local Best Western or Hilton in NYC.

2. Then you raise the ethical issue (effectively) of visiting during a place with a downturn. I’d be with Jacky in her prior comment on this. Yes, of course you should go. Icelandic tourism will get a boost in 2009 because of the decline in the Icelandic currency during late 2008. The Latvian currency has not declined at all against the euro, so what gains there are to be made in Riga in 2009 derive not from currency fluctuations (as in the case of Iceland) but from possible price discounting.

Your query raises the general principle of visiting places ‘in trouble’. I would say yes in almost every case, even in the instance of towns like Srebrenica where there have been great tragedies. Here is a town (in Bosnia and Herzegovina) that is desperately trying to rebuild itself, and trying to attract visitors. So yes, do visit.

I hope these thoughts helps, but it’ll be interesting to see what others say.
Nicky
_______________
Nicky Gardner
co-editor / hidden europe magazine

I totally agree that people should travel to places that are not so well off.
Following the Bali bombings, my wife and I decided to continue visiting Bali, as we knew that it wasn’t the local Balinese who were responsible for the terrorism.
We of course take extra precautions with our personal safety, but everywhere we go throughout Bali, we are thanked by the locals.
One suggestion is to make use of local suppliers as much as possible, so we try and avoid the chain restaurants and shops. This way we can do our best to keep the money within the country.
Keep up the interesting articles, in these tough economic times it’s still important that we get out and support the tourism industry.

Jacky says:

What a great comment hidden, and budgettravelguy. On American soil, what would have happened to New Orleans if people weren’t visiting and participating in the city’s economy after Hurricane Katrina? It takes people with passion and interest, usually travelers of the world, to rebuild. I plan to travel to Appalachia this year to hike and learn more about the people there. I know my few dollars a night at a motel won’t necessarily turn the way of life around, but maybe my being there will show the residents they haven’t been forgotten, others are interested in their lifestyle, and that things can turn around.

I had so much to say after looking at this post—and then I read Nicky’s response and realized that most of what I wanted to say had already been written. I find especially interesting Nicky’s comment on market pricing. (And incidentally, something that always drove me crazy on hotel reviewing trips for EuroCheapo was the uncertainty that often arises at larger chain hotels around rates. There are often three or four rate types at play for the same room, something that produces all sorts of difficulties when you’re trying to figure out how much a room costs per night! This is a complaint particularly acute for those of us who review hotels for a living.)

I will add something, though. I think it’s important to remember is that a pricing differential does not mean that the richer tourist is necessarily and automatically behaving in an exploitative manner. A price differential is a fact—and by no means a stable one—and it can be exploited mercilessly or accommodated to the benefit of all parties. For Americans accustomed to traveling through Western Europe, the idea that we might somehow exploit the locals along our journeys seems ludicrous. Pricing tends to be higher in big Western European cities than it is in big American cities—in many cases nearly extortionately so. But Western Europe is but a piece of Europe, and there are plenty of places like Riga where meals, cultural activities, and budget hotels are all going to be pretty cheap. In these places, I think that it’s important to remind ourselves that the lats we withdraw from the bank machine are economically useful, and not exploitative weapons. (How we spend our money, of course, is another matter. But you get my drift.)

This leads me to another point. Budget travelers are often better and more respectful than your average travelers. Budget travelers don’t tend to be entitled and snippy about things like the state of their hotel rooms or a particular, culturally-specific concept of “service.” They’re often willing to try local foods and traditions and are typically uninterested in cookie-cutter business hotels and bland “international” cuisine. If budget travelers know that a place like Riga is more affordable than it was, say, a year ago, then there’s a greater chance that they’ll flock there. And this, in my view, is a good thing all around.

Very well made points, Alex. So much has to do with the level at which you pitch into the community you visit. Get it wrong, and you are guilty of exploiting the locals, while also setting yourself up to be mocked by the locals.

I am not at all sure that Americans are the prime culprits here. Germans go sometimes to gated compounds in the Dominican Republic, often to all-inclusive resorts where all the profit is repatriated to Germany. These visitors’ engagement with the communities they visit is zilch (and indeed often discouraged by the resort managers).

But as you rightly say, Alex, budget travellers often choose locally owned accommodation, eat at local cafes, and behave in a manner that somehow fits in more with the local community. So be it Riga or Reykjavik in 2009, go for it, but espouse slow travel principles and always try and give something back to the communities you visit.

Nicky

Thanks for the good thoughts, Jacky, Nicky, TheBudgetTravelGuy, and Alex. I’m really pleased to have this conversation.

Nicky and Alex, regarding the market pricing issue:

I, like Alex, have often been frustrated with hotel market pricing, especially in big cities like London and New York. When reviewing hotels in these cities, receptionists often look baffled when I ask for the minimum and maximum hotel rates (a seemingly straight-forward question!). After all, these hotels usually have an employee solely responsible for adjusting the room rates on a daily basis. This means that the hotel is doing searches online, checking out the competitors’ rates for various dates, and pricing their own rooms accordingly (and, obviously, taking into account their own inventory). This results in a wild range of rates.

Most hotels in Riga gave me their “low season” rate, but then quickly told me that, if I booked a room at that moment, the rate would be much cheaper. The city, after all, was empty. (At one hotel, the manager told me that she has to give walk-in tourists the standard “rack rate.” If they scoff at the price, she then directs them to the hotel’s internet station, where they could book the same room online for a fraction of the price. This especially struck me as odd, as the hotel would have to pay a commission if booked online.)

So, I think I was observing three things:

1) Riga is seeing its hotel “market pricing” mechanism in freefall, due to a slow season and a surplus of rooms. (This is obviously good for the tourists who ARE there.)

2) Latvia is experiencing a financial crisis (bank collapse, government collapse, massive debt, no more loans, etc.). This crisis fuels uncertainty. (Can hotels get needed loans? Will the city have the money to finish projects? Will museums and performance halls be able to stay open?)

3) The local tourism trade seems to have the jitters about whether or not tourists will return for the high season. Will the crisis keep visitors away? (Also, of course, whether other nation’s financial problems will keep them from visiting Latvia.) If so, their money won’t be shared with restaurants, cafes, stores, theaters, tour buses, etc. And, of course, if they don’t come, the “market prices” of the hotels will remain low, hurting the hotels.

I agree–at difficult times, we should go. As Jacky points out, visiting during difficult time can, in fact, be the responsible thing to do. But do it in ways that keeps the money THERE.

Tom

BJ says:

What’s with the picture you used for Riga?

Interesting points. We are into our 3rd year of an open ended world tour & although we have been to 4 continents and 29 countries, we have been focused primarily on Europe thus far.

We have seen a HUGE difference everywhere and hear about it from all the natives. We travel very slowly and have used every kind of transportation from freighter ships to camels over 75,000 miles, but most of it is overland and into nooks in the country as well as the major sites.

We see things get worse every year ( which we actually expected and a big reason why we sold our home in 2005 in Ca at peak). We have spent the last 3 winters in a tiny 15th century while village near the sea in Andalusia and each year it has gotten much worse here. There are TONS of rental and sale signs all over the sugar cube houses and many friends have closed their restaurants and moved away.

All of Europe is a bargain now as are the flights. I doubt that the dollar will stay up too long ( fundamentals just don’t call for it with a bankrupt country) nor will gas prices. Tourism every where will be affected this year, but all the better reason to travel and take advantage of the bargains.

There are always booms and busts. Yes, it is nicer for the sellers of things to get the higher prices of boom times, but I find they are grateful to get what they can in bust times. It is just the way of the world, I would not feel bad about it.

Smart people are frugal even in boom times, so that when the bust comes they can take advantage. Smart travelers should be taking advantage now and everyone should be grateful to have them!

Jorgen says:

Hi there I just came back from Riga, it is the capital of Latvia, fantastic city, my suggestion is to visit Riga at the beginning of Spring, there are a lot of things to do& see, for example follow Art nouveau guided tour published on http://www.bestriga.com, fantastic. as well as I recomend to go out of town too, i went to Liepaja – it is a town it self indeed, quite romantic but nothing much to do there, so I rent a car and went out of town, best place was Kalnmuiza manor, not far from Liepaja, (read about that place on http://www.bestriga.com) so thats my recommendation for you all

Anna says:

Guys, it’s up to you visit Riga or not in these troublesome times. But we can’t ignore – Latvia is undergoing unique period of development at the moment. The hard switchover from socialism to democracy and the heavy economical crisis as a result of embezzlement of the state made by Latvians themselves – all these sad facts you can see in Latvia this year. Visiting Latvia this year would be no pleasure trip, rather some kind of educative travel. Buy the way – some facts useful for economic education you can find in Katya’s blog: http://www.rigacityonline.com/latvia_crisis

Rollo says:

I cannot wait to see Latvia esp Riga and also Tallinn before going back to beautiful St Petersburg in May 2010.

Can anyone tell me what is the best way to get from St Petersburg to see Estonia and Latvia without breaking the bank?

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