Article name

Season selection for opening new hotel in northeastern and central Europe.

Abstract

It is very important to select the month/season for starting new hotel business in
northeastern and central European countries. Because season always have a big impact
on hotel business and if startup time is not calculated carefully by company it can create
big financial crises for a new company because operation cost for hotels vary a lot during
different seasons and the graph of tourists also goes up and down according to seasons.
In this article I am focusing on the northeastern and central European countries like
Poland, Lithuania and Latvia. During the strategic planning for the hotel business startup
company must work with detailed study on hidden costs associated with season/climate
and company must perform a deep market surveys during each season before new
startup.

Introduction

In Latvia, Lithuania and Poland there are four seasons spring, summer, autumn and
winter and if we will talk about winter season it generally starts from mid of November and
goes till start of March. During the winters temperatures can go up to minus 30 degree
sometimes. On average in the month of January and February temperature stay minus 5
till minus 10 with heavy snow fall and with high speed winds also some times. From study
it’s very much clear that during these cold winters the graph of tourists goes down rapidly.
During these winters the utilities bills for hot water and building heating goes very high. If
we talk about Latvia, there is big hike in gas, electricity and hot water prices recently in a
few months.

AS “RĪGAS SILTUMS” siltumenerģijas tariffs (thermal energy tariff)

 Piedāvātais tarifs
Sabiedrisko pakalpojumu veids Spēkā esošais tarifs Tarifa palielinājums
EUR/MWh (bez PVN) no
EUR/MWh (bez PVN) no
01.03.2022.
01.11.2021. Tariff increase (%)
Type of public service Proposed tariff
Existing tariff EUR/MWh
EUR/MWh
(excluding VAT) from
(excluding VAT) from

Siltumenerģijas ražošanas tariffs

49,53 52,20 5,4%
Thermal energy production

tariff
Siltumenerģijas pārvades un
sadales tariffs

15,79 17,39 10,1%

Thermal energy transmission

and distribution tariff

Siltumenerģijas tirdzniecības
tariffs
1,31 1,34 2,2%

Trade tariff on thermal energy

71,22
66,76

(ar dabasgāzes akcīzes

Siltumenerģijas gala tariffs (ar dabasgāzes akcīzes
nodokļa
nodokļa komponenti
komponenti
6,7%
Final thermal energy tariff 0,13 EUR/MWh)
0,29 EUR/MWh)
(with components of
(with components of
the excise duty
on natural gas the excise duty
EUR 0,13/MWh) on natural gas
EUR 0.29/MWh)

Table No.1.0 (AS “RĪGAS SILTUMS”)

TARIFI NO 01.07.2021 LĪDZ 31.12.2021.
Mainīgā daļa atkarībā no patēriņa, 01.07.2021. - 31.12.2021.
Vs TARIFI NO 01.01.2022. LĪDZ 30.06.2022. IN RED COLOR

Dabasgāzes gada patēriņš 0 - 2635 kWh 2635.1 - 5269 kWh 5269.1 - 263450 kWh
(0 - 250 m³) (250.01 - 500 m³) (500.01 - 25000 m³)

Dabasgāzes cena 0.0343216 0.0343216 0.0215821

Price of natural gas 0.0647755 0.0647755 0.0520360
EUR/kWh

Dabasgāzes cena no 01.10.2021 0.0343959 0.0343959 0.0216564

EUR/kWh

Sadale - mainīgā daļa 0.0180761 0.0074416 0.0074416

EUR/kWh

Pārvade - izejas punkts 0.002004 0.002004 0.002004

EUR/kWh

Pārvade - izejas punkts no 01.10.2021*** 0.0019297 0.0019297 0.0019297

EUR/kWh

Akcīzes nodoklis* 0.00165 0.00165 0.00165

EUR/kWh

PVN 21% 0.0117709 0.0095376 0.0068623

EUR/kWh

Tarifs par 1 kWh 0.0678226 0.0549548 0.0395400

0.1045819 0.0917141 0.0762993

Tarifs par 1 m³** 0.71472 0.57912 0.41668

1.10209 0.96649 0.80405

Table No.1.1 (Latvijas Gāz )

And the second important thing is there are many buildings with old type of heaters which
cannot be controlled by regulators. So many times there is extra loss of heat which cost
extra during bills payments. These heaters are called latvijas radiatora in Latvian
language.

Image No. 1.0

So here main point for new hotels is that for new startup, company must plan and
calculate these big utilities expenses in advance. And if new start up might be opened in
the month of October or November then there are two big adverse factors for new
business, first one is that there will be less members of tourists and due to that occupancy
in hotel will be less and on the other hand the second factor will work in opposite direction
that during winter months the heating bills, electricity and hot water bills will be quite high.
Due to these adverse factors operating cost will be high and overall profit will be low or
even in some cases hotel may not have any profit at all and have to bear operating cost
from company’s account during these winter months. And it’s very difficult for a new
business to survive for starting 4-5 months without profits and paying the operating cost
from their pocket.

Methodology

1. Interview from Locals

2. Interview from Hostel owner.
3. Data Collection from Government sites.
4. Data collection from Tourism Company Eurostat
Charts & Graphs

Graph Image No. 1.1

 Graph Image No. 1.2

Result

For new hotel business startup in northeastern and central Europe season have huge
impact on tourism and hidden costs in the form of utilities goes drastically high in winter
season. So during the strategic planning for hotels these both factors must be calculated
with proper manner.

Conclusion

Ideal time for opening a new hotel business in northeastern and central European
countries like Latvia, Lithuania and Poland is during the end of winter season somewhere
in mid of March so that utility bill should be bearable and tourists starts visiting these
countries after a long break of winter season. And if the new startup starts in month of
end of October or start of November then these two factors will impact badly in starting
phase.

References
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