Page last updated at 00:05 GMT, Thursday, 19 February 2009

Strong euro stems stag party flood

By Mark Broad
Business reporter, BBC News, Riga, Latvia

"Why would you come to Riga if it's cheaper in London?" asks Parish Patel, who runs Paddy Whelan's Irish bar in the centre of the Latvian capital.

Burlesque artist Dita Von Teese performs as a guest at the MGM Grand's Crazy Horse Paris
UK operators offer cheap hotel and striptease packages

For bars and clubs across the city, the decline of the value of Sterling has caused business to collapse in the past year.

And it is not just the economic problems in the UK that are worrying the bar and hotel owners of Riga.

"High inflation in Latvia has pushed up prices meaning that beer is very expensive," says Mr Patel.

And with only a few ex-pats sipping at pints at the bar, Mr Whelan's sentiment seems to sum up the end of Eastern Europe's tourism boom.

New invaders

The end of the Soviet Union brought a wave of change to the states that surround the modern-day Russia.

Beer drinker

It breaks my heart to bring young lads to a bar and tell them that a pint of beer costs 5 or 6

Ivo Grubanov, Tour operator, Riga

Democracy, economic independence and a new sense of national pride infused many of the newly independent states.

But as countries such as Latvia and Ukraine opened up they found a new type of invader on their streets; the foreign stag party.

Low cost airlines offered British groups cheap flights to previously "undiscovered" cities such as Riga, Kiev and Talinn.

And once there, the groups found that the money in their pocket went a lot further than on a night out in Newcastle, Glasgow or Cardiff.

Plunging pound

But over the past year, the credit crunch has weakened sterling against almost every currency, forcing people to cut back on foreign trips.

Top UK Stag destinations
UK pub

One person who has felt this slowdown first hand is Ivo Grubanov who works as a guide for stag parties and tourists in Riga.

"It breaks my heart to bring young lads to a bar and tell them that a pint of beer costs 5 or 6," says Mr Grubanov.

The local currency, the lat, has been pegged to the euro by the government, which sees it as essential in order to enter the Eurozone by 2012.

But while the government's ambitions might prove economically beneficial in the long term, right now it is hitting locals who depend on their income from tourism.

"There's no good reason to have the lat to be so artificially high, and it would be much more sensible if we could float our own currency," says Mr Grubanov.

'Slowing to a trickle'

The falling pound has hit countries across Europe, even cities such as Prague, which have long had a strong tourism industry.

Man with a gun

Shooting hand guns in Eastern Europe is popular but so is rafting and gorge scrambling in Wales

James Baddiley of stag operator, Chilli Sauce

Paul Smith, 28, helps run Molly Malone's Irish bar just off the main square in the city.

Mr Smith has been working in the bars of the city for six years and has seen the flow of stag parties slow to a trickle.

"There are very few stag parties these days," he says.

"Prague has become very expensive and those who do come are watching their money closely."

The decline in numbers has had one positive effect for the city with incidents of drunken behaviour reduced to just one every few weeks.

"At the height of the boom, bars would not allow stag parties in," says Mr Smith.

"Now they don't need to. There simply aren't any around."

The credit crunch stag

The decline in popularity of foreign stag parties has forced tour operators to offer city breaks closer to home.

Stretched Limousine advertising the 'Venezia' striptease nightclub in Vilnius, the capital city of Lithuania
Firms relying on foreign stag parties have seen business slow

"Our stag party booking for UK cities are up over 20% compared to last year," according to Grant Thompson from tour operator Go Bananas.

The company has seen a surge in demand for the "Credit Crunch Stag" deal it offers in Newcastle and Edinburgh.

For 49 a person, stag parties get two nights accommodation and entry into a night club or strip club, a price that few European cities could compete with.

Buying British

While the strip club and a spot of lap dancing are still important to stag parties, Chilli Sauce has seen a move towards more energetic pursuits.

"Shooting hand guns in Eastern Europe is popular but so is rafting and gorge scrambling in Wales," says James Baddiley of the stag operator.

The company has seen soaring demand for activities such as cliff jumping, rafting and surfing as stag parties have come back to the UK.

And with headlines of economic woe continuing to force Brits to look closer to home for their holidays, the UK seems braced for a new wave of stag parties.

While bar owners in Riga may be counting the cost, cities such as Newcastle and Edinburgh may be set for a much needed boost.

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