Spa hotels: Layoffs inevitable without continued state aid

While the first spa hotels will be opening their doors this month, employees of many such establishments are looking at layoffs.

Empty spas herald collective layoffs and great economic damage for the companies that operate them, "Aktuaalne kaamera" reported on Saturday.

Because offering accommodation and beauty services is allowed in the emergency situation, two spa hotels remained open in April, with occupancy at 2 percent and 0.47 percent, executive manager of the Estonian Spa Association Aire Toffer said. She added that spa and sauna centers form the core of spa hotels' business model as 90 percent of guests come for that reason. Heads of spa hotels have no idea when they will be allowed to reopen spa centers.

"The problem is uncertainty. That we have been told it will likely be in August is just a preliminary assessment," said Lauri Teorein, CEO of the Lavendel Spa Hotel.

Aire Toffer said that great water parks, such as Terviseparadiis and Kalev SPA Hotel in Tallinn, lose around €100,000 every month when closed. "Thinking about all the spa and sauna centers in Estonia, the total sum is a little under €1 million a month," Toffer said.

If we add to that empty hotels, restaurants and other establishments, the sector's fixed monthly costs are €5 million, she said. That was the situation in late April. The sum can be multiplied by the number of months spas will have to remain closed. Toffer added that owners will not be able to survive on their own. How long spas must remain closed is unknown.

Member of the board of Tervis Spaa Grupp Jaan Ratnik said the most important question is whether they can count on continued state aid. "The Unemployment Insurance Fund's salary benefit for a period of two months was a brilliant crisis measure, but it is clear our sector will need help much longer. And truth be told, we need that information yesterday," Ratnik said.

Spas are looking on as traders are offered aid and admit they also need a helping hand. Without state support, mass layoffs cannot be avoided, heads of several spas said.

Lauri Teorein said that without information regarding direct support or an extension of the unemployment insurance measure, spas will have to go down the path of collective layoffs in the coming weeks.

There are 35 spa hotels in Estonia, with around 3,000 people set to lose their jobs, the Estonian Spa Association estimates.

Aire Toffer said that because the tourism sector has taken a direct hit in the crisis, the unemployment insurance benefit continuing is a matter of life and death for the sector and spa hotels.

"We are not talking about a loss of turnover of 30 percent but up to 100 percent," she said.

A third of spa tourists are locals while two-thirds come from other countries.


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Editor: Marcus Turovski

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