Tourism sector: Help from state, taxpayer needed for survival

Finnish tourists disembarking from a special cruise vessel which visited Saaremaa in summer.
Finnish tourists disembarking from a special cruise vessel which visited Saaremaa in summer. Source: Margus Muld/ERR

Estonian tourism's future seems very bleak in the aftermath of the spread of the coronavirus, with shipping line Tallink undergoing redundancies, hotels still virtually empty, and borders re-closing. Interested parties say they don't see a way out of the mire without the help of the taxpayer.

Last August, 1.3 million passengers passed through Tallinn passenger ferry harbor. This year, the number was less than half that, at 550,000. It is clear that things in the tourism sector are not goijg well, and Estonia will be left out-of-pocket to the tune of hundreds of millions of euros. ETV weekly news show "Aktuaalne kaamera. Nädal." looked on Sunday at how much of this is the state's problem.

There are 740 bed spaces at Pärnu Tervis Spa Group's hotels, but around 120 clients per day. Whereas last September, there were 15,000 clients, this year, the figure is around 4,000.

Head of the spa, Jaan Ratnik, said that starting from March, they had zero turnover for two and a half months, which was partly restored in July, to 75 percent. But the situation is acute again, they say.

"Now we can see again that there is this 65-70 perecent decrease in the turnover, and considering we don't have tourist groups coming in, then I'm afraid that this situation may well last until next spring," Ratnik said.

The peculiarity of the sector is that during the tourism season, service providers save up to survive the winter. This year, however, there hasn't been anything to save up. This means that the companies have had to adapt. While at the beginning of the year there were 400 employees working in the company, now there are 270.

One of the engines of Estonia's tourism, Tallink, has announced redundancies. Around 1,500 employees can expect to lose their job. At the same time, the state strongly supported Tallink's business in the spring - a loan of €100 million, in addition to other measures.

"If you're asking about the fact that we have received a loan of €100 million, then today I checked the fact that the annual handling cost of just one ship sailing between Tallinn and Helsinki is €59 million - almost €60 million - and Tallink has 15 ships," explained Paavo Nõgene, the head of Tallink Group. Tallink has had 55 percent fewer passengers this year compared with last year.

"We can't plan ahead for too long. We have decided to keep several ships on hold until April because there is too much uncertainty. We are basically taking it one step at a time. We don't know where can people travel tomorrow, where can we bring passengers in from tomorrow," Nõgene added.

Tourism companies say that it is not just a question of them, because every hotel or travel company has several companies that provide services or products to them. According to Swedbank's chief analyst Tõnu Mertsin, the impact of the tourism sector on the economy is about eight percent.

"47-48 percent of GDP is from private consumers, and last year, 11 percent of that private consumption came from tourists. This number is relatively high because now it has decreased to 2 percent in the second quarter," Mertsina said.

To avoid redundancies and keep the potential of the sector, the state should continue with wage compensation until spring, tourism companies say. Both Ratnik and Nõgene think this would reasonable.

Signals from the government don't support this direction. "I don't see any benefits in taxpayers keeping alive companies, which do not bear their share in income and we can't see when will it happen," Minister of Finance, Martin Helme (EKRE), has said.

"Of course, it is like a cold shower because other countries are standing out for their sector," Külli Karing, President of the Estonian Association of Tourism Companies (Eesti Turismifirmade Liit), said.

"This won't lower the expenses of the state much after the redundancies when all these people go knocking on the door of the unemployment fund and want to receive all kinds of prescribed benefits," Paavo Nõgene said.

"If we are disbanding all these people today, then in the case of this service today I cannot imagine how to start from scratch again at time 'X' in the future," Ratnik said.

According to Mertsina, the general salary compensation is too expensive for the state.

"It is probably no longer sensible to make such general broad support, but we should look further. And it depends on how we want to see the Estonian economy in five years, for example," he said.

According to Mertsina, the situation should be analyzed and aid should be targeted more precisely. The labor market measures will be discussed by the unemployment insurance council on Monday, September 7.

"Aktuaalne kaamera. Nädal" asked people in different parts of Estonia where and how they spent their summer vacation. Most of the respondents spent their holidays at home, driving around Estonia, for instance.


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Editor: Roberta Vaino

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