Hotel industry: German tourists returning to Estonia

Radisson Collection Hotel
Radisson Collection Hotel Source: Ken Mürk/ERR

German tourist groups that canceled their reservations soon after Russia launched its full-scale invasion of Ukraine in late February are returning to Estonia. Domestic tourism, including to the Western Estonian islands, meanwhile, is becoming more expensive, said Ain Käpp, the head of several hotels in Estonia.

When the full-scale invasion of Ukraine began, travelers from countries further away canceled their hotel reservations, and there was a lot of uncertainty in the air. However, people are now willing to travel to Estonia again, said Käpp, chairman of the board of the Radisson Collection, the Palace Hotel Tallinn as well as the Estonian Hotel and Restaurant Association (EHRL).

"We have talked a lot about Estonia's safety at the state level, but tourism is allergic to such subjects, and war definitely affects it," he explained. "Sadly, many are now willing to travel since they are accustomed to the situation. German groups that first canceled their trips, are now slowly beginning to return."

Nonetheless, the Estonian hotel and restaurant sector has a long way to go before it can return to its pre-crisis levels.

"Because of a 30-35 percent drop in sales, our costs have gone up," Käpp said. "We are delighted that tourists and visitors are returning to Estonia. Locals also regained interest in domestic travel during the crisis, as evidenced by statistics showing that they are now vacationing in Estonia."

According to the executive, high room rates locals worry about are actually limited to just a few days.

"If you want to spend a pleasant weekend in a resort town, it's reasonable to expect to pay a higher price," he said. "However, even with timely reservations, there is a significant difference in price between a vacation in Scandinavia and Europe and one in Estonia, which would benefit local businesses. The dining sector is also being forced to raise prices in response to market changes."

A 50 percent increase in ferry ticket prices has negatively impacted tourism.

"Fuel prices have also climbed," Käpp continued. "Appealing domestic locations, such as the islands, are encountering difficulties. The state could join us here in a collective effort to restore tourism."

In contrast to Kuressaare, hotel prices in Tartu have gone up.

"These are serious warning signs," Käpp said. "The hotels are running, but we also have to repay the debts incurred during the crisis. Companies are in a difficult situation."

Nonetheless, he added that "the general outlook for this summer is good."

A potential increase in the national minimum wage would also affect the hotel and service industries.

"We pay more than the minimum wage in general, but because we are the first employer for many young people, we pay them the minimum wage," Käpp explained. "This is where I see a risk to the industry's ability to attract younger people to the labor market in the future."

The EHRL has submitted proposals to the Estonian government regarding the regulation of youth employment opportunities.


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Editor: Kristina Kersa

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