Tallinn hotels unable to make up for winter shortfall this summer

Ain Käpp.
Ain Käpp. Source: Ken Mürk/ERR

The economic performance of hotels in Tallinn this June was worse than during the same month in 2019, before the onset of the coronavirus pandemic. There are now fewer groups of foreign tourists visiting the Estonian capital than before, while costs for hotels are also rising due to inflation.

Ain Käpp, chair of the Estonian Hotel and Restaurant Association (EKRL), told ERR that the average turnover per room in the country's hotels has fallen in recent months. "This is a very big drop. If turnover was better towards spring, then now May and June were both in the red. In May, turnover was down 17 percent and in June, turnover was 21 percent down."

Käpp said he was basing this on statistics, which aggregate information from 57 Tallinn hotels and 6,900 hotel rooms. Such data can be obtained on a rolling basis and therefore is available faster than the regular summaries provided by Statistics Estonia.

"If in June 2019, the occupancy rate in Tallinn was, on average, 86 percent, then this year it was 71 percent," Käpp added.

The average hotel room in Tallinn cost five percent less per night in June this year than during the same month in 2019. At the same time, costs for hotels were more than 30 percent higher due to inflation and other price increases, Käpp said. However, those additional costs cannot easily be passed on to the customer.

"Competition is very fierce and so it is not possible to raise prices. [Rooms] can't be sold at that price. If we were in sync with inflation, then average prices could be up by 30-40 percent, not down five per cent," explained Käpp.

Kaisa Mailend, CEO of hotel chain Hestia Hotel Group, pointed out that big events attract more guests. "However, these are limited to only a few hotter dates, when the price levels are of course noticeably higher. But, overall, high price levels shorten the length of [people's] stays."

War in Ukraine frightens off more distant tourists

Mailend also highlighted a major problem. "As a segment [of the market], group tourism from Europe and Asia is disappearing."

"The German tourists, who have helped us a lot in previous summers, are not there. The same goes for those from more distant countries, America and Asia," explained Käpp.

"People in groups like this are afraid of travelling because of the war," Käpp said. In addition to that, there are of course, no tourists arriving from Russia at the moment.

Mailend explained, that after Russia was removed from the list of potential destinations, some operators cancelled their tours altogether. However, others have been able to reschedule tours without stop-offs in Russia.

Estonia is working actively to convince tourists that the country is a safe destination. "Cities, municipalities, the state and EAS (Enterprise Estonia) are all doing a really good job of marketing," said Käpp. "Every foreign visit by our ministers also demonstrates that we are safe and well here."

"Unfortunately, July and August will follow the same trend, and we will not be able to change this," said Käpp. It now remains to be seen whether business tourism will continue at the same rate in the fall.

"And summer should be the time for the tourism sector to pick up the slack, making up for the shortfall during the low season. The latest low period is already into its third year," Mailend said.

According to Statistics Estonia, 936 accommodation establishments offered services to visitors in Estonia this April. With 21,000 rooms and 48,000 beds available, there was an average occupancy rate of 43 percent. One night in an Estonian accommodation establishment cost an average of €45 per person.


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Editor: Michael Cole

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