The Lithuanian hotel developer first started developing the new hotel six years ago, when tourist numbers to Estonia were at record levels, ETV's "Aktuaalne kaamera" reported Wednesday.

"The market was growing, everyone was happy and everything was going great," recalled GVP Invest Estonia representative Sigitas Daugnoras.

"Now it's the end of 2024 – it's a completely different situation," he acknowledged. "But we're still quite optimistic, because we're absolutely convinced that what's happening both in Estonia and in the surrounding area will change eventually. The status quo won't last. We hope that the war will end, and that we'll once again welcome more tourists here."

The investment in the new 184-room hotel, which is geared primarily toward family and business travelers, amounted to €24 million, which Dauganoras noted remained within the planned budget.

Radisson Collection Hotel and Palace Hotel CEO Ain Käpp said that international hotel chains are still welcomed in Estonia. However, the number of travelers accommodated in Estonia dropped from 3.8 million in 2019 – the year before the COVID-19 pandemic reached the country – to just 3.4 last year.

In terms of foreign tourists, Estonian accommodation establishments are only just starting to recover from the slump caused by the pandemic and the war.

"Locals have fortunately made up for it, which we're thrilled about," Käpp highlighted.

"And Latvia has been very positive, with good growth," he continued. "And average hotel prices have risen very little during this period – according to the latest statistics, average prices in Tallinn have only gone up 9 percent compared with 2019."

Even so, costs have also gone up 45 percent, putting the pressure on the profitability of hotels, the hotel CEO explained. But in many other European countries, especially in Southern Europe, tourism is booming this year.

Due to overall price increases, Estonia is no longer an affordable destination for Finnish retail tourists, for example.

"The number of Finnish tourists maybe hasn't decreased significantly overall," said economic analyst Mihkel Nestor. "It is somewhat lower, down some 12 percent compared with 2019. But the biggest difference is Russia. It's very difficult for us to combat these two factors."

The war in Ukraine is still ongoing, and Estonia is unlikely to open its doors to Russian citizens, he noted. "Estonia's price levels are unlikely to drop," he continued. "So, we just have to come up with something new."

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