On Thursday, Statistics Estonia released data showing foreign tourism has finally bounced back to the same level it was in 2019.

Külli Karner, CEO of the association, said the first-quarter outlook is still not good.

"Our look back is actually quite bleak, especially when we consider March of this year, and there haven't been many positive signals from our entrepreneurs for April either," she said.

The statistics agency said 230,000 tourists stayed in Estonian accommodation establishments in February, which is two percent more than in the same month last year. The number of foreign tourists increased by 3 percent and domestic tourists by 2 percent.

Karner said hotel occupancy did rise in the first quarter, reaching 52 percent. However, the problem is the drop in the average room rate.

"Regionally, the situation looks even more drastic, the revenue per room fell by as much as 7 percent. In short, we are in a situation where a small increase in visitor numbers does not offset the revenue loss caused by lower room prices and rising costs," she explained.

One of the factors limiting recovery from the downturn is the value-added tax increase that took effect at the beginning of the year.

"We were also affected by a seemingly minor thing, this year, the national holiday fell during the February school break, and the same will happen in April, when the break and Good Friday fall in the same week. This means that instead of spending a long weekend in Estonia, people go abroad for a week, which results in money being spent outside of Estonia," said Karner.

While Estonia is also warm and pleasant in summer, Estonians still prefer destinations such as Turkey or Greece. Karner said it is difficult for Estonia to compete with countries where tourism makes up a much larger share of the economy.

"If we look at our accommodation and restaurant prices, the price level still remains below the European average. From a Western European perspective, Estonia is certainly a bit cheaper, but it is hard for us to compete with destinations like Turkey or other major tourism hotspots, where tourism accounts for a very different proportion of the economy. That also means a different kind of national policy."

However, Karner said local tourism businesses are making a lot of effort to provide added value to tourists or locals during their holidays.

"In addition to accommodation, there are options like enjoying a light show, visiting a theme park, or taking part in storytelling evenings or art experiences at restaurants. We are definitely doing our part to encourage people to explore our own country in the summer. We actually have a lot of new and interesting things coming up," Karner said.

There is also strong competition between the Baltic states, especially since Latvia and Lithuania have been cheaper than Estonia for years.

Karner said this is not an excuse: "Based on the latest data, you can no longer really say that hotel prices in our capital cities — Tallinn and Riga — are significantly different. Latvia is moving into a very similar range with us."

As for Lithuania, Karner acknowledges that prices there are indeed different compared to Estonia.

"They have a significantly lower VAT on accommodation, and Lithuania's new government has made the tourism sector a priority. So we can expect to hear more tourism success stories from Lithuania in the near future."

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