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Tallinn
Hotels in Tallinn and elsewhere in Estonia are facing tough times as in addition to the government plan to increase VAT rate they are also accommodating fewer and fewer Russian and Finnish tourists, the two main tourist groups visiting Estonia, www.balticbusinessnews.com reports.
Statistics Estonia reported yesterday that the number of Russian tourists staying in hotels is down more than 40 percent in a year and also the number of Finnish tourists accommodated in Estonia is decreasing.
“The loss of Finns is the biggest blow to Tallinn hotels because they are such an important customer group,” says Ain Käpp, CEO of Tallinn Hotels, commenting the fact that in March, 11 percent fewer Finns stayed in hotels in Tallinn than a year earlier.
“The situation last year was notably better because Finns helped to offset the impact of the decrease in incoming tourism from Russia,” he added.
Käpp admitted that since it takes time under the number of Finnish tourists staying in Tallinn hotels will start increasing, hotels need to downsize and lay off employees.
“We are planning to stay in business, but if the share of Finns would fall by twenty percent, it would create a most difficult situation because hotels are operating with very low profit margins,” says Käpp who manages Palace, Savoy Boutique and Bern.
“Finnish travel agencies and tour operators say that their revenues are falling and they are very worried,” said Käpp, adding that the situation will not improve before the Finnish economy picks up again.
Although summer is traditionally a high tourist season in Estonia, Käpp says that he doubts whether it would solve problems facing accommodation establishments.
“Demand will be higher in the summer, but it will not offset the overall decrease in business volumes in rest of the year,” he said, adding that also the number of days that tourists spend in Estonia has been decreasing.
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