Cultural events saving Estonia’s summer hotel market, says hotel director | News

Speaking on Vikerraadio’s “Vikerhommik” on Saturday morning, Käpp said hotel operators are very grateful to the businesses and individuals who have taken on so much work and risk this summer.

“Truly, I don’t think we’ve ever had so many great stars here in one summer,” he highlighted. “All these events — whether cultural, musical or sports-related — are what feed tourism and the hotel sector.”

Major concerts in town also drive up hotel room prices, which the CEO described as a way to balance out demand.

“There are about 6,900 hotel rooms in Tallinn,” he explained. “If demand during the Justin Timberlake concert, for example, is for 12,000 rooms, then we have to find a way to balance that demand. We can’t just go with a ‘first come, first served’ approach at standard prices.”

Käpp believes this isn’t a matter of greed, pointing out that it’s standard practice, and common in air travel as well.

“When demand is high, tickets are more expensive,” he said. “The same logic applies to hotels. Only in our line of work, a room left unsold today can’t be sold tomorrow. If we were producing chairs, we could sell them a month later, but for a hotel, every day counts.”

Käpp noted that recent global events have taken a heavy toll on Estonian tourism, and it has taken years for war-related fears to subside, but the situation has since started to improve.

A positive trend has emerged with the return of Asian visitors and visitors from the U.S., he highlighted, adding that demand is gradually rising.

Foreign tourist numbers in Estonia still remain 6 percent below pre-COVID-19 pandemic levels, but Käpp noted that some Asian guests are very high-paying guests who prefer four- and five-star hotels.

“Clearly, our main focus should be on neighboring countries, to make sure visitors from Finland and Latvia feel welcome here,” he said. “That said, the Asian market shows strong potential.”

Rooms booked months in advance for Song Festival

Major events play a key role in revitalizing tourism. For instance, one large German party booked rooms for the Song Festival nearly nine months in advance.

“The Song Festival and Independence Day events are real magnets that attract guests from both nearby countries and beyond,” Käpp said.

According to the CEO, hotel pricing is a delicate balancing act, as hotel owners fear that raising room rates as little as €1.50 might scare off guests.

“Competition is fierce, and the market is constantly monitoring each other,” he admitted. “Meanwhile, costs have jumped 40-45 percent, heavily affecting profits. We are striving daily to find ways to manage.”

The main drivers behind these price increases are labor costs, energy, goods and inflation — which have been further amplified at the national level by taxes.

“No one is directly to blame here,” Käpp emphasized.

The main challenge is the lack of foreign tourism.

“If demand recovers, we’ll be able to manage financially,” he said optimistically, adding that the situation today is still so much better than it was in 2020.

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