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Real Estate Market Review 2011 | Estonia Hotel Market Hotel Market Number of Hotels in Estonia by Stars Source: Colliers International Advisors, Estonian Hotel and Restaurant Association Stars Estonia Tallinn 5-star 7 5 4-star 30 26 3-star 50 16 2-star 36 10 1-star 3 1 Total 126 58 Distribution of Hotels by Number of Stars in Estonia Source: Colliers International Advisors, Estonian Hotel and Restaurant Association OVERVIEW At the beginning of 2010 the hotel sector remained in deep recession with quite a bleak outlook. However the summer and good publicity overseas in 2010 saved many hotel operators from near bankruptcy. In 2010, the hotel market witnessed an increase in the number of tourists, driving average occupancy rates and prices up. During 2010, income of the sales of accommodation services increased by 8.7 per cent compared to the previous year. Supply 2009 saw Tallinn’s hotel segment expand with the opening of two hotels belonging to the Meriton Hotels Chain, however no new hotels entered the Tallinn hotel market in 2010. At the beginning of 2011, the 4-star segment comprises the largest percentage of Tallinn’s available rooms, consisting of 26 hotels with 3,783 rooms - 57 per cent of the total supply. Recent development, most of which was completed in 2007 has mostly occurred in the 4-star and 5-star segments. In 2007, one 3-star, four new 4-star and two 5-star hotels were opened in Tallinn, 2008 added one 4-star hotel and 2009 saw one 4-star hotel enlargement and one new hotel enter the Tallinn market. Approximately 36 per cent of Estonia’s total stock is strongly rooted in the 3-star hotel segment, indicating that visiting tourists to Estonia are often looking for middle or higher-value travel options. Tallinn’s hotels rooms account for 63 per cent Estonia’s total supply, with the 3-star segment dominating the Estonian market, in respect to the number of hotels. Demand During 2010 Estonia accommodated a total of 2,401,763 guests, with 1,289,372 of them staying in the capital city. Numbers increased by approx. 12 per cent in Estonia and 13.6 per cent in Tallinn respectively relative to 2009. The majority of tourists were from outside Estonia, with 1.56 million foreign tourists staying in Estonian accommodation establishments and 1.14 million foreign tourists similarly in Tallinn. Foreign tourism in Estonia increased by 13.3 per cent and in Tallinn by 12.2 per cent compared to 2009. The number of local visitors increased by approx. by 9.3 per cent in Estonia and by 8.6 per cent in Tallinn. The number of nights spent by foreign tourists in Estonia was 3.2 million (+17 per cent relative to 2009), an all-time record high number, exceeding the pre-crisis (2008) level by as much as 9 per cent and the previous record level (2006) by 6 per cent. According to Enterprise Estonia, the number of foreign visitors on overnight stays for holiday trips increased by 21 per cent, stays overnight on business trips by 12 per cent and overnights on other trips by 8 per cent. Both holiday (which account for 2/3 of all foreign overnight stays) and business trips were slightly longer than in 2009. The growth Number of Rooms added to the Tallinn Hotel Market in 2000 - 2010 Source: Colliers International Advisors 2% 2% 1,400 1,200 29% 23% 1,000 800 600 400 1-star 2-star 3-star 40% 4-star 5-star 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CONTACT: AVO RÕÕMUSSAAR - a.roomussaar@colliers.ee Colliers International | p. 68
Real Estate Market Review 2011 | Estonia Hotel Market Guests (000s) Distribution of foreign visitors by country in accommodation establishments in 2010 Source: Statistics Estonia, 2010 Distribution of foreign visitors by country in accommodation establishments in Estonia fSource: Statistics Estonia, 2010 2,500 2,000 1,500 1,000 500 0 2002 2003 Foreign 2004 2005 Local 2006 2007 2008 2009 Distribution of foreign visitors by country in accommodation establishments in Tallinn Source: Statistics Estonia, 2010 1,400 10% 1% 2% 1% 1% 2% 2% 3% 5% 5% 5% Finland Russia Sweden Germany Latvia Poland USA 9% 54% Norway United Kingdom Lithuania Italy France Other Countries 2010 in arrivals and overnights were achieved with lower prices. Overnight stays (domestic + foreign) increased by 14 per cent, and the sales income of accommodation services increased by 8.7 per cent. More than half of the foreign tourists staying in accommodation establishments came from Finland. Compared to the same period of the 2009, the number of tourists from Finland increased 11 per cent. The length of stay of the Finns also showed a good increase - up by as much as 17.5 per cent. Finnish overnight stays increased somewhat more in spa hotels than in other accommodation establishments. Tourism from Finland has been boosted by a combination of several factors: marketing activities by the public and the private sector, new tourist attractions, as well as the general growth trend in Finnish outbound travel. Arrivals and overnight stays from Russian tourists reached a new peak in 2010 when 141,964 tourists from Russia used the services of accommodation establishments, 51 per cent more than a year ago. Russia was also one of the very few growth markets in 2009. The increasing popularity of Estonia as a New Year trip destination for Russians, the lowering of the minimum sum for purchases eligible for a VAT refund (for non-EU travellers), active marketing by the public and the private sector, additional transport connections and international winter sports events were the main factors that grew tourism from Russia to Estonia in 2010. It should also be mentioned that one third of Russian tourists overnight stays in 2010 were spent at spa hotels (a year ago this figure was 27.5 per cent). Most of the other main source markets showed an increase in 2010 with more tourists than 2009, such as Germany, Lithuania, Latvia, United Kingdom and Sweden as well as from more distant Southern European markets (Italy, France, and Spain) and the USA. At the same time, the number of visitors from Norway decreased 1.2 per cent. The majority of foreign tourists arrive by ship. According to the Port of Tallinn, the number of ship passengers increased by 9 per cent in 2010. The number of tourists from Finland is expected to continue to increase, due to ongoing special offers and discounts from ferry operators. In 2010 AS Tallink Grupp transported 3,974,927 passengers between Estonia and Finland which reflects an approx. 13 per cent increase compared to 2009. During 2010, the number of passengers travelling between Tallinn and Stockholm increased by 6.4 per cent (with a substantial y-o-y increase of 38 per cent in December 2010). The number of passengers (including both arrivals and departures) using Tallinn Airport increased annually by 3 per cent in 2010 after a sharp decrease of 25.6 per cent in 2009 compared to 2008. An increase in number of direct inbound and outbound flights from Tallinn has also factored in increasing the number of travellers through Tallinn. Irish low-cost airline Ryanair launched it’s inaugural flights from Tallinn Airport in late 2010. By the beginning of 2011 Ryanair is offering seven destinations from Tallinn and additional new routes to East Midlands, Girona (Barcelona) and Bremen are expected to be launched in March 2011. Tallinn Airport expects to add almost half a million passengers in 2011 and the number is expected to continue further growing mostly due to low-cost carriers. According to Erik Sakkov, board member of Tallinn Airport, at the beginning of 2011 Tallinn Airport is negotiating with 30 - 40 airlines and is Guests (000s) 1,200 1,000 800 600 400 200 0 2002 2003 2004 Foreign 2005 Local 2006 2007 2008 2009 2010 Change in number of tourists, 2009 vs 2010 Country Number of Tourists 2009 2010 Change Italy 19,959 23,017 15.32% Lithuania 33,441 34,107 1.99% Latvia 68,320 72,684 6.39% Norway 40,915 40,414 -1.22% Sweden 77,470 81,196 4.81% Germany 75,966 84,454 11.17% Finland 750,984 832,874 10.90% United Kingdom 33,395 35,692 6.88% Russia 93,947 141,964 51.11% CONTACT: AVO RÕÕMUSSAAR - a.roomussaar@colliers.ee Colliers International | p. 69
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BALTIC STATES AND BELARUS REAL ESTA
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