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Real Estate Market Review 2011 | Estonia Hotel Market
looking for an Asian carrier to make Tallinn
its hub in flights between Asia and Europe.
Domestic tourism decreased substantially in
2009. However, during the first months of
2010 the decline stopped and starting from
the second quarter of 2010, domestic tourism
showed an increase in terms of occupancy at
accommodation establishments. In 2010,
837,811 domestic tourists stayed overnight at
accommodation establishments in Estonia
(+9.3 per cent compared to 2009). According
to Enterprise Estonia, overnights on holiday
trips increased by 13 per cent and overnights
on business trips by 12 per cent, whereas
overnights on other trips decreased by 2.6
per cent.
Prices and Occupancy
Tendencies and Forecasts
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Although 2010 already established a
new record high in terms of the number
of tourists in Estonia, hotel operators
are even more optimistic about 2011.
Starting from autumn 2010 the average
room price has started to steadily
increase and is predicted that during
2011 the increase could be as much as
30 per cent. In general, room prices are
expected to increase by 10 - 15 per cent
on average due to growing tourism
demand and a continual increase in
energy and labour force prices.
Tallinn’s European Capital of Culture
programme is expected to further buoy
the hotel sector in 2011.
In 2009, an overall decrease in occupancy
rates directly caused a decrease in room
rates. Low-end room rates fell 15 - 20 per
cent year-on-year, forcing existing hotels to
be more cost effective and flexible with
pricing.
In 2010 the average price for a night of
accommodation in Estonia was 26.7 EUR
and 31.1 EUR in Tallinn indicating an annual
decrease of 5 per cent and 8 per cent
respectively. The minimum price for standard
double hotel rooms in Tallinn decreased on
average by 15 - 20 per cent encouraging
sales of accommodation services in 2010.
The average occupancy rate in 2010 for all
accommodation establishments was 39.8 per
cent in Estonia and 52 per cent in Tallinn.
Due to a substantial increase in the total
supply (approx. 23 per cent) of rooms
between 2007 and 2008 and an unfavourable
economic climate, the occupancy rate during
2009 declined relative to 2008 by ca 12 per
cent both in Estonia and Tallinn. In 2010 the
average occupancy for accommodation
establishments in Estonia returned to 2008
levels while the occupancy rate in Tallinn
increased by ca 18.5 per cent in 2010
compared to 2009, exceeding 2008 level.
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Further development of inbound tourism
is substantially dependant on the volume
of Estonia’s air travel, which is expected
to grow with the opening of several new
direct flights. 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.
There are no new hotel chains expected
to enter Tallinn hotel market and no new
hotels to be established in the near
future (in 1 - 2 year perspective).
As Estonia is no longer a relatively
inexpensive country, tourism enterprises
will need to focus on additional products/
services and cost-efficient management
in order to maintain a competitive
advantage.
CONTACT: AVO RÕÕMUSSAAR - a.roomussaar@colliers.ee
Colliers International | p. 70