Hotels batten down for uncertain winter

  • 2004-10-13
  • By Steve Roman
TALLINN - Things have been looking brighter for Estonia's hospitality industry. The number of visitors in just about every region is on a sharp upswing, and Tallinn itself recorded a 26 percent jump in the number of hotel guests in the first half of 2004. On the supply side, no less than six large new hotels opened their doors in the capital from January to October. Indeed, managers in the hospitality industry couldn't be happier.

But the smiles quickly drop from the faces when you mention the forbidden word: winter.

While occupancy rates throughout the year are growing, filling rooms in the off-season continues to be a particular problem, statistics suggest. According to Kersti Uus, an analyst for the Tallinn City Tourist Office and Convention Bureau, the high-season to low-season ratio of foreign visitors is 4:1 in Tallinn, compared with 3:1 in Helsinki and 2:1 in Stockholm. Uus points out that demand for rooms in Tallinn is not stabilized by a steady flow of domestic clientele as it is in other cities.

Tallinn's healthy 85 percent - 95 percent occupancy rates during the summer drop to a meagre 50 percent in winter. To get an idea of the situation in towns outside the capital, these percentages should be halved. And the number of new hotels on the market means competition for the low-season revenue will be fierce.

"There was quite a high growth in supply this year. It's going to be a tough winter," says Kris Leinatamm, manager of the Saku Rock Hotel. Leinatamm is optimistic that the Saku Rock will have an edge over competitors with its unusual, comic decor and its catering to business clients. "If you have something to offer to the corporate clientele, then winters are easier," she says.

But the reality seems to be that nobody really knows just how hard this winter will be.

"This is a question we haven't faced before. This is a new situation for every hotel in Tallinn," says Andres Huul, managing director of the Vana Wiru Hotel. "Now we are going to see who is going to survive and who is not, how much the decrease in numbers [will be] and how these customers are going to be spread," he says.

Optimists are looking to other developments that may offset the winter slump, mainly the recent addition of new, cheaper air connections and a worldwide trend toward city-break travel, for which small cities like Tallinn are well suited. Where the industry in Tallinn is pinning most of its hopes, however, is the fast-growing international convention market, which has already gone quite a way to alleviate the seasonal slump. The number of visitors traveling to Tallinn for conventions and seminars nearly doubled from 2002 to 2003 (18,400 to 37,900), and is expected to increase as the city becomes better known.

"There is a lot of potential," says Helina Tuvike, sales and marketing director for Estonia's largest hotel group, Reval Hotels.

But conventions are far from a perfect solution to the winter issue, she warns. Since conferences are concentrated in the April-May and September-October periods, most overlap with the established tourist season, and few take place during the most difficult January-March period.

"Conferences [take place during] the week, and there's still a question of what to do during weekends and what to do during holidays - Christmas, New Year's, Easter," she adds. She also notes the danger that warmer destinations like Prague and Spain might outsell Tallinn if prices aren't kept competitive.

Hotels outside Tallinn, where the seasonal differences are even sharper, are coming up with their own schemes to lessen the winter bite. Many are offering incentive tours and conference packages to Estonian-based companies. Others, such as the Grand Hotel Viljandi, are selling theatre-packages on the domestic market, combining a night's accommodation with a cultural event.

Tarmo Sumberg, chairman of the board of the Estonian Hotel and Restaurant Association, said that while he thought the winter lull was inevitable, more government involvement in long-term tourist development was needed.

"The problem we have had is a very short average stay here. People come for just two days and there is quite a big need for the kind of products which attract people, and keep them for a longer time," he says, specifically mentioning Tallinn's historic Old Town.

"We have a very interesting history and a very interesting past, but it's not well presented," he says.

When asked whether the hotel industry in Tallinn was in danger of reaching a saturation point, Sumberg is confident that good times are still ahead.

"There's a lot of potential that is not used, but the fact also is that the day will come when it stops," he says. "The question is when."

Saku Rock Hotel manager Leinatamm is less sure. "I think in every business, at some point of time, the point comes when the weaker businesses just have to leave," she says. "[And] it's closer than we want to think."