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Superprofits at Estonian sanitoriums

  • 2004-12-15
  • Baltic News Service
TALLINN - Estonian sanatoriums are reportedly posting profits that only monopolistic business can boast, a local paper recently reported. Thanks to large numbers of Finnish tourists, a profitability rate of 20, 30 and even 40 percent is not a rarity in the health spa business, the business daily Aripaev wrote.

Parnu's Viiking, for instance, earned a net profit of 40 kroons (2.6 euros) per every 100 kroons of sales last year, Toivo Ninnas, manager of the Viiking health spa in Parnu, said. Sales amounted to 30 million kroons and a net profit of 12 million kroons.

"The whole business is based on Finnish customers, and the key to our success is low prices," said Ninnas. "We are like the Saastumarket discount chain of sanatoriums."

Another rehabilitation center, Viimsi Tervis (Viimsi Health), earned a profit of 21 million kroons on sales of 56 million kroons. Peeter Kukk, CEO and one of the owners, predicted that this year's turnover would surpass last year's and that earnings would grow at the same rate.

Viimsi Tervis has an average occupancy rate of 90 percent, with Finns as the largest group of customers, Kukk said.

Vello Muliin, the manager and part owner of Estonia's largest sanatorium, Tervis, said that 2004 would be as successful as the previous one. He expects sales of around 95 million kroons and a slightly smaller profit this year than in 2003.

The latest newcomers in the sanatorium business are hotel owner Tarmo Sumberg and Toomas Leis of the Alta Capital investment company. Their Georg Ots Spa Hotel, which opened this summer in Kuressaare on the island of Saaremaa, had a solid start, with the occupancy rate hovering above 80 percent despite the relatively high prices.

Curiously, most major sanatoriums belong to well-known Estonians. Ninnas is the former deputy mayor of Tallinn, while former Prime Minister Tiit Vahi has a majority in the fast developing Puhajarve rest home. Tonu Laak, one of the founders of Hansapank, is now involved in the spa business at Laulasmaa near Tallinn.