The four star hotel, from which guests can see the tall towers of Old Tallinn, will be managed by France's Accor company.
Accor oversees more than 2,500 hotels worldwide and this experience will help Mercure Tallinn to compete successfully with other city hotels.
"Our biggest competitors Olympia, Palace and Park Consul are very nice hotels, but we are trying to do a little better," said Jean-Philippe Savoye, general manager of Accor's Central and East European region.
The Accor network owns hotels in all geographical regions of the world and is also planning to establish a permanent presence in the Baltics.
"This is our first step in the Baltics, but we are planning to open a hotel in Vilnius, Kaliningrad and two in Riga," said Savoye.
The competing hotels said they welcome the birth of a new hotel, as it makes them try harder to improve quality.
" It makes our life more interesting," said Ene Truusa from Central.
Michael Stenner, general manager at Park Consul, agreed. "Mercure hotel is a nice place. It is good to have more international competitors in Estonia as it upgrades service. It is a very good challenge for the existing hotels," he said.
He also noted that Mercure Tallinn could have been a five star hotel if the requirements of the Estonian Tourist Board weren't so tough.
The new hotel named after Mercury, the Roman god of trade, was acquired by Irnesse Kapital last year and refurbished in eight months. The floor space of Mercure Tallinn was increased from 5,000 square meters to 11,500.
The 250 million kroon ($18.7 million) reconstruction was financed by Uhispank (60 percent), Luxembourg bank (25 percent) and Irnesse Kapital (15 percent). The owners believe all the outlay will be recouped in eight years.
Alain Miquel, director general of Mercure Tallinn, said the hotel hopes to achieve an occupancy rate of 50-55 percent in the first year of operation.
The hotel has 164 rooms with 328 beds on four floors. According to Ene Truusa, the sales manager at Central hotel, Mercure is the fourth largest hotel in Estonia in the number of rooms.
There are two bars, two French brasserie style restaurants, a pastry and a coffee shop, saunas, a fitness center, beauty salons and conference and entertainment facilities at the hotel. Accor's and Volkswagen's joint venture Europcar, Europe's second largest car rental company, will also open its office in the same building. Six hundred square meters of the building are rented out to different offices.
The price of accommodation varies from 1300 kroons in a Standard class single room to 6200 kroons per night in the presidential suite. The price includes breakfast, morning sauna and fitness centre and are higher from April to September and on working days.
The hotel sees the business person as its main customer, but Stenner also believes that fewer businessmen visited the country during the last two years and the number of tourists is increasing instead.