Käpp: Tourism needs 90 million

Chairman of the board of the Estonian Hotel and Restaurant Association Ain Käpp. Photo: Madis Veltman

Chairman of the board of the Estonian Hotel and Restaurant Association Ain Käpp told the “Otse Postimehest” webcast that the state should make a sector-based exception for the hospitality industry. “We need roughly 65-90 million euros, but that would be enough to save the entire sector,” he said.

Is the light at the end of the tunnel that was faintly visible this summer beginning to fade again?

It is a great misconception that we did well in summer. There was some relief, in Pärnu, for example. But it is not enough to say that the tourism sector has pulled through.

On behalf of companies, I would like to thank everyone who vacationed in Estonia. But tourism rests on foreign visits. Tourism was really struggling in cities. The turnover of Tallinn hotels was down 88 percent compared to the many-year average in July. August will see it miss the mark by 72 percent.

And we’re talking about a period during which entrepreneurs usually lay up a store for the winter. The crisis hit in March that usually marks the end of the slow season. Tourism sector reserves had mostly been depleted and then the crisis hit!

Now, we have lived for six months in a situation where 50-90 percent of turnover has disappeared and are heading into winter without buffers. The situation is difficult but not hopeless. We believe that tourism will recover because it is an important part of the global economy, making up a little over 10 percent.

Major countries will never abandon tourism because it matters. We also cannot say that tourism doesn’t matter and that everyone should learn a new trade. We can set about restoring tourism next spring, which is when we will need people and their skills. We need to stay alive until then.

Reserves have been depleted to a point where tightening one’s belt simply isn’t possible anymore?

Yes, it is a difficult situation. What I mean to say is that the tourism sector is a marketing tool for Estonia. And people do not come here just to see the [Tallinn] Old Town. They come because our people have created something cool here, are passionate about offering good food and accommodation. No one comes here just to see a pile of stones.

You sent a letter to the government where you ask for the Unemployment Insurance Fund’s salary support instrument to be restored for tourism sector companies until next spring. What kind of sums are we talking about?

That depends on various conditions. The investment we need is around 65-90 million euros, but that would deliver the entire sector! We are not naive and some companies will still go under. Whereas it is not because of shoddy work but because owners and investors will run out of steam eventually.

They have been forced to go into the red is so many places this year and it just becomes senseless at a certain point. We all hoped that things would improve in the fall, but business tourism has all but disappeared today. There are no conferences and there was no cruise tourism in summer.

However, I would stress that tourism will recover in the big picture and we need to hold on until then. Tourism makes up a considerable part of the Estonian economy and we need to ask why. We do not have favorable climate to attract visitors. The answer is efforts made over decades. A decision and capacity to safeguard the sector is vital.

Some 15,000 jobs are at stake. Which positions are we talking about?

All tourism sector jobs, including rural tourism. The latter is often the sole employer in small communities. A person can theoretically learn a new trade in Tallinn, while finding something like that could be very difficult in the country.

Therefore, it concerns everyone directly tied to tourism. It is one big system. We are also integrated with the rest of the world, so we cannot say that tourism doesn’t matter. It does!

Regarding the salary support instrument, the government could fear that other sectors will also demand exceptions once one is made for the hospitality industry.

Yes, and I understand the government. We are always told that exceptions are very complicated.

Statistics suggests the share of tourism in the salary support instrument was 11 percent. I would very much like to verify could it really have been so small! Just 11 percent, not 50 or 80 percent, looking at how much the sector has suffered.

The measure was too much like throwing money off of a helicopter at first, while decisions should now be made looking at individual sectors. A sector-based exception should be made for us after we have suffered for six months. No other sector has such problems today.

Director of Enterprise Estonia’s (EAS) Tourism Development Center Liina Maria Lepik told “Otse Postimehest” in July that she believes tourism is largely seasonal work and that more flexible labor regulation is needed. Do you agree?

Completely. And I’m not saying it so we could offer our people worse conditions. No, tourism is our people. But the flexibility of employment contracts should be something else. Students would gladly work a few days here and there, but it is very complicated today. That is why entrepreneurs often use authorization agreements where working time is not fixed.

These things should be revisited if there is consensus, but it is not the most pressing concern today. The problem today is that tourism is stagnant. It is a matter of life and death.

Schengen countries have started to reevaluate travel restrictions. We are looking to Finland that will restrict tourism as the first thing should they deem it necessary. What would that mean for Tallinn tourism?

Finland is our most important and biggest tourism partner. I would describe the situation as a disaster. I hope both countries and governments will do everything they can to keep borders open and refrain from frightening people. There are no simple solutions, but Finland is crucial from our point of view. When the Finnish border reopened in summer, it brought great relief to the entire sector.

Looking at the Tallinn skyline at night, hotels are completely dark. How do they still operate?

Costs have been brought down to a minimum. A lot of people have been laid off out of necessity. That said, seeing three major Tallinn hotels close their doors for renovation suggests investors still have faith. They are not pulling out or turning hotels into apartments or offices. We can still see investments to be prepared for when the market starts recovering.

How did Old Town restaurants survive the summer? How big was the wave of bankruptcies?

We have talked to restaurants and their forecasts are pretty stark. They say there is a realistic chance that 75 percent of restaurants will have closed doors or switched to a new trademark by spring. Even successful restauranteurs whose business acumen no one doubts are struggling because there simply aren’t any tourists.

Why has tourism been delivered to worst blow in Tallinn?

I was there when they discussed the domestic tourism campaign. What it resulted in was people leaving Tallinn…

To the countryside?

Yes, to the country for the summer months. And it makes sense. We could try the opposite now. Try and see whether we can bring people to the city.