Estonia. Tourism in the economy. Tourism governance and funding

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1 Estonia Tourism in the economy Tourism contributes directly around 4.6% of Estonia s GDP, rising to 6.6% if indirect impacts are also included. Export revenues from tourism amount to approximately EUR 1.7 billion annually, equivalent to 10% of total exports of goods and services in In million people visited Estonia, of which 2.9 million stayed overnight. Two thirds of the clients in accommodation establishments were foreign tourists. The tourism industry had been growing consistently. However, demand from Russia and Finland has seen some decline in the latter half of 2014, with an impact on the performance of the tourism sector. Tourism governance and funding National tourism policy and development activities are implemented by the Estonian Tourist Board, under the Enterprise Estonia Foundation, which in turn is administered by the Ministry of Economic Affairs and Communication. The activities of the ministry in the field of tourism include: Setting tourism policies and programmes and overseeing their implementation, Applying funding for tourism development programmes and projects from the state budget and from the European Union, Drafting tourism-related legislation and regulations, Participating in the activities of international tourism organisations. The Estonian Tourist Board undertakes international and domestic marketing and engages in product development. It also carries out market research in the main target markets, develops and administers the national tourist information system and participates in the work of international organisations. Other bodies and organisations that are involved at the national level are the Estonian Travel and Tourism Association, Estonian Hotel and Restaurant Association, Estonian Rural Tourism non-profit organisation, Tourism Foundations for north, south and west Estonia, Estonian Spa Association, and Estonian Convention Bureau. The overall budget for tourism development is stated in the National Tourism Development Plan for as approximately EUR 116 million, the majority of which is financed through Enterprise Estonia/Estonian Tourist Board. The budget of Enterprise Estonia/Estonian Tourist Board for tourism programmes in 2015 is EUR 6.6 million. The main sources of funding for tourism development are EU structural funds and the state budget. There are no specific tourism taxes. All the measures and activities of the Estonian 159

2 Estonia: Organisational chart for tourism bodies Ministry of Economic Affairs and Communications Tourism Industry Organisations National level Enterprise Estonia Estonian Tourist Board Regional level Regional Tourist Organisations Tourism Destinations Local level Local Tourist Information Centres and Destinations Municipalities Source: OECD, adapted from the Ministry of Economic Affairs and Communications, Tourist Board are evaluated through measurable indicators which are set in the National Tourism Development Plan for and its implementation plan. Tourism policies and programmes Tourism development contributes to the achievement of the objectives of the competitiveness strategy Estonia 2020, particularly by increasing the share of Estonia s exports in world trade, raising the employment rate, reducing youth unemployment and encouraging the development of international transportation routes. Promoting Estonia as a tourist destination and the growth in tourist numbers create the necessary preconditions for this economic contribution, alongside enhancing the development of new international transportation routes (e.g. new air routes, bus and train routes and cruise shipping). Tourism in Estonia faces a number of challenges. In the world context, awareness of Estonia both in general and as a travel destination is low. It lacks a clear and distinctive image amongst individual travellers and tour operators in western and southern Europe as well as in more distant countries. The majority of foreign tourists are visitors from nearby countries making short trips to Estonia (the average length of stay in accommodation establishments is only two days). One of the reasons for such a short length of stay is that Estonia lacks attractions and activities or information on them that would motivate tourists to stay in Estonia longer. Estonian tourism is characterised by excessive seasonality. While in summer there is a shortage of bed places, the average occupation rate in winter is low (annual average bed occupancy rate is below 30%). To level out seasonality it is necessary to create new tourism products and services that do not depend on the weather. In June 2013, the Estonian Government approved the National Tourism Development Plan Its main goal is to ensure competitive and sustainable development of Estonia s tourism sector. Strategic lines of action include the promotion of Estonia as a tourist destination, tourism information management, management of tourism product development, monitoring of tourism development potential, development of internationally attractive tourist sites, fostering international events and development of regional tourism products. 160

3 The sustainable development of the tourism sector relies on the application of principles of sustainable tourism. The underlying principle of the Development Plan is to build on hospitable and safe tourist routes accessible to people of all ages as well as for the disabled, by offering a high quality visitor experience. In order to achieve this goal, actions are identified in a four year implementation plan. In 2014 the Estonian Tourist Board, in co-operation with the tourism industry and regional tourism organisations, developed common marketing strategies for priority target markets with the highest tourism revenue potential, determining implementers, planned joint activities and budgets for two-year periods (Box 1.12). The strategies are based on research on target markets, the product offering, and Estonia s image as a tourist destination. Strategies include an action plan for managing demand in target markets, while representing the interests of the state, destinations and operators. Implementation of the strategies is financed by all implementers through prior agreement. Market based strategies are drawn up on the precondition that there are enough organisations and operators interested in marketing activities in the target markets. Product development strategies will be drawn up, reflecting existing product offers and opportunities and the demands of target markets. The latter will be analysed and evaluated, with guidelines for operators on products that meet market needs. Strategies will be developed and implemented by operators and other interested industry parties, including co-operation networks. In 2014 a support measure for the development of a small harbour network was launched, implementing priorities in both the National Tourism Development Plan and the National Transport Development Plan Another priority area for action is supporting international conferences and cultural and sporting events, in order to increase the number of overnight visits by foreign tourists. An additional purpose of this action is to reduce the seasonality of tourism. 161

4 Statistical profile Table 1. Estonia: Domestic, inbound and outbound tourism TOURISM FLOWS, THOUSAND Domestic tourism Total domestic trips Overnight visitors (tourists) Same-day visitors (excursionists) Nights in all types of accommodation Hotels and similar establishments Specialised establishments Other collective establishments Private accommodation Inbound tourism Total international arrivals Overnight visitors (tourists) Same-day visitors (excursionists) Top markets Finland Russian Federation Germany Latvia Sweden Nights in all types of accommodation Hotels and similar establishments Specialised establishments Other collective establishments Private accommodation Outbound tourism Total international departures Overnight visitors (tourists) Same-day visitors (excursionists) Top destinations Finland Latvia Russian Federation Sweden Germany TOURISM RECEIPTS AND EXPENDITURE, MILLION EUR Inbound tourism Total international receipts International travel receipts International passenger transport receipts Outbound tourism Total international expenditure International travel expenditure International passenger transport expenditure Not available Disclaimer: Source: OECD Tourism Statistics (Database)

5 Table 2. Estonia: Enterprises and employment in tourism Number of establishments 1 Number of persons employed Total Tourism industries Accommodation services for visitors Hotels and similar establishments Food and beverage serving industry Passenger transport Air passenger transport Railways passenger transport Road passenger transport Water passenger transport Passenger transport supporting services Transport equipment rental Travel agencies and other reservation services industry Cultural industry Sports and recreation industry Retail trade of country-specific tourism characteristic goods Other country-specific tourism industries Other industries Not available Disclaimer: 1. Data for food and beverage, travel agencies and other reservation services industry refer to number of enterprises. Source: OECD Tourism Statistics (Database) Not available Disclaimer: Table 3. Estonia: Internal tourism consumption Million EUR 2010 Domestic tourism consumption Inbound tourism consumption Internal tourism consumption Total Consumption products Tourism characteristic products Accommodation services for visitors Food and beverage serving services Passenger transport services Air passenger transport services Railways passenger transport services Road passenger transport services Water passenger transport services Passenger transport supporting services Transport equipment rental services Travel agencies and other reservation services industry Cultural services Sports and recreation services Country-specific tourism characteristic goods Country-specific tourism characteristic services Other consumption products Tourism connected products Non-tourism related consumption products Non-consumption products Source: OECD Tourism Statistics (Database)

6 From: OECD Tourism Trends and Policies 2016 Access the complete publication at: Please cite this chapter as: OECD (2016), Estonia, in OECD Tourism Trends and Policies 2016, OECD Publishing, Paris. DOI: This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre français d exploitation du droit de copie (CFC) at contact@cfcopies.com.