Estonian Spa Association Warns There May Not Be Enough Customers for New Spas
Aire Toffer, head of the Estonian Spa Association, cautions that the spas due to open in the coming years may lack enough solvent customers. Entrepreneur Oleg Gross, however, believes a high-quality product will draw visitors.
Several new spas are due to enter the Estonian market in the next few years. Aire Toffer, CEO of the Estonian Spa Association, says there may not be enough customers with spending power to fill both the new and existing venues.
Toffer says the opening of a number of new spas is planned for the end of next year and early 2028. In her view, a misleading picture of the sector has formed, as though large sums of money flow through it. She attributes this to very high prices during school holidays and on Saturday evenings. Those are isolated days when visitors have time to go, which allows operators to charge more.
She suggests that newcomers may not fully grasp the cost side of the business, such as electricity and water use, and recommends reading company financial reports, since accommodation is not a very profitable line of work. Even so, she remains optimistic that any product will find buyers if it is created in the right place and is distinctive and innovative.
Gross: quality will bring customers
Next year a spa hotel is due to open by Lake Viljandi, owned by Lääne-Virumaa entrepreneur Oleg Gross. He says that anything worth doing must be done very well, and then customers should follow. Gross says a spa has to offer a premium product, and notes that Estonians have been visiting spas more often even though foreign tourism has declined. He describes a spa hotel as an emotion project rather than a profit one, but does not expect it to run at a loss.
Gross believes the market has room for one more spa. He adds that many developers built hotels with spas using only bank loans and have no other business, whereas his parent company operates in food retail. If the spa makes a small loss in its early years, he says, he will neither sell nor close it.
Foreign visitors are also needed
Toffer stresses that the outcome depends not only on Estonian guests but also on how accessible Estonia is, on flight connections and on what happens with airBaltic. She says the country needs to find visitors in other target markets through better marketing messages and by promoting Estonia as a health-oriented destination.
She notes that spa operators may be more patient and used to low profits. In the current economy many entrepreneurs are struggling to get by, and if many more spas open, some could be forced to close. Toffer also points to a heavy tax burden and a VAT rate she calls unreasonably high compared with neighboring competitor countries.
