Tallink CEO: Estonia has become expensive for tourists

Nõgene first commented on the results of the U.S. presidential election, which took place on Tuesday, saying that Donald Trump’s last term as president was not bad for Europe or the economy. “I think it’s also a wake-up call, that Europe needs to defend itself more and investing in defense was certainly very necessary at that time,” he said.

“It’s going to be a very busy year for Estonian diplomats, as well as foreign policy and defense officials to make sure Estonia is protected and to work well with President Trump’s administration.”

The outcome of the U.S. presidential election will not have a direct impact on Tallink, but Nõgene noted that the price of fuel did fall by a few percent in light of the news. “But I think we still have to look at the broader picture regarding what the relationship between Europe and the United States will be,” he said.

Nõgene added that from a security perspective, the most important recent change has been the decision by Finland and Sweden to join NATO.

Retail sales in Estonia have declined and Nõgene confirmed that the same is true at sea. “There’s no difference from on land in terms of the retail trade numbers,” he said.

He also pointed out that interest rates on loans are falling, leaving people with more money in their pockets, though the impact will only be seen after a delay. According to the Tallink CEO, all of this also affects his company’s financial results.

According to Nõgene, Estonia’s economic situation depends to a large extent on the Finnish and Swedish markets, which are both important for Estonian exports. “If life starts to get better there, it will also start to get better in Estonia,” he said.

Tax changes will hamper economic growth

Tax reforms are also starting to have an impact on the economic situation and Nõgene believes this will slow the pace of economic growth. He also said the industrial downturn should have bottomed out by now, but the it will take some time before it becomes visible.

Tallink is also trying to adapt to the tax changes. “Understandably, we have had to adjust prices over time due to various tax changes, and we will have to continue to do so in the future in order to be a profitable public company.”

Estonia has become a relatively expensive destination for tourists. “Further tax changes will add to this,” Nõgene said. “People who go on a trip are going to choose from amongst our competitors. At the end of the day, a tourist’s budget is the same.”

In light of Tuesday’s news form the U.S., Nõgene also said, more needs to be invested in defense. “The state budget needs to be put in order. The government has made its choices, but what the impact will be can only be judged in hindsight,” Nõgene said.

At the moment, businesses need to adapt to the new tax environment, said Nõgene. “I don’t think it would be wise to raise taxes so much in a recession, as this could hamper economic growth, where the deficit could in fact be covered by economic growth.”

Nõgene noted that the Estonian state budget has become increasingly slippery year after year. The government plans to make cuts, but whether the public sector will actually make savings in the coming year will become apparent in 2026, he said.

Estonia should do more to attract Swedish tourists

Nõgene hopes that the pledge not to raise taxes further until the end of the current government’s term will hold, as that would give companies adequate opportunities to plan ahead.

“The year 2025 will certainly not bring much to cheer about for the tourism sector or the Estonian economy as a whole, but maybe things will start to move in a positive direction,” he said.

Regardless of the economic environment, Tallink will improve on its performance this year. However, the company currently has two ships idle in port, something which is having a negative impact on the company’s operations. Precisely for that reason, Tallink’s third quarter (Q3) results were down on year.

Interest among Swedish tourists in visiting Estonia is low. Before the pandemic, Tallink ran a connection between Riga and Stockholm, but up to now that route has not paid off. However, Nõgene says the Latvian government is working hard to get that line up and running again and is prepared to put a lot into advertising Latvia in Sweden as a potential tourist destination.

Nõgene said that Estonia should advertise in the same way to more attract Swedish tourists with a high standard of living and income.

However, he said, tourists are still looking at the Baltic countries with a degree of caution. After Covid, tourism did not recover to previous levels due to the war in Ukraine. “We have to work on that. It is possible to travel anywhere in the world from Sweden, there are good connections. That is the competition Estonia has to work hard for,” he said.

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