The industry association wants to meet with Keldo before the month is out to present him with the sector's 2024 economic results, which reveal a difficult situation. CEO Külli Kraner stressed the need for a "realistic and shared understanding of the actual situation" to avoid misleading messages in the media.

Kraner also said that it is vital for the coalition to consider moving toward a fairer and more sustainable tax policy — one that won't drive viable companies out of business or turn accommodation and dining services in Estonia into luxury goods.

The association chief pointed out that Estonia's food service VAT is the third highest in Europe, and added that since these services are aimed at customers without the option to deduct VAT, the high VAT rate directly affects consumer prices.

For Estonians, eating out with family has become significantly more expensive, and less dining out translates into reduced turnover and profitability. "At the same time, investing, maintaining jobs and offering competitive wages gets more difficult," she added.

While supporting efforts to lower the VAT on food, Kraner warned that this wouldn't affect catering service prices, since businesses can deduct input VAT, but customers are still billed the full 24 percent VAT on invoices.

The hospitality association believes this year's VAT hike on accommodation has significantly increased pressure, hurting both domestic tourism and international competitiveness.

"We're forecasting that the economic results for 2024 will be even worse than in 2023, when sector profitability was already at a record low 1.4 percent," Kraner warned.

She said that as the hospitality sector is currently still struggling to survive, recent overly positive messaging from the economic minister went over like a lead balloon.

"These are based on one month's statistics and analysis of customer numbers, and ignore business owners' circumstances, losses from previous years, current economic conditions and outlook, business owners' assessments of the results of the first half of this year, or forecasts for the second half," the association chief detailed.

The group is also calling for an evaluation of whether the assumptions and forecasts behind the 2023 VAT hike on accommodation were met.

Rental market study sparks transparency concerns

The EHRL is also concerned about the transparency and independence of an ongoing short-term rental market study. Members feel the Ministry of Economic Affairs and Communications (MKM) fails to grasp the uneven playing field in accommodation services.

At a June advisory meeting involved in the study, participants observed the ministry steering analysts away from policy recommendations that would allow for effective interventions. Despite records and a recording of the meeting, Kraner noted, the study's materials remain inaccessible.

The association believes that since the meeting was public and addressed a matter of public interest, the ministry should not be able to declare the materials "for internal use only." It will seek clarification from the Data Protection Inspectorate on the matter.

The EHRL also worries whether changes involved in the reform of the Estonian Business and Innovation Agency (EIS) could undermine the Visit Estonia team's work or ability to meet 2025–2035 tourism goals.

In the first seven months of 2025, occupancy at Estonia's accommodation establishments rose 4.3 and average room rates 3.3 percent, but overall prices jumped 5.6 percent in July, significant impacting costs, according to Statistics Estonia.

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