"Overall, the [tourist] markets are growing, with only Finland, Norway and Denmark experiencing a decline last year. All other markets actually grew, with the U.S. and Latvian markets growing significantly," said Reilend.

"We at Estonia Spa Hotels have managed to keep the number of Finnish visitors at more or less the same level as the year before last. The domestic market declined but the Latvian market grew significantly," said Andrus Aljas, head of Estonia Spa Hotels.

High prices are seen as one reason behind the decline in domestic tourism.

"Price certainly plays a role. At the same time, if you look at the airport statistics again, Estonians travel abroad a lot. Of course, there are a lot of cheap trips available, such as family vacations to Turkey. But I think that another factor may be that straight after the pandemic, Estonians got used to traveling here in Estonia but now they want to discover foreign countries again," said Reilend.

"This is definitely one reason why Estonians are increasingly looking to more distant markets. However, another factor is that, as the tourism market is not growing overall, the situation is now relatively stagnant. There has been no significant growth in recent years," Aljas added.

Aljas explained that hotels in Estonia are now having to compete for a lower number of domestic tourists than before.

He believes these price wars will only intensify in the future as more and more hotel rooms are being added to the market. Although costs have increased, accommodation prices are being kept artificially low because it is not possible to raise them given the current competitive environment.

"At the end of the day, we don't have that much of a markup. We still ask the market for the price that the customer is willing to pay and then try to be so efficient with our costs and operations that it still brings in a profit. So far, we have been successful, but in the long run, it will become increasingly difficult," Aljas told ERR.

Although Estonia is a more expensive destination than neighboring Latvia and Lithuania, Reilend still considers Estonia to be competitive when it comes to tourism.

"It may be an expensive destination for visitors who are used to coming here. I would say that for a Finn who is used to coming here for spa treatments, for instance, we have now become more expensive," Reilend pointed out.

At the same time, however, for tourists from elsewhere, including the U.S., for example, there may still be room for further growth.

"We may be seeing the emergence of a target group that is willing to spend more. There are fewer of them, but they do spend more," said Reilend.

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