A person took a photo during a sightseeing cruise in Helsinki on 28 July 2023. The Finnish capital has been left in the dust by other major Nordic cities in the race to attract foreign visitors, suggests a study by Helsinki Tourism Foundation. (Eelis Berglund – Lehtikuva)

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HELSINKI has fallen well behind its regional rivals in terms of tourism growth in the post-pandemic era, reveals a study carried out by the Helsinki Tourism Foundation.

The Finnish capital registered fewer than two million overnight stays by foreign visitors in 2023, corresponding with 78 per cent of the total for 2019. In Copenhagen, Hamburg, Oslo and Stockholm, the number of foreign visitors has recovered noticeably faster, already exceeding pre-pandemic levels in Copenhagen and Oslo.

The study found a notable difference in the amounts invested in marketing the cities as travel destinations.

Helsinki Partners, a marketing and talent attraction company owned by the City of Helsinki, has allocated about 2.2 million euros of its annual budget of 8.4 million euros for attracting foreign visitors. In Hamburg, Oslo and Stockholm, the tourism marketing organisations have access to 5–9 million euros a year – in Copenhagen, to as much as 36 million euros.

Mikko Leisti, the board chairperson at the Helsinki Tourism Foundation, said the Finnish capital has fallen behind its rivals especially after the pandemic.

“Helsinki has for years invested in hotel capacity and other tourism infrastructure, and the restaurant offering does not shy away from comparison with its peer cities. The study does show, however, that the tourism sector in the city has tremendous potential that is not being realised,” he said in a press release according to Helsingin Sanomat.

Although the tourism marketing budgets of the cities are not directly comparable, the foundation believes additional investments in marketing are required to boost tourism growth in Helsinki. Such investments could have substantial economic effects, with tourism generating 1.2 billion euros in direct revenue and another 800 million euros in indirect revenue in 2022.

Finland is widely considered a great tourism destination by foreign visitors, Timo Lappi, the managing director of the Finnish Hospitality Association (Mara), reminded in an interview with Helsingin Sanomat on Monday. The ongoing effort to increase hotel capacity, he added, serves as evidence of widespread confidence in continued growth before the Russian invasion of Ukraine.

“In the capital region alone, there’ll be almost 7,000 more hotel rooms by the end of 2026 than there were in 2018,” he noted.

Helsinki fared worse than its rival cities also in terms of overnight stays by domestic visitors, according to the Helsinki Tourism Foundation. The number of overnight stays was about two times higher in Oslo and Copenhagen, three times higher in Stockholm and almost six times higher in Hamburg.

Lappi stated to Helsingin Sanomat that Finland has a relatively small budget for international tourism marketing especially now that the government has decided to shave two million euros off the budget of Visit Finland.

The budget has thus contracted to eight million euros, having peaked at 17 million euros around 2010.

Lappi said the decision to cut the budget is incredulous particularly because it coincides with the crumbling of the two bedrocks of tourism to Finland: visitors from Russia and Finnair’s ability to fly Asian passengers conveniently over Russia. Russia’s full-scale invasion of Ukraine in February 2022 has forced Finnair to effectively re-devise its strategy and halted the inflow of visitors from China and Japan.

Also policy action is required to respond to the development, argued Lappi.

According to Lappi, Finland is the only Nordic country that has registered a decline in tourism due to the war of aggression prosecuted by Russia. Had inbound tourism continued to grow at the same rate it did until 2019, the country would have raked in an additional 13.6 billion euros in tourism revenue in 2020–2023, he calculated.

Travel accounts portray an even more alarming picture of the situation, reported Helsingin Sanomat. The accounts reflects the difference between the amount of money foreign visitors bring to a country and the amount of money locals take to other countries.

In Finland, the accounts have been negative for years. The balance of payments was in the red by 445 million euros in 2002 and by about two billion euros in 2022. Last year, the deficit widened dramatically to 2.85 billion euros.

“It widened by 850 million euros in a single year. That’s an enormous amount. And it also has an impact on tax revenue. Tourism exports are the third largest sector for service exports,” said Lappi.

He pointed out that global competition for foreign visitors is intense given the spending power of foreign visitors. A Finnish study, for example, found that the restaurant and accommodation sector had a tax footprint of about 2.9 billion euros before the coronavirus pandemic.

“That illustrates just how massive an impact the sector has on tax revenue.”

Finnish accommodation service providers are also hit by the recent government decision to raise the value-added tax on accommodation services from 10 to 14 per cent, the second highest level in the European Economic Area (EEA), added Lappi. In Denmark, accommodation services are subjected to a value-added tax of 25 per cent.

Aleksi Teivainen – HT

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