Hotels going up in Helsinki, although potential clients still in doubt

Cheaper accommodation atracts customers, but executive hotels experiencing stiff price competition

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By Jenni Frilander
     
      Around twenty new hotel projects are being discussed in Helsinki, even though the existing establishments in the capital are engaged in a tough battle for overnight guests.
      The plans include classy hotels catering to business customers and mid-range accommodation. In many of the ventures the plan is to convert an old property to new use as a hotel.
      Examples of this include the warehouses sold to shipping line Tallink in the West Harbour, the so-called Lampan talo site on the north side of the Esplanade, and expansion of the Omenahotelli on Lönnrotinkatu, as seen in the accompanying photo.
     
There are also plans afoot for completely new hotels.
      The Marriott chain is considering a high-class hotel in the West Harbour, there are plans for a spa in Taivallahti, and then there is the design hotel slated for Katajanokka, which has prompted a good deal of public resistance.
     
So hotels are being sketched in on a grand scale, in spite of the fact that the city's so-called business-class hotels in particular - the four-star and above establishments - have found themselves forced to take a long hard look at their room-rates and sell accommodation at hefty discounts.
      Even though prices have been made more user-friendly, the occupancy-rate in downtown Helsinki's several executive hotels slipped alarmingly below 50% in the first half of the year.
     
In the current climate, the benefits are being felt not just by the discerning customer, but also by hotels falling into a slightly cheaper price-bracket.
      "Better occupancy-rates and capacities are now coming from the three-star hotels, particularly at weekends. Right now the situation is curiously that hoteliers can get a better price for a room in a three-star hotel than for a four-star one", says Kari Halonen, Marketing Manager for the Helsinki Tourist Office.
     
The trend derives from a decline in business travel and from the fact that business travellers themselves have tightened their belts and shifted down to more modest establishments.
      The City of Helsinki's Tourist & Convention Bureau has indicated that hotels can expect a four per cent drop in overnights this year relative to 2008.
      "When the recession lifts, travel and tourism will take off very quickly, and will return in a year to the levels reached in the so-called good old days", believes Halonen, based on earlier experiences.
      "These hotel projects are being put together with an eye to the future. The view is that 2010 will see a considerably better outlook than right now."
     
According to the Tourist Office, what Helsinki needs above all at present is a greater spread of cheaper hotels. However, the accommodation being planned is for the most part at the already congested business-and-congress end of the market.
      "We are a bit concerned that the number of lower-priced alternatives have declined, with some of the city's hostels having left the market. It would not be wise to leave things with only four-star hotels and upwards to choose from", says Halonen.
      "It is necessary to look at the entire travel and tourism genre, including backpackers and families. We have been quite publicly pointing this out to the tourism trade for several years now."
     
Helsingin Sanomat / First published in print 10.8.2009

More on this subject:
 Omena hotel chain grasping at market opening offered by recession

Previously in HS International Edition:
  At least four new hotels to be opened on prime real estate in Helsinki this year (1.6.2006)

See also:
  Norwegian investor determined to pursue controversial hotel project in Helsinki (5.12.2008)

Links:
  City of Helsinki official tourism website - Visit Helsinki

JENNI FRILANDER / Helsingin Sanomat
jenni.frilander@hs.fi