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Copenhagen, the Little Mermaid goes under

Today Copenhagen is making the front page. A few weeks ago, Barrack Obama, President Lula, King Juan Carlos and Prime minister Yukio Hatoyama traveled to the Danish capital to defend the colors of their respective cities as candidates for hosting the Olympic Games in 2016. Soon, hundreds of heads of State, ministers, government officials, ecology experts and all the journalists in their entourages will be gathering for the much awaited UN summit about climatic changes. Copenhagen enters into conversations constantly, but is that enough to revive a highly deteriorated hotel situation?

In just a few months, the Danish capital will have seen the world’s lea­ders pass through, making its way into the headlines of the international press. It is in real need of this spotlight and moreover activity because the si­tuation at its hotels is far from glowing. And yet, it would appear that the media and international activity around Copenhagen will merely temporarily slow the slump the RevPAR has been in for several months. While tourism and business traffic have steeply dropped, projects for new properties continue to flourish in a veritable chronicle of forecasted overcapacity.In addition to the congress activity, the second tourism development axis is concentrated on the cruise market. A recent association with Malmöe results in a vast ambition to become a new unavoidable destination for cruise liners sailing the Baltic sea. Thus, in 2008, 310 ships called at port, for a total of 580,000 passengers, making Copenhagen the numberone destination for cruises in Europe.The euphoria in recent years has increased developers’ interest in a city with a reputa­tion for being dynamic and Scandinavia’s principal city. But the backlash at the beginning of the international crisis was particularly severe. The Danish capital has about 1.7 million inhabitants, but it is the engine driving a vaster region Øresund with 3.6 millions inhabitants which overlaps on neighboring Sweden. Since the creation of a bridge between Sweden and Denmark, opened in 2000, Copenhagen’s current hotel supply, slightly more than 13,000 rooms, is completed by the 28,000 rooms available around Malmöe, only one and a half hours away from Copenhagen. Which represents a necessary supply for major international meetings but also creates potential competition during low seasons. Last year, the region of Øresund had a total of 6.7 million nights, 5.3 of which were in Copenhagen alone, but since then the figure has entered a freefall.From one year to the next, between the beginning of 2008 and the first months of 2009, the turnover for hotels fell by more than 20%. According to the company Soliditet, which audits the financial solidity of Danish businesses, half of the 422 hotel properties audited reported operating losses for the last fiscal year. According to this analyst, more than one hundred are ineligible for bank loans, considering the fragility of their balance, and fifty or so need to provide serious guaranties. If the situation does not improve quickly, it predicts that up to one third of Copenhagen’s hotels could declare bankruptcy in the years to come. The regional president of Horesta, professional organization of Danish hoteliers­restaurant owners, Jens Zimmer Christensen confirms: “Hoteliers are going through a very difficult period and we are expecting to see many defaults, although we cannot presently estimate to what extent.” And everything would appear to indicate that the future is anything by tranquil. So although the number of busi­ness travelers and tourists is shrinking like shagreen, the construction of new properties has not come to a halt. The hotel pipeline confirmed for the two years to come already has nearly 4,000 new rooms, through eight largescale projects, of which nearly 2,000 rooms are in Ørestad’s new business district.Among the projects that are most ad­vanced is that of the family run ArpHansen Hotel group, which is already one of the leading operators in the city with an active portfolio of 1,700 rooms in 9 properties. It began building a complex of three hotels in complementary categories at the same site in the city center, near the central station, that alone will have 1,300 rooms. The first hotel should open before the end of the year under the Wakeup Copenhagen brand, a “low cost” property with 510 rooms. It will be followed by two others at the rate of the Pharaonic worksite directed by Kim Utzon, renowned architects. They will be built up next to Tivoli Congress Center, a new 4,000 seat congress center in the city, a tool expected to put Copenhagen on the international circuit of congress cities.A few kilometers from the city center, in Ørestad, architect Daniel Libeskind delivered the first part of his Cabinn Metro, an original 2* hotel, that will have 710 rooms once it is completed at the end of the year. In the same neighborhood near the Bella Center with its 63 conference halls and 4 auditoriums, IHG will open its 4* Crowne Plaza Copenhagen Towers with 366 rooms, with its own 3,500 sq.m congress center. Another spectacular project in this new neighborhood, the 814room Bella Hotel, scheduled to open in the 1st quarter 2011. The Radisson Scandinavia, however, does not plan to see its title of biggest hotel in the country taken away from it and has already planned to add floors and 460 rooms, and simultaneously doubling its capacities for hosting congresses.Clearly, the aediles of Copenhagen are placing a great deal of hope in the congress segment for filling these new properties. And it is true that the past two years offer reason for this. With 104 international congresses listed in 2008, Copenhagen got ahead of London and Amsterdam for once, climbing to 9th in the worldwide ranking of congresses hosting major me­dical and scientific associations. And 2009 looks like a record year, accor­ding to Steen Jakobsen, Congress director at the Wonderful Copenhagen Convention & Visitors Bureau: “15 of the congresses that we will host in 2009 will bring together 2,000 to 15,000 participants.” The city is playing on the diversity and proximity of the hotels and their easy access with the busiest airport in Northern Europe with 265,000 movements of airplanes. A new terminal was inaugurated in 2008 increasing its capacity for processing passengers. Today it surpasses 28 million passengers from 127 destinations worldwide. The main company, SAS, member of Star Alliance, thus developed partnerships with 60 other companies.Moreover, the highly present technology, the efficient telecommunications, security demonstrated by a low crime rate in a city renowned for its gastronomy and cultural life successfully guarantee Copenhagen’s promo­tion as a candidate for important events. But Claus Allerup of Solidet seriously sounds an alarm: “After an exceptional year in 2009 in terms of major congresses, hoteliers must expect a series of quieter years that will result in a veritable bloodbath.”And yet, the city has not renounced increasing its equipment. Its town council entrusted the project for a new multipurpose 15,000 sq.m com­plex in the south of the neighborhood to the German company AEG. According to Lars Bernhard Jørgensen, general manager of Wonderful Copenhagen, this equipment was in­dispensable “We will finally be able to compete for even bigger congresses and sports and cultural events on an international scale.” The new Arena should be operational in July 2013. The challenge is risky considering the markets degradation, but it may pay off if the situation rights itself rapidly and if Copenhagen’s hoteliers haven’t been bowed down in the meantime. To perfect their strategy, the Danish are trying to occupy more positions in the offices of professional associations such as the International Congress and Convention Association or the International Association of Professional Congress Organisers.In addition to the congress activity, the second tourism development axis is concentrated on the cruise market. A recent association with Malmöe results in a vast ambition to become a new unavoidable destination for cruise liners sailing the Baltic sea. Thus, in 2008, 310 ships called at port, for a total of 580,000 passengers, making Copenhagen the numberone destination for cruises in Europe.

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