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Lausanne: the Swiss exception

Crisis? What crisis? Lausanne’s hotel industry did not experience the throes of the economic slump. This very stable business is backed by three solid pillars: its status as world sports capital thanks to the headquarters of the IOC, the presence of great multinationals and a leading Education pole. While the city has almost no vacancy during the week, several developments are underway to accommodate a higher volume of businessmen and congress goers.

One million (room nights)! For several years, Lausanne has been getting closer to this benchmark but has not yet reached it. Also tourism actors are hoping that 2010 will be the year. Is this goal unreasonable when the cycle is just getting going? Certainly not, because tourism in Lausanne has a strong dynamic. While the financial world was shaking on its foundations, the year 2008 was the most productive since 1972 with 994,600 nights in Lausanne! And 2009 posted nearly identical results with a slight drop by 0.8% nights, although there was growth in arrivals (+1.4%).Several elements allow local authorities to believe in pursuing the city’s tourism growth. Lausanne Tourisme has an active policy that plays on its strong axes: athletics and conventions. “We are considering financial support for the organizer that is inversely proportional to occupancy to attract events during slow periods. The city, which regularly hosts world and European championships, also plans to welcome new athletic events,” explains Claude Petitpierre. This priority is part of the Métamorphose project whose goal is to give the city new sports equipment while improving public transportation. To develop leisure tourism, the city will soon settle on the project for a new cultural center combining the Musée Cantonal des Beaux Arts, the Mudac and the Musée de l’Elysée. All fine arguments for attracting new hotel groups?Hoteliers prove to be more than satisfied with this good résistance. “2009 was the third best year for the company with an average price higher than 2008, thanks to individual clientele,” observes François Dussart, general manager of Beau Rivage Palace, one of the city’s jewels. He expects “2010 to be even better with a 3 to 4 point increase in OR and a slight drop in prices due to competition on the MICE segment.” “We are ten points higher than the average in Lausanne that is 65%,” explains Georges Schneider, general manager Accor Hospitality Switzerland.The overall stagnation has, in a way, benefited the Swiss city. Its local markets have proved to be solid, preferring the charm of the shores of Lake Léman to other, more exotic settings. Even if corporate seminars have been less numerous, domestic clientele, which represent one third of demand, supported the hotel industry with growth by 7.8% nights. In this context of crisis, Italians (+9.0%) and French, second market in the city (+8.3%), were also more numerous in crossing the border. “The reinforcement of our supply with the opening of the gastronomic restaurant of Anne-Sophie Pic strengthened our image on the Swiss market but also resulted in 10% on the French market,” remarks François Dussart. These three markets thus largely compensated for the regression of the other primary markets: German (-6.9%), English (-7.3%) and American (-6.4%) clientele.Evidently, with one-third the arrivals of Geneva and Zurich, Lausanne’s market does not have the breadth of Switzerland’s two international hubs. But it doesn’t have the inconveniences either. Its hotel business is proving to be very stable, resting on three pillars that bring in an almost steady volume of reservations. Of all the major contributors to business, Lausanne, which has been home to the International Olympic Committee (IOC) since 1915, has taken full advantage of its status as Olympics capital. In fact, starting from the 80s, many international federations and athletic institutions have built up their presence around the IOC. To the great benefit of the city’s hotels!“These federations organize seminars weekly,” remarks Claude Petitpierre, director of Lausanne Tourism. The first to benefit was of course the Lausanne Palace, the 5* hotel historically connected to the IOC since its former president Samaranch and his successor Jacques Rogge took up residence there. But meetings organized by the federations fill the supply. “Even on weekends, because managers often have a professional activity alongside their athletic endeavors,” underlines Stefano Brunetti, president of the Association Lausanne’s hotels.Another factor that promotes occupancy at Lausanne’s hotels: a dense economic fabric. The town council such as in the canton of Vaud do everything to facilitate, successfully, the implantation of high performance corporations. Claude Petitpierre happily observes that “the region around Geneva has experienced strong development over the last fifteen years.” Dynamic companies such as Logitech and Medtronic are joined by the world headquarters of groups such as Philip Morris and Nestlé. While the Swiss multinational is still based in Vevey, several of its divisions recently moved to the region of Lausanne such as Nespresso, Purina and Nestlé Waters, and its entity Healthcare will soon join them. Stefano Brunetti observes that “companies continue to arrive, attracted by Swiss political, economic and social stability, and also because the city is an important university center.” Mention must also be made of a local tax situation that is more favorable to businesses in the canton of Vaud than in the of canton Geneva.This center, the third pillar in the hotel industry, “generates hundreds of nights,” enumerates the director of the Lausanne Tourism. Thanks to the EHL, the oldest hotel school, Lausanne is evidently known by all professionals in the sector. But it is the IMD and Ecole Polytechnique Fédérale de Lausanne (EPFL), that regularly rank among the best schools worldwide, that stimulate the development of dynamic companies – a barometer for a radiant future for business tourism– and generate increased activity during the week. “Mövenpick has a strong occupancy base thanks to the proximity of the IMD,” underlines the president of the hoteliers association.These two schools are booming with the number of students nearly doubled in less than a decade. And their dynamics could have even more positive consequences on tourism. Thus the EPFL, after having opened the Rolex Learning Center this year –a library with innovative architecture including a 600-seat conference room– began building an ultra modern 3,000-seat congress center at a cost of 190 million Swiss francs (140 million euros). Its goal: to allow, starting June 2013, the school’s 350.laboratories to organize scientific conventions worldwide.Local players are all confident in the project’s success. But there is one, not so minor, pitfall: accommodating all this new potential clientele. Because, and it is paradoxical, the hotel supply has not kept up with the economic development of the city. With 2,700 rooms, the supply has remained nearly stable for ten years while the other major Swiss cities saw their supplies grow by 15%. While the supply is, according to the director of Lausanne Tourism, “well balanced” with properties that are in the economy, midscale and luxury segments, the supply is limited with respect to the city’s ambitions. High capacity hotels, which satisfy the needs of MICE clientele but are difficult to fill on the weekend, are rare. The vast majority of properties have a capacity lower than 100 rooms. Another particularity of the offer in Lausanne: it is in the hands of independent owners or small Swiss groups such as Fassbind Hotels with the Agora, Alpha-Palmiers and City and Minotel with the AlaGare and Crystal hotels. The city’s two stars also have their annexes: the Beau Rivage with the Hôtel d’Angleterre & Résidence and the Lausanne Palace with the Château d’Ouchy, a Loterie Romande building transformed into a hotel in 2008 and managed in parallel to the luxury property.It must be observed that until now the tenors of the worldwide hotel industry have not had a great appetite for the city. Best Western, Mövenpick, Louvre Hôtels-Golden Tulip with Tulip Inn and Accor with its Novotel, Ibis and Formule 1 brands are the only groups currently represented. This may be explained by several elements: long-established family run hotels that do not need a brand to guarantee a high volume of business; a “particularly efficient” Swiss democratic process, as Claude Petitpierre ironically underlines, that slows certain projects and, above all, rare and high-priced locations, especially lakeside where it would be illusory to try to rival with the Beau Rivage, a veritable city resort at the center of a 4-hectare park.And that is not without raising a few problems … “Important companies complained to the town about this lack of beds,” admits Stefano Brunetti. “With 70% business clientele, it is difficult to find a room on weekdays,” admits Claude Petitpierre. Opening in Lausanne? That equation is more difficult than calculating the square of the hypotenuse… But several have made an attempt by adopting several solutions: the takeover of existing properties such as the recent transformation of the Jan hotel into an Ibis; by extension such as that of the Mövenpick which is adding 76 new rooms to its inventory; transformation-extension such as that of the Royal Savoy, closed this year by its owner Qatari Diar to reopen in 2012.Several openings should also make it possible to expand the supply. “20% more rooms are expected,” expects Stefano Brunetti. Foreseeing, the Swiss group Starling Hotels has just imposed its brand on the campus itself of EPFL with a 154-room hotel. North of the town, where the N°2 metro enters town, opens up the outlying neighborhoods, a 140-key hotel project is currently on hold, but could move forward again. The center of town, the area around the train station and the booming Flon district, also incite interest. But the biggest project is incontestably Beaulieu 2020.The revival of the Beaulieu congress and exhibition center includes a tower, that combines offices, shops and hospitality. The city called upon a well-known group that is already present in the city, Accor, to manage three properties: a Mercure, an Adagio and alongside the tower, an Etap Hotel, which expects to be a great success with all the personnel working on logistics for events. Georges Schneider is not totally satisfied: “the ideal situation would have been to have only a hotel complex on this site! ”This tower is still on hold before undergoing construction. But once all the projects have been completed, should we then fear a flood after the draught? “Of course it will be necessary to absorb this new supply, but I am confident,” analyzes Stefano Brunetti.

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