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Warsaw: on your mark!

Warsaw is trying to make up for lost time. A martyr of war, the Polish capital suffers from a negative image in terms of tourism. Membership to the European Union together with the important role Poland should play in it offers fine perspectives for business tourism. Although for a short while longer the hotel supply will continue to surpass demand, hoteliers are doing all they can to reverse the trend.

When the largest Eastern European country – with its population of 40 million – was preparing its entry into the EU, hotel groups were developing many projects for Warsaw at the end of the 1990s. Mostly launched before September 11 and financed by private and institutional local investors, today they are opening their doors. In 2000, the region of Warsaw had 71 hotels versus 114 today and 19,600 rooms. “At the time when the contracts were signed, the city was experiencing a strong demand. The current drop in the RevPAR may be explained by the combined effect of the growth of the offer and flexibility of prices,” explains Sandro Bohrmann, General manager of Westin. Joining the Sheraton near the embassies, this high-tech hotel in the financial district recently entered the market. Before it, the Hyatt Regency, a second Radisson SAS and the InterContinental, one of the tallest skyscrapers, all hotels with over 250 rooms, contributed to the necessary modernisation of the hotel supply, but they make competition even fiercer. “It is possible to find last minute prices that are almost as good as ours for 4 or 5* hotels,” observes Anthony Vesin, director of the all-new Campanile.But within the Polish capital there is competition from Poznan to host large conventions, whereas Budapest, outside, has also positioned itself on this niche. While the city might have the Palace of Culture to hold conventions and exhibitions, that is not enough. Several projects have gone downhill. A project Zlote Tarasi or “ Golden Terrace” should rise up in May 2005. This futurist construction combines, on several levels, an urban park, and restaurants in the midst of which there is a covered area to host large events. Little by little, Warsaw is implementing elements that allow it to refine its position within the New Europe. “It is never to late. We are not pessimistic,” confides Joanna Blicharska. Today, Warsaw is today a promise worth waiting for.With an occupancy rate close to 50% and average daily rates down: 308 zlotys (67.6 euros) in 2003- 2004 versus 323.5 zlotys (71.05 euros) on the last twelve months, Warsaw is currently feeling the baneful consequences of the combination of increased competition between hotels, a drop in demand and a lack of recognition in terms of tourism.The midscale and economy segments have not been outdone in terms of the development of supply. Envergure opened a multibrand near the central station, to reach a total of 500 rooms includin a First Class, “a magnet with its price at 179 Zlotys,” explains Anthony Vesin, director of Campanile, to which may be added a Kyriad Prestige. This group, with its 30 million euros price tag, is “a very fine product”. It enters into competition with the new 333-room Ibis, that enters into competition with the two previous Ibis of Warsaw. In the same way the Courtyard by Marriott rivals with the Novotel at the Okecie Frédéric Chopin airport. The result: -8% OR and a RevPAR down by 25% for the latter.It will be some time before this growth is absorbed. Sandro Bohrmann hopes first of all for “building to stabilise”, since two or three other projects are expected to be built soon, including the Hilton Warsaw & Convention Centre. There is also a hotel included in the Blue City project, a major shopping centre including offices and leisure areas. The Spanish group Barcelo is one of the candidates for the management of this hotel, and the final decision is expected in the weeks to come.Simultaneously, clients have become more scarce in recent years. Just following the dissolution, in 1991, of the pact signed in the same city, growth was steady. The number of tourists in Poland didn’t stop climbing and reached nearly 20 millions in 1997. Direct investments coming from abroad had grown five-fold between 1995 and 2000. Since then a significant economic crisis hit Poland and Germany, its primary source country producing one third of the country’s clientele. Almost all the supply markets posted a drop, starting with the countries of the European Union and Russian and Ukraine neighbours. “Poland is developing rapidly. Subsidiaries of foreign companies today have more and more Polish employees,” remarks Sandro Bohrmann. By ricochet effect, the number of arrivals has dropped back down to 13.7 million in 2003, among which 2 400 000 visitors in Warsaw, and upscale clientele has made a clear drop.It doesn’t prevent further projects. “Poland is a top priority for our group”, explains Keith Lindsay, COO of Louvre Hotels, “The opening of the Envergure complex represents a logical evolution of our expansion in Poland. New projects are under scrutinity by the end of 2005.”Poland continues to offer fine economic perspectives in the midterm. Hoteliers have to expect “some difficult times for the five to seven years to come,” according to John Marriott III, who was in town, but there are reasons to expect a progressive recovery. The number of arrivals in the first four months from 2004 have risen significantly (+18%). And for 2007, the Polish Tourism Institute is counting on 15.3 million tourists, a level equivalent to 2001.The arrival of low-cost companies should play a significant role in the growth of the destination Warsaw. In two months, the supply for a connection such as London- Warsaw grew by 5,000 seats per week. Air Polonia connects the Polish capital to most of Europe’s major cities. By the end of June Skyeurope will connect the Polish capital with Paris, Vienna, Bu d ape s t , London and Amsterdam prior to Rome and Zurich in October.Construction at the Okecie airport will modernise Terminal 1 and ensure the construction of a second terminal in order to bring its capacity up to 12 million passengers in 2010 versus the current 4.7.In terms of tourism, the Polish capital is subject to rude competition from Prague and Budapest, the jewels of Central Europe, and even Krakow within its own country. Unfortunately it does not have the same level of cultural heritage to its benefit. This city-martyr saw 84% of its buildings destroyed during World War II. While resuscitating the city’s splendours such as the Royal Castle or the Old Town, classified on the World Heritage list, from the ruins, the socialist period left behind a “social realist” architectural heritage.“Warsaw will never be Venice or Rome, but my clients are surprised by the number of things there are to do here”, remarks John Quero, of the hotel Rialto, the city’s first boutique hotel. But these attractions need to be known… Andrzej Koslowki, president of the Polish Tourist Organisation, complained of the lack of financial means, 7 million USD, a budget twelve times lower than that of the Hungarian national tourist office. “Tourism is not particularly promoted. It is at the bottom of the of local authorities’ priority list,” comments John Quero.To make up for the lack of international recognition, in a typically Polish tradition hoteliers show solidarity with local authorities. “Warsaw does not have a positive image. The goal of the Warsaw Destination Alliance is to promote the city abroad,” recognises Joanna Blicharska, executive director of this marketing alliance. The leitmotiv of the counter-attack, “Let’s Warsaw together”, offers an invitation to discover Warsaw, a modern and dynamic city, with a warm welcome. An admitted goal: to grow the number of visitors by 5% each year over a tenyear period.Around Alex Kloszewski, the director of the InterContinental, 10 patrons from the city’s primary hotels (Holiday Inn, Hyatt, Le Meridien, Marriott, Radisson SAS, Sheraton, Westin and Sofitel Victoria, to which were added 2 boutique hotels Rialto and Regina) are pushing up their sleeves to develop a network of partners. To this day, the foundation counts 32 members, including the American and English Chambers of commerce, companies set up in Warsaw such as Coca-Cola and Danone, the media with the Poland Weekly and Warsaw Voice and a large number of airlines. To finance the promotion of the city, its current visitors also play a contributing role. At hotels, guests are asked to kindly pay an additional euro per night and 90% participate in this effort.The first results: the coming launch of advertising campaigns on BBC and CNN. Another success to the Alliance’s credit, the agreement with the Beethoven association for the organisation of a festival dedicated to the composer during the summer . Furthermore, a calendar for the next two years will be established in order to sell all the city’s events more efficiently, such as the festivals dedicated to Chopin or to jazz.In terms of tourism, the machine is rolling. But, whereas business tourism accounts for 85% of clientele, Warsaw cannot become a major destination without significantly improving its capacities to host conferences, today the lowest in 25-country Europe. Upscale hotels are all outfitted with state-of-the-art meeting rooms that can accommodate small conferences, such as the 700 participants in the meeting of the World Economic Forum at the Sofitel Victoria on the eve of the expansion of the EU. And the new Hilton should continue to grow the city’s capacities.

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