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The Oberoi Group is negotiating with Four Seasons for a marketing alliance for its properties in India and abroad, according to a report.

The source said that apart from co-branding its properties, the group might look at divesting a minority stake to the hospitality chain.

The Oberoi Group has been discussing a marketing alliance for the last two years. The group has started restructuring to allow amalgamation of various subsidiaries within the group.

Millennium & Copthorne 10 mths to Oct REVPAR down 2 pct year-on-year

AFX News - Millennium & Copthorne Hotels PLC reported a 2 pct year-on-year fall in revenue per available rooms (REVPAR) for the 10 months to Oct 31, but it remains confident its 2002 results will be ahead of last year. REVPAR fell 6 pct in the first half to end-June.

"We continue to be encouraged by the ongoing trading of the group and remain confident that the group's performance in 2002 will be ahead of last year," it said.

"In the context of continued worldwide economic uncertainty and political unrest in the Middle East, we believe that the pace of economic recovery going into 2003 is likely to remain slow."

In the US, the regional market remains very challenging and is still affected by the reduction in domestic air travel. Its occupancy and average rate in this market are both slightly below 2001 levels, resulting in a REVPAR decline of 4 pct for the 10-month period, it said in a trading update.

In New York, The Millennium Hilton has been closed since Sept 11 2001 and it has received a total of 26 mln usd so far from the insurers. It aims to reopen the hotel by mid-2003.

In London, there is still significant pressure on rates in the market; however the occupancy increased by more than 2 percentage points with the average rate down by 10 pct.

In Asia, its occupancy was more than 3 percentage points up on last year but the average rate reduced by 4 pct to leave REVPAR just ahead of 2001.

While there may be some short-term decline in leisure traffic to South East Asia, the company said it does not believe the events in Bali in mid-October will have a major impact on its business.

Hotels group Hilton yesterday said it had pegged back capital expenditure for next year after seeing little sign of an upturn in trading conditions.

The company intends to spend £130m on projects in its hotels division during 2003 compared with a figure of around £200m this year.

However, Hilton said the quality of its estate meant that the figure would still be sufficient to ensure its portfolio stayed in good shape.

The budget will also be enough to cover the £46m being spent on the redevelopment of the Hilton Sydney.

The company's budget review comes after figures for the four months to October 31 showed profits were 9 per cent lower than a year ago. That compares with a 10 per cent fall in half-year profits reported in August.
It said yesterday that "political and economic uncertainties" had resulted in widely varying performances in different parts of the world, with hotels in key European cities among those affected.

It added: "The timing of a sustained recovery in the hotels business remains difficult to predict."

The latest trading figures for September and October show Hilton's UK hotels division improved its revenues per average room figure by 4.6 per cent, although the figure benefits from weaker comparisons last year because of September 11.

In the company's five-star London hotels, the increase was 10.5 per cent after a 12.9 per cent decline in July and August, while four-star properties rose 6.5 per cent after a dip of 7.5 per cent in the previous period.

A Hilton spokesman said its London hotels had benefited from aggressive marketing to attract customers on weekend and leisure-based breaks.
In the UK provinces, Hiltons continued their resilient performance with revenues up 2.4 per cent in September and October compared with a rise of 1.4 per cent in the previous two-month period. Across the group, the hotels division revenues per average room figure rose 7.7 per cent

Kurt Ritter, president & CEO of Rezidor SAS Hospitality, has announced the reorganization of Rezidor SAS, following the signing of a multi-brand agreement with Carlson Hotels Worldwide in September of this year. With the agreement, Rezidor SAS Hospitality becomes the master franchisor for the Europe, Middle East and Africa (EMEA) regions to operate or license hotels under the brand names of Regent, Country Inn and Park Inn Hotels, complementing the existing Radisson SAS Hotels & Resorts brand and thereby reaching all the major segments of the hospitality industry.

The following executives, who were formerly responsible for the Radisson SAS Hotels & Resorts brand on a corporate level, have now been appointed to the following positions within the umbrella Rezidor SAS organization based in Brussels:

Fredrik Korallus, senior vice president sales & marketing, Rezidor SAS (Korallus has also been appointed senior vice president and COO of Park Inn Hotels. See Park Inn section below).

Gordon McKinnon, senior vice president brands & concept development, Rezidor SAS

Werner Kuendig, senior vice president special projects, joint venture Middle East and Africa, Rezidor SAS.

Bernard Hazenberg, vice president business development for Southern Europe and the Benelux, Rezidor SAS.

Wilma Kellermann-Baans, vice president business development for Central Europe, UK and Ireland, Rezidor SAS.

Claes Livijn, vice president business development for the Nordic countries and the Baltics, Rezidor SAS.

Arild Hovland, vice president business development for Eastern Europe and the Southern Africa Development Community (SADC), Rezidor SAS.

Jean-Marc Busato has been appointed Vice President, Middle East. In his new capacity, he will be responsible for the development of the Rezidor SAS portfolio in the Middle East.

Adrian Ort has been appointed senior vice president & COO for Country Inn and the Rezidor SAS’ planned new lifestyle brand. In this position, he will be responsible for managing the Country Inn hotels in the EMEA region as well as developing the new lifestyle brand that will be introduced shortly by Rezidor SAS.

Fredrik Korallus has been appointed senior vice president & COO for Park Inn Hotels. In this role, he will be responsible for the development and management of the Park Inn Hotels’ portfolio in the EMEA region. Korallus will also serve in the capacity of senior vice president sales & marketing for Rezidor SAS Hospitality until a successor is appointed.

Subsequent to the new Rezidor SAS structure, Kurt Ritter, who remains president & CEO of Radisson SAS Hotels & Resorts, has announced the following appointments:

Marcus Bernhardt, formerly area vice president, has been appointed senior vice president & COO for Radisson SAS Hotels & Resorts. In his new function, he will be responsible for the management of all hotels with the exception of the Middle East and South Africa.

In view of the future expansion and their seniority within Radisson SAS, the following regional directors have been promoted to area vice presidents:

Torsten Kirschke, area vice president Germany, Switzerland and China, Radisson SAS.

In order to focus on the growth within their region, the following general managers have been promoted to regional directors:

Heimo Leitgeb, regional director Austria, Sophia, Budapest, Prague & Bratislava, Radisson SAS.

Based at the Corporate Office in Brussels, the following have been assigned new responsibilities to strengthen Radisson SAS’ support functions:

Stan Van Roij has been appointed vice president revenue development, Radisson SAS.

John F. Monhardt has been appointed vice president future openings, Radisson SAS.

Rezidor SAS is the master franchise holder for the Regent, Radisson SAS, Country Inn and Park Inn brands in Europe, the Middle East and Africa (EMEA). The company currently operates 117 Radisson SAS Hotels & Resorts with a further 42 properties under development. The Radisson SAS portfolio now extends to 39 countries. Rezidor SAS has held the Radisson master franchise since 1994. Regent, Country Inn and Park Inn joined the portfolio in 2002. The company projects that they will have 700 hotels across all brands operating within the EMEA region by 2012. Rezidor SAS is a wholly owned subsidiary of the SAS Group.

Think Tank on Tourism Destination Management: Building Competitiveness through Education, Training and Research - WTO

From 2 - 4 December 2002, a Think Tank on Tourism Destination Management: Building Competitiveness through Education, Training and Research will be held at WTO Headquarters. The purpose of the Think Tank is to establish coordination with destinations within the WTO.HRD Sbest Initiative for excellence through quality service using education and training.

Some 30 destinations worldwide forming part of the WTO Destination Management Task Force have been invited to attend. In agreement with the WTO.Destination Management Task Force, they will serve as pilot cases in the search for excellence worldwide in this area. Members of the WTO Education Council will also participate in the Think Tank with the aim of establishing direct contact and close collaboration between destinations and knowledge specialists, in setting new paths for action in Tourism Destination Management.

The discussions during the Think Tank will focus on: (i) reviewing the state-of-the art in Tourism Destination Management; (ii) critically analysing the real needs of destinations in planning and managing for success: strategic positioning, competitiveness and sustainability, and (iii) establishing a platform for action using the WTO.Sbest Initiative.

The WTO.Sbest Initiative is a framework concept encompassing concrete programmes and avenues for action sharing the common goal of contributing to Tourism Destination competitiveness and success through excellence in service. This is achieved through actions combining the analysis of needs and quality gaps with training (and education) activities of high value added characteristics. WTO undertakes to promote all successful experiences achieved within this initiative. It's expected that the delegation from each destination could comprise one representative from the public sector, one from the private sector and one from an education institution, but this is open to discussion in each case.

Website: http://www.world-tourism.org

Findings of the 14th Annual European Hotel Industry Investment Conference

Despite continuing geo-political uncertainty, volatile international travel patterns and declines in hotel RevPAR, the European hotel industry continues to attract investment, according to experts speaking at this year’s 14th Annual European Hotel Industry Investment Conference. While speakers agreed the market outlook remained uncertain, the industry fundamentals were strong. More than 250 executives from the hospitality industry met at the London’s Royal Lancaster Hotel on 6th November 2002 to consider the outlook for the European hotel industry. Hosted by Deloitte & Touche and Jones Lang LaSalle Hotels, this was the 14th time this unique event has been held.

Nick Marsh, Executive Vice President of Jones Lang LaSalle Hotels said: “The last 12 months have proven fairly resilient for the European hotel investment market. Unlike the US, where the market shut down through the fourth quarter of 2001 and the first two quarters of 2002 the European markets held their nerve and owners bringing assets to the market, have found a variety of different capital sources willing to invest in the sector. Whilst 2003 looks as if it will be tough in some markets, there are brighter spots and the amount and variety of capital available in the market today will mean the investment markets can look forward to a reasonable 2003.”

Nick van Marken, the partner in charge of hospitality consulting at Deloitte & Touche, said: “The potential for conflict in Iraq and uncertainty brought about by the on-going threat of terrorism continue to unnerve operators, investors and travellers alike. Volatility has become a way of life for the industry and hoteliers are having to be fairly innovative in protecting volumes and their bottom line. Certain sectors (notably the European budget sector) are performing well although the resort sector in the Mediterranean has exhibited mixed performance. While lenders are cautious, low borrowing costs and the availability of debt mean that transactions appear set to continue. There are no distressed sellers. The market is quite unlike that of the early 1990s”.

Other speakers included Roger Bootle of Capital Economics, Chris Tarry, airlines and aviation analyst at Commerzbank, Sinead Finn of Ryanair, Sébastian Bazin of Colony Capital and Rod Taylor of Barclays. Copies of all the presentations can be accessed via:
www.HotelBenchmark.com/14thannual.htm or www.joneslanglasallehotels.com

The European Hotel Industry Investment Conference is the premier forum for discussion, analysis and networking for individuals in the hotel investment industry. The event is preceded by a cocktail party, this year held at the Four Seasons, Canary Wharf.

Deloitte & Touche is the UK’s fastest growing major professional services firm. It is based in 23 locations, has over 10,000 staff nationwide and fee income of £713.6 million in 2001/2002. Deloitte & Touche is the UK practice of Deloitte Touche Tohmatsu, a global leader in professional services with over 98,000 people in 140 countries and fee income of $12.5 billion for the year ended 31 May 2002.

Website: http://www.deloitte.com

e-Tid.com - Euro Disney has blamed a lack of hotels capacity on site for a disappointing FY which saw it record a net loss for the first time since 1984.

Another factor in its €33.1m FY net loss was the start-up costs from opening of a second park on site. But as well as incurring start-up costs, Walt Disney Studios failed to attract the desired interest. The results pointed to an H2 revenue lift of 13.1% which did not meet its expectations.
Hotels on site were achieving an occupancy rate of 95% after the studios opened in March, which averaged out at 88.2% for the year. Chief financial officer Serge Naim said: ‘We dramatically lacked capacity and people couldn’t find rooms on our site so they didn’t come.’

Disney has seven themed hotels. Eighteen months ago Euro Disney allowed third parties to develop hotels on site, an offer taken up Airtours, as was. It is currently developing a 400-bed hotel on site, due to be operational by Easter 03. This March, Thomas Cook AG announced plans for a hotel on site which would be built and operated on its behalf. TCAG’s property would be designed for German and Austrian visitors.

The results have been posted on the corporate section of Euro Disney’s website. Click hereto have a look.

TravelWeeklyEast - The Pacific Asia region is the new engine for growth. This is the message the Pacific Asia Travel Association (PATA) president and CEO, Peter de Jong, had for the leaders of the global tourism industry at the IPK International seminar, “The Latest Global Travel Trends 2002-2003," held at the recently-concluded World Travel Market in London.

"Pacific Asia is the world’s fast-growing region, demographically and economically. The region stimulates 60 percent of global tourism demand. Travellers to the region spend over US$170 billion annually or 40 percent of global tourism receipts.”

De Jong said that despite 2001 and 2002 being trying times for tourism, most of the Pacific Asia region was doing well. Northeast and Southeast Asia were still driving the region’s growth - both as destinations and markets.

In 2001, international visitor arrivals to Northeast Asia increased three percent and Southeast Asia 5.2 per cent. Almost 65 percent of international visitor arrivals to Northeast Asia and Southeast Asia came from within these two regions.

In the first eight months of this year, foreign arrivals to China (PRC) increased by more than 16 percent. Similar double-digit growth rates were also recorded for Hong Kong SAR and Macau SAR, he said.

In a reference to security and travel advisory issues de Jong said, “The events in Bali and elsewhere in the world have helped to clarify PATA’s focus as an association working on behalf of its members. Advocacy involving both the public and private sectors is an essential element of our new focus.”

Best Western, THE WORLD’S LARGEST HOTEL CHAIN®, announces 22 winners of its annual Best of the Best Awards. The program, now in its third year recognizes Best Western hoteliers throughout the United States, Canada and the Caribbean for excellence in quality and service. In addition, 44 hotels have been chosen as honorable mention.

Best of the Best winners are chosen based on strict criteria including two quality assurance reviews conducted during the year in which they must receive a perfect score on each occasion. Honorable mention recipients scored at least one perfect review and one review totaling 975 out of a possible 1,000 points.

“The Best of the Best Awards recognize leading Best Western hotels,” said Ken Smotherman, Chairman of Best Western’s Board of Directors. “The awards reflect dedication to the high quality of our brand and outstanding achievement in hotel operation by each of the winners.”

Six of this year’s recipients are repeat winners. Those hotels are: Best Western Shadow Inn, Woodland, Calif.; Best Western Revere Inn & Suites, Paradise, Penn.; Best Western Ludlow Colonial Motel, Ludlow, Vt.; Best Western Executive Court Inn & Conference Center, Manchester, NH; Best Western Big Spring Lodge, Talala, Okla. and the Best Western Elm House Inn, Napa, Calif.

All winners are being recognized in front of 2,000 peers at the hotel company’s international Convention this week in Las Vegas, Nev. Hotel owners will receive a trophy, along with special designation in the company’s printed and online hotel guides.

Best Western International is THE WORLD’S LARGEST HOTEL CHAIN® with more than 4,000 hotels in 80 countries and territories. Best Western is a membership association of independently owned and operated hotels that provides marketing, reservations and operational support to its members.

This is the first of a series of articles in which we will discuss current problems that some borrowers (and obviously their lenders) are having with hotel mortgage loans, along with ideas and strategies for possible resolution.

To start, frequently asked questions include: how bad are things in the hospitality industry, especially regarding the conditions of hotel mortgage debt? Also, is this a “U” or “V” shaped downturn? As things have evolved over the last year or two, the downturn can probably be best described as an “L” shaped downturn. In most markets, Revenue per Available Room ("RevPAR") has deteriorated and, for the most part, remained fairly flat. On a positive note, however, improvements in the operating margins of the hotel industry have been well chronicled. Additionally, the current interest rate environment has been an added blessing for the industry, especially for borrowers of variable rate hotel mortgage debt. So the volume of hotel mortgage defaults and foreclosures has not been at the levels that had been expected.

This does not mean that there have been no defaults or foreclosures. From the lenders’ perspectives, particularly as it relates to their real estate debt portfolios, hospitality mortgages have been by far, the most troubling component. However, in most cases in which a lender has a reasonably balanced mortgage portfolio spread out over a variety of real estate asset classes, hospitality mortgages are usually relegated to a minority of the total. As such, even if default rates of hotel mortgages have climbed, such defaults only constitute a small percentage of lenders’ portfolios. Due to this, few lenders seem to be worried about “going under” because of defaulted hotel mortgage debt. Therefore, improved operating margins, low prevailing interest rates, and a lack of general real estate malaise (affording lenders the opportunity to be somewhat understanding in handling defaults within their hotel mortgage debt portfolios) have combined to limit the number of defaults and subsequent foreclosures. Still, defaulted hotel mortgage debt (despite its percentage of an overall portfolio) represents a problem with which needs to be dealt.

As stated above, since real estate mortgages portfolios are, in general, doing well, and the problems to date primarily involve hospitality, not many lenders are sufficiently staffed to manage these problem loans. In the early 1990s, when real estate defaults were rampant, workouts, foreclosures, and troubled asset management essentially became a “cottage industry,” with numerous real estate professionals becoming active in the resolution of these problems. In response to this current lack of workout personnel, HVS has created a new and specialized division to handle this cycle’s downturn: the HVS Special Hospitality Assets Group. Along with two major national law firms, we are currently providing a host of services to lenders and borrowers, working through and resolving their issues (please click here to view more information on the HVS Special Hospitality Assets Group).

Essentially, a default in a hotel mortgage loan is a liquidity problem, or more precisely, is the result of a lack of liquidity. What exactly do we mean by the term liquidity? A lack of cash, cash flow, cash investment, and/or cash equity. In other words, a hotel that is the subject of a monetary default will often enter a downward spiral, and the various parties associated with the hotel (and/or its underlying debt) cannot or will not resolve the problem with cash. Of course, this problematic trend usually begins with a lack of liquidity at the property itself. The hotel is not generating enough bottom-line cash flow to fully service its monthly debt service requirements. This failure to meet debt service then extends this liquidity problem to the lender. However, the lender often takes the position that it has already invested as much money as it is going to into the project, and will not invest any additional capital. At such point, the lender is likely becoming concerned about the loan’s repayment risk (specifically, as it relates to principal amounts), so the notion of any additional investment is probably a non-starter.

Financial conditions of the borrower often mirror those existing at the property; when the property (or the hotel industry in general) is doing well, the borrower should be financially stable, at a minimum. Alternatively, when property operating conditions deteriorate, borrowers often suffer. This is particularly true for those borrowers that are heavily invested in the hotel industry. As such, more often than not, a borrower will not be in a position to provide much (if any) meaningful financial assistance to a troubled hotel property.

By this point, the borrowers may have missed some scheduled payments (principal and/or interest). Sometimes, they will have asked for, and obtained, some level of temporary forbearance or other concession(s) from their lenders. Due to the apparent “L” shape of the industry’s current downturn, however, sooner or later some action must take place. Examples include the borrower seeking more formalized and longer-term concession(s) from the lender, the lender beginning foreclosure proceedings, the borrower contemplating bankruptcy, or some other decisive plan of action. Such topics will be discussed in more depth in our upcoming segments.

TravelCLICK Reports Third Quarter Electronic Booking Results for Top Asia-Pacific Markets

TravelCLICK released results today for third quarter hotel room nights in Asia-Pacific, booked electronically through the Global Distribution Systems (GDS). While all of the top ten Asian markets show improvement over 2001 for the quarter, comparisons to second quarter bookings show mixed results. The number of room nights booked increased over second quarter 2002 in just half of the markets (Sydney, Tokyo, Beijing, Seoul, Shanghai). Average daily rate for the third quarter was down from the second quarter in nine of the top ten markets.

The results were compiled from TravelCLICK's comprehensive database, which is the exclusive source of hotel industry electronic distribution data from the Abacus/Infini, Axess, Amadeus, Galileo, Sabre, and Worldspan GDSs. TravelCLICK's data also includes consumer online GDS hotel bookings made through many of the major Internet travel sites, such as Expedia.

Top Asia-Pacific Destination Markets
The top 10 destination markets for total GDS room nights in Asia-Pacific during the third quarter were, in order:

Rank    City    Room Nights     Year-Over-Year Growth Average Rate    Year-Over-Year Growth
1       Sydney 151,140 7.9%    $ 100.44        0.4%
2       Melbourne       132,594 12.5%   $ 94.43 0.5%
3       Singapore       94,714 4.8%    $ 115.91        -5.7%
4       Hong Kong       92,275 23.5%   $ 151.69        -9.7%
5       Tokyo   90,385 8.9%    $ 177.02        -1.6%
6       Beijing 42,284 41.7%   $ 112.52        -5.1%
7       Brisbane        42,121 22.4%   $ 80.42 5.4%
8       Seoul   38,449 13.5%   $ 182.62        4.1%
9       Shanghai        37,964 79.1%   $ 128.48        -3.1%
10      Perth   36,703 19.9%   $ 73.88 -2.8%

"Shanghai continues to show explosive growth over last year, with a 79% increase this quarter echoing the 75% increase in the second quarter. Beijing and Brisbane also continued with healthy growth rates, recording 42% and 22% growth respectively, year-over-year in room night bookings," said Jan Tissera, vice president of international sales for TravelCLICK.

To receive a free listing of third quarter results by top 50 cities worldwide in electronic bookings, please e-mail emonitor@travelclick.net. GDS hotel booking summaries by individual local market are available for downloading on the TravelCLICK's public Web site: www.travelclick.net.

About TravelCLICK
TravelCLICK ( www.travelclick.net ) is the leading provider of solutions that help hotels and other travel industry suppliers improve revenue from electronic distribution channels. TravelCLICK's exclusive electronic marketing networks allow hotels and other travel related suppliers to target promotional messages to specific travel agents, consumers, and group meeting planners when they are booking travel. The company's competitive benchmarking reports provide hotels with price and booking performance information unavailable through any other source.

http://www.travelclick.net

Poland: Grand Hotels, Falling Prices

Newsweek's story on the developing Warsaw hotel market begins this week with the story of expat Pole Malgorzata Greem, mother of 10-year-old Liberty. Malgorzata, who married and lives in the UK, was always in the habit of working out a different solution on her regular trips back to Warsaw - hotel rooms in the city have been massively expensive ever since 1989. To a certain extent it's still the case - most of the hotels in the city center remain in the upper ranges of the market, but there are now so many of them that Malgorzata's attitude has changed somewhat. This year on her trip back to Warsaw, she lodged herself in the four-star Novotel in the city center - competition is up and prices have fallen by anything from ZL100-200 in the capital's most prestigious locations.

Changing Circumstances

To be more exact, prices, estimate market analysts, have fallen by 15-25 percent in the last year. Looking at it a bit deeper there are two reasons for this. The first is completely external to the sector: the economic recession has hit the industry hard. Expats on contracts or long business trips to Warsaw are now much harder to find - and even if they're here, then the emphasis is on cost savings. The second however, is purely internal - there are simply too many new rooms, even for an economy growing at twice the pace of Poland currently.

According to the Tourism Institute within the next year, Poland will have as many as 1045 full scale hotels, twice as many as eight years ago. Already, as a result, the top rank luxury hotels are facing weeks on end of empty rooms. The hardest situation, says Ireneusz Weglowski from the old Orbis state network, is for those hotels operating in the largest cities, since it's here that the new investments are naturally focused. In Wroclaw and Krakow, he continues, the number of rooms in the top category has risen by as much as 50 percent in the last year. At the same time the number of tourists coming into both cities has fallen by 14 percent in comparison with 2000. Income from tourism overall has fallen further - last year it was EUR5.4bn, around 20 percent less than a year earlier.

Market Hit By Over-Supply

The situation worldwide is the same - possibly providing some suggestion for why so much investment is focusing in Poland currently. Construction is likewise in the doldrums, hence investment costs are for the moment somewhat cheaper. Bear a couple of years of losses, goes the alternative logic, and the new hotels will be in a strong and unthreatenable position. And if in the meantime one can emerge ahead of the competition then all the better. The only problem is that for many it really has been a disastrous year.

In Warsaw in recent months, the Radisson and Hyatt chains have opened high class hotels respectively housing 310 and 250 rooms. Well on the way as one gazes across the city's skyline, are similar projects by Swedish construction group Skanska: the Intercontinental (400 rooms) and Westin (366 rooms). The choice then is an interesting one for the existing operations. Orbis is a prominent example. As a rule, it's buildings do not have the western look of Warsaw's Sheraton , Marriott or other new chain hotels and in some of its prestigious locations the company has already begun to consider more adventurous cuts in prices to win the price war. Effectively by reducing prices by ZL200 or more, a hotel like the chain's prestigious Krakow Sofitel building opposite the Wawel royal castle, may actually move down a category - hence changing its image and marketing.

A giant in the lower leagues. By doing so, however, Orbis is also taking a large financial risk. Building a four- or five-star hotel room currently costs around $ 150-200,000, three-stars in comparison comes in at around $ 90-100,000. Warsaw's five-star Radisson, for example, cost around $ 50m. At top rank prices this is an investment that, according to the original plans, should come back to the company over the course of 7-10 years. As it is, however, estimates already suggest that this return period will need to be extended by at least a further 2 years. Were the hotel to dump prices, as Orbis are considering doing, the consequences in the longer run could be yet worse.

Crisis on the Way for Some

And the conclusion? "When the new hotels are completed next year, the old operations will find themselves in financial trouble," says Colliers real estate consultants' Marek Dabrowski. The wrong decisions, he says, were actually made some five years ago during the hotel boom, and once investments were fully underway there was no turning back. But it is a story of boom and bust - the market in Warsaw has already been through one crisis in the early to mid-1990s, when a new wave of high class hotels - Sobieski, , Mercure, the refurbished Bristol - flooded onto the market almost all at once. Demand couldn't keep up, and the Sobieski was taken over by creditors, the Mercure sold off in an atmosphere of scandal. Only time will tell if all that awaits the market is a series of similar changes of ownership or more serious moves to convert some of the existing buildings to other functions.

Newsletter - November 18, 2002