The Stockholm Market

REVIEWS

The Wit

Dana

Elysian

Elysian

Stockholm is a beautiful city, all grand buildings and waterways. It is also home to the Swedish stock exchange and many multinationals. With a service-based economy, the Swedish capital has been less affected by the current economic downturn than more industrial centres such as Gothenburg where Volvo and Ericsson are big employers. “Over the last years demand was increasing by some 5-6% per annum driven mainly by business travel with leisure demand largely unchanged,” explains Björn Arnek of Sveriges Hotell & Restaurang företagare, the Swedish Hotel & Restaurant Association. However the Swedish economy was already in decline prior to the collapse of the banking system in September 2008 and the 4-5% contraction in GDP is having a knock-on effect in the hotel market.

This has not been helped by significant increases in supply. Christie & Co report openings totaling 448 guestrooms in 2007 followed by over 700 guestrooms in 2008. Some 558 of these rooms came with the strikingly angular Clarion Hotel Sign, beside the railway tracks of the Arlanda Express to the airport, making it the largest hotel in town. Also opened in 2008 was the Lydmar Hotel, with 46 spacious rooms. This is just along from the Grand Hotel, itself fresh from a recent extension and renovation that included the addition of the Mathias Dahlgren restaurant designed by Studioilse of Ilse Crawford, and a Raison d’Etre spa. Meanwhile Axios Hospitality Real Estate recently brought in interior designers, Champalimaud, to upgrade the 465 room Sheraton Stockholm across from the City Hall. Newer still are the 82-room Story Hotel and the Hotel Skeppsholmen, with just over 80-rooms apiece and both reviewed.

With the Comprehensive Hotel Pipeline Report of STR Global, providers of hotel performance data, showing a further 1,364 guestrooms under construction, in final planning or in planning stages the expansion looks set to continue albeit at a slower rate. A “definite” amongst these is the 278-room Courtyard by Marriott Stockholm opening in February 2010.

Given the oversupply situation and general climate of economic gloom, results for the city are not all that bad. According to STR Global the year-on-year occupancy for the year to 31 October 2009 saw an overall decline of only 4.5%. Arnek explains that this is because of effects of the weakening Swedish Kronera. “This has led to an increase in leisure demand compensating for the reduction in corporate business,” he states, “The twin effect of the depreciation of the Swedish Kroner has been to attract foreign tourists and also persuade Swedes to holiday at home thereby following a general recessionary trend for ‘stay-cations’.” Furthermore the holding of the rotating Presidency of the EU Council for the second half of 2009 undoubtedly saw Stockholm take a good portion of the 50 to 80,000 extra room nights the country as a whole could expect. This will have served to mitigate the loss of demand elsewhere. Arnek summarises, “The increase in supply and reduction in demand has put pressure on rates and we are going to have some tough years ahead.” If there is to be any light at the end of the tunnel it will be for sectors less well represented in the city. These include limited service hotels, aparthotels, hotels near conference centres and more budget accommodation to encourage leisure trade.