Capital hotel construction: Experts warn there may be too many rooms

Thousands of new hotel rooms are under construction or in the planning stages for the capital region, but more tourists are needed to fill the beds.

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File picture of Sokos Hotel Tripla bedroom

Dozens of new hotel projects underway or planned in the capital city region, potentially adding thousands of new hotel rooms; but experts say it’s likely this will lead to over-capacity without a significant increase in tourist numbers.

A 430-room Sokos hotel at the new Mall of Tripla is the latest newcomer to Helsinki’s hotel scene, but plenty more hotels – especially big name international brands – are due to open their doors in the next couple of years.

A Scandic hotel at Helsinki Central Railway Station in the old VR headquarters will bring an extra 500 rooms when it opens later this year; while the chain will also open the Scandic Avenue hotel with 350 rooms on Annankatu in 2022.

Hyatt’s Grand Hansa Hotel will open in the converted Seurahuone building in Helsinki city centre, adding another 224 bedrooms in 2022.

A two-storey hotel complex will be opening at Helsinki Airport in 2023 with 718 rooms.

Töölö’s Crowne Plaza is undergoing renovations to all its rooms, set to be completed in in the spring; while the 1930’s Torni Hotel is also being renovated, with new rooms opening in 2021.

Sokos Hotel Flamingo’s recently-completed new wing make it the current biggest hotel in Finland with 539 rooms.

And even more hotels are in the pipeline.

Artist’s impression of new Scandic Hotel, Helsinki Central Railway Station

According to Timo Lappi, CEO of The Finnish Hospitality Association MaRa, there are more than up to 30 hotel projects underway in Helsinki alone – and many others in Espoo and Vantaa as well.

“The projects are currently in different stages; those that are certain to be materialized and those at the stage where only project agreement exists” Lappi tells News Now Finland.

“But if we talk about the broadest scenario, which assumes that all the planned projects will be completed, then it’s more than 30 hotels in Helsinki alone. At this stage, it is still impossible to say how many of these will come to happen, but I believe the most” he explains.

Lappi points out that even the hotel boom started in capital region already some years back – with at least a couple of new hotels each year opening up – but Helsinki is till way behind compared to other Nordic capitals.

“It tells us that the hotel market has attracted a lot of new investors – both to invest in new buildings and new hotel operators. The metropolitan area is consistently having great potential for travellers now and in the future” he says.

“If you compare Helsinki to rival cities like Oslo, Copenhagen or Stockholm, this boom started much later here than there. We had a financial crisis in 2008 which hit the economy far worse than in those rival countries. If we are to succeed in the competition, then it is necessity that new hotels enter the market” he says.

Is there enough capacity for all these new hotels?

With so many new hotels already being planned or built, and thousands of new rooms potentially available, it’s fair to ask whether there’s enough demand to meet the increased capacity.

According to Lappi, if inward tourism to Helsinki doesn’t increase, hotel rooms will be left empty.

“As thousands of new hotel rooms are coming to the market in that short period, it’s certain that the current volume of tourism is simply not enough” says Lappi.

“It’s clear that it requires strong marketing from everyone to get more customers here.”

Nina Niemi, Senior Lecturer in Accommodation Management at Haaga-Helia University of Applied Sciences, thinks that hotel services are already closely matched with tourist numbers, and is confident about the future.

“Many organizations, such as Visit Finland or Visit Helsinki have been making a great effort on promoting Helsinki abroad” Niemi tells News Now Finland.

“If we look at the tourism statistics in Helsinki particularly, it is clear that tourism is constantly growing. There is no sign that traveling is declining” she adds.

Hotel occupancy in the capital region is highest in the summer when some weeks hotels are 90% full at their peak, but a more usual figure is an 80% occupancy rate. This can drop to 65% during January and February, according to Helsinki Business Hub.

Artist’s impression of new airport hotel complex / Comfort Hotel

Foreign brands look to Helsinki for new business

Some foreign hotel brands have noticed the potential for hotel growth in the capital city region.

A recent arrival in the market is Norwegian hotel company Nordic Choice Hospitality Group which runs ten hotels in the capital region like Hotel Kämp, St. George Hotel and Lilla Roberts.

That’s the same group behind the huge Helsinki Airport hotel complex – they’ve already announced that one of those hotels will be Finland’s first Comfort Hotel; the other will be a Clarion.

“We have very high ambitions when it comes to Comfort Hotel. It’s a hotel concept that guests like as we give them budget at prime location in city centers or at airports” says Katalin Paldeak, the company’s Chief Operating Officer.

“This project will be our first in Finland, but we will grow here and it will happen quickly. Especially we look at places like Helsinki, Tampere, Turku and Oulu” she adds.

Construction begins this year at the airport hotels, and is expected to be complete by 2023 with a price tag of €120 million.

American brand Hyatt’s first property in Finland is a huge renovation of the Seurahuone building being done by developer Ylva.

When it opens in 2022 it will be branded as one of Hyatt’s “Unbound Collection” hotels.

“We want to develop Helsinki as broadly and responsibly as possible. The hotel project supports the internationalization of Helsinki as well as the sustainable development of the city’s center. We want to make our Kaivopiha block as high-quality as possible for the people of Helsinki and its visitors” says Ylva’s CEO Antti Kerppola.

Changing hotel scene

Experts note that many of the new hotels in the capital are catering to specific – and different – types of customers.

“When it comes to new hotels, it is obvious that there are a lot of new type of hotels among the standard ones that are designed to meet customer’s needs and wishes individually” says  says Timo Lappi CEO of The Finnish Hospitality Association.

“The hotel industry is having this phenomenon of personalization.”

According Nina Niemi, there’s constantly different type of players in the hotel industry, as today there are more customers with specialized wishes.

“The traditional hotel business will still remain strong but alongside them alternative hotel options emerged, such as budget hostels, work and leisure facilities, and hotels for people on work assignments looking for various types of long-term accommodation.”

Artist’s impression of Grand Hansa Hotel Helsinki