The Independent Hotel Corporation, IndeCorp, has identified Eastern Europe - particularly cities such as Budapest, Prague and Warsaw - as offering the greatest potential for the travel trade when the European Union expands from 15 to 25 countries on 1st May.
IndeCorp, which is headquartered in Chicago, provides business systems and sales and marketing support to more than 300 luxury independent hotels in more than 50 countries through its three brands - Preferred Hotels & Resorts, Summit Hotels & Resorts and Sterling Hotels & Resorts.
The company is committed to expanding its portfolio and is researching possible new member hotels in several countries set to join the EU. IndeCorp’s existing hotels also expect to benefit from greater outward-bound travel from the 10 expansion nations in the long-term.
“Eastern Europe is a vast region with tremendous potential as a business and leisure destination - we will be looking at possible new member hotels in cities such as Budapest, Prague and Warsaw,” said Richard Lewis, managing director of IndeCorp’s portfolio of Summit Hotels. “Countries, like Poland, Hungary and the Czech Republic, are intriguing possibilities in the long term because they will attract more and more in-bound leisure travellers. Ultimately, IndeCorp is looking to have a strong presence in these countries - a sprinkling of hotels is not enough.”
The full list of countries joining the EU in May are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. IndeCorp already has hotels in Cyprus (3), Czech Republic (3), Estonia (2), Latvia (1) and Lithuania (1).
An historic city of 1.6 million inhabitants, Warsaw’s choice of up-market hotels is limited but Lewis feels this will change rapidly. The city’s airport already serves 3.5 million passengers annually on 60 routes and is just two hours 25 minutes flying time from London. Budapest, which has a steadily developing hotel sector, is a city of 2.1 million and is famed for its location on the Danube River.
Prague - a relatively small capital city - has 1.1 million inhabitants, but probably has a more advanced infrastructure than Warsaw and Budapest. The city’s historic centre was listed in UNESCO’s World Cultural and Natural Heritage Register in 1992.
“Lots of people in the travel trade are eyeing these new EU countries with interest,” said Lewis. “We’re already partnering with hotels in cities like Riga in Lithuania and Tallinn in Estonia because they have a great long-term future. The EU expansion must be good news for them. However, anyone looking to make gains in the short-term is sorely mistaken - all ventures must be for the long-term and hotels in these new EU nations must find experienced partners.
“Probably the greatest service we can offer is helping hotels to market themselves. A good example is Andel’s in Prague, a wonderful boutique hotel, which had a slow start. Now it has a host of special packages to attract guests and this is paying off. ”
Lewis believes many lessons can be learnt from IndeCorp’s experience in Russia where it has hotels in St Petersburg and Kazan. The company also opened a general sales office in Moscow last year in order to exploit its growing outward-bound market. It has already recorded a 30 per cent increase in Russian travellers booking into IndeCorp hotels around the world.
“For a number of years, there been has a steady stream of wealthy Russians travelling to Western destinations and we’ve been eager to capture that market,” said Lewis. “People talk about the Roman Abramovich effect but it’s far broader than one or two oil billionaires. For instance, Dubai has been a haven for wealthy Russians since the mid-1990s.”
Bruno Maini, managing director of IndeCorp’s Sterling brand, outlined some of the potential problems facing the new EU nations. “Some of these countries are recovering from up to 70 years of Communism and they simply do not have the infrastructure to support extensive leisure or business travel,” he said. “It is going to take time for facilities to develop.”
Maini lists India as a growth area for 5-star hotels, while Lewis is excited by the possibilities offered by China and its increasing numbers of new independent luxury hotels. “India is enjoying a huge economic upsurge,” he said. “This is based around the development of its service industry and it has led to a more affluent population. This will lead to more hotels and more outward bound travellers as the market matures.”