Hotels want fewer and richer guests

Norwegian hotels have generally been enjoying a boom in tourism, but profits remain elusive as fjord and mountain hotels compete with cruiseships and building booms in cities like Stavanger and Bergen have led to over-capacity. Experts say the hotels need to earn more money per guest and be able to charge higher rates.

Hotel Ullensvang on the Hardanger Fjord finds itself competing with cruiseships and is urging more sustainability in the Norwegian hotel industry. PHOTO: Hotel Ullensvang

Hotel room rates in Norway have long been relatively reasonable compared to other countries. It’s still fully possible to book hotels in Norwegian cities at less than USD 200 a night – not cheap, but lower than in many other cities around the world.

They can rely on more volume than hotels in outlying areas, though. Newspaper Aftenposten reported recently that despite Norway having the largest growth in foreign tourism in 10 years, the vast majority of hotels did not generate profits. “Every third hotel in Norway lost money in 2015, the last year we have results for,” Per Arne Tuftin, the former tourism chief for Innovation Norge who now runs the travel industry organization Forum for Reiseliv in Norway. “Four of 10 hotels in the districts operate at a loss. The rest have marginal profits. This can’t continue.

“Norwegian tourism businesses must earn more per guest. Therefore we need to attract more affluent tourists who can pay a higher price.”

Dumped Booking.com and Hotels.com
Barbara Zanoni Utne, who runs the Hotel Ullensvang in Hardanger along with her husband Hans Edmund, agrees. “We must dare to discuss whether it’s worth going after the least profitable tourists, and we can never rely on mass tourism,” she told newspaper Dagens Næringsliv (DN). She even cancelled all the Hotel Ullensvang’s agreements with the large online hotel booking services like Hotels.com and Booking.com, and took all the booking business back themselves.

“Many think I’m crazy, so we’ll see if that was wise,” Utne said, but she objected to the online service’s high commission costs and use of market muscle. Many hotels using such online services also only sell a certain number of rooms via them, and when they’re booked, the service can inform travelers that there are no available rooms, even though there is availability if the hotel is contacted directly.

Hotel Ullensvang is already in the high end of hotels and room rates in Norway, currently advertising rates from around NOK 2,500 to more than NOK 4,000 per night. They stress quality, though, and had strong bookings heading into the summer season.

Continental thriving
Another high-end hotel that’s doing well is Hotel Continental in Oslo, Norway’s only member of the international Leading Hotels of the World chain. Hotel owner Elisabeth C Brochmann could report at the end of June that Hotel Continental doubled its profits in 2016 and that growth was continuing this year.

It comes after Brochmann invested nearly a half-billion kroner in a major renovation of the historic hotel that includes the legendary Theatercaféen. “We’re also experiencing that the tourist market is steadily stronger and that the tourist season is longer,” Brochmann told DN. She said the Norwegian market was Continental’s most important, “but we’re also seeing increases from the US and Asia.” Hotel Continental recently took over first place on the website Trip Advisor’s list over the best-liked hotels in Oslo. Thon’s Rosenkrantz Hotel placed second and The Thief at Tjuvholmen was third.

newsinenglish.no/Nina Berglund

  • frenk

    The Norwegian ‘cost base’ is the reason for this. If all these businesses are losing money – then why are they still operating?