Just outside the East German town of Hoyerswerda, the white-stoned Lake Hotel beckons visitors with four-star elegance. Guests desiring a waterfront view, however, will need to wait another three years for the lake to fill up.

The site is one of a chain of lakes being formed out of open pit coal mines in a 10 billion-euro ($12.5 billion) effort to forge a regional tourist destination that will draw visitors and give the town a new economic lifeline.

Hoyerswerda is symbolic of the lengths to which Germany has gone to rebuild the east of the country — pumping 2 trillion euros into the region in the 25 years since the Berlin Wall fell — and the work that remains to be done. While the gap is shrinking, unemployment is still higher in the east than the west and those in the east earn less. And many towns like Hoyerswerda continue to be propped up by government spending.

“When young people ask where they can work, and we can only promise that things will start to pick up in 2025, they of course ask what they’re supposed to do until then,” Stefan Skora, the town’s mayor, said in an interview. “That’s the real problem, we can’t solve it overnight.”

Hoyerswerda’s economic collapse has been especially acute. The town has seen the greatest exodus of any East German city, after two-thirds of those in the coal-mining industry lost jobs in the years after reunification. The decline is visible in the rows of empty apartment blocks built by the Communist regime in the 1960s and 1970s to house some of the area’s 140,000 miners.

Lake District

Since 1997, about 10,000 of the flats have been torn down – – replaced by smaller properties, wooded parkland and playgrounds — and another 2,000 are set for demolition in the next decade. The community has also restored the picturesque old town with cobbled streets, red-tiled roofs and street signs in both German and the local Sorbian dialect.

At the heart of the revitalization are the lakes, most of which have already been completed. The government in 1994 set up an agency called the LMBV to handle the decommissioning of the mines after coal demand plummeted. The LMBV decided to follow the lead of Senftenberg, a neighboring town which in the 1970s filled its own former coal mine with water, and create a chain of more than 20 lakes with Hoyerswerda at the center.

“It’s a region where no business can find a reason to set up a site — that’s partially because it’s too far away,” said Joachim Ragnitz, a Dresden-based economist at the Ifo research institute. “They have to make the best of what they have, so naturally they end up with tourism. So we’ll have to see.”

Boosting Revenue

The main target of the push is visitors from neighboring Czech Republic, which is just 35 miles away. The town, which became known in Germany for industrial decay and race riots in 1991, is counting on projects like a hotel and restaurant built by a local car dealer for 4 million euros on the shore of one of the new lakes to help remake its image.

With more such investment, the region aims to boost annual tourism revenue to more than 150 million euros by 2025, said Kathrin Winkler, the local tourist board’s head. That’s still less than the 250 million euros that the LMBV spends every year to transform the pits into lakes, build waterways and locks to link them, and find new businesses to occupy old sites.

“It’s not enough just to turn our mines into lakes,” Winkler said in her office overlooking the town’s cobbled main square. “We have to wait for the redevelopment to be completed before we can start looking for hotel and other investors.”

The biggest challenge has been stopping the population decline as people have left to seek work elsewhere. The number of residents stood at 34,600 last year, half of 1990 levels. Those departures were part of a wave of 2 million East German inhabitants who fled in the two decades following reunification in 1990, according to a report by the Halle-based IfW economic research institute.

Tripling Visitors

Chancellor Angela Merkel, who grew up in the East, said in a podcast last weekend that the outflow of people has come to an end and Skora, a member of her Christian Democratic Union, thinks he can stabilize the population at 30,000.

He’s calculated that the region needs to triple the number of overnight visitors to 1.5 million to generate enough jobs to bring down unemployment, which was 14.5 percent in June, compared with the German average of 5.8 percent. Services are currently the town’s biggest industry, while energy remains the largest sector of the regional economy.

Local Guenter Kalliske is one of those fortunate enough to already have a job in the city’s budding tourism business.

“At the beginning I wasn’t so hopeful,” said Kalliske, who worked as an electrician in a charcoal factory and is now a tour guide. “Now I’m optimistic. I’ve been positively surprised by the interest people pay to our region.”

Even the local hospital has gotten behind the city’s tourism push, rebranding itself as the Lusatian Lakeland Clinic. Such communitywide backing and the private financing that’s already come in makes Skora optimistic about the future.

“People wouldn’t have built the hotels they have, nor would the banks have supported it, if they didn’t think Hoyerswerda had a future,” said Skora, who worked himself at the Schwarze Pumpe coal plant in the 1980s. “It’s a generation- long project.”

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net. To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net. 

Photo Credit: The train station at Hoyerswerda Ingolf / Flickr