Polish hospitality market continues to grow

Details: Published on Friday, 24 June 2016 00:00; Written by BK

There is a positive outlook of stable growth for the Polish hospitality market, as the country's hotels continue to attract both domestic and foreign tourists. Warsaw remains one of the most popular destinations, especially for business travel, with 139 hotels offering over 15,000 rooms.

Due to the size of the market, strong local demand, substantial development opportunities, excellent location with great connections to other European countries, well-educated talent pool with competitive wages and outstanding partnership with Scandinavian countries, which boost the corporate and leisure segment, investors and developers highly appreciate Poland's strong potential. The market is growing dynamically, with several investments in the pipeline.

The number of overnight stays in hotels in Poland has been steadily growing since 2009, reaching 32.6 million in 2015. This represents an increase of 9% compared to the previous year.

3.5 million arrivals and 5.7 million overnight stays were recorded in the Mazowieckie region (with its capital in Warsaw) in 2015, representing an increase by 8% in arrivals and 9% in overnight stays in comparison to 2014. Thanks to a strong local demand, the Polish market was less affected by the drop in interest from foreign customers during the global economic crisis, unlike other CEE markets that depend mainly on foreign visitors.

The hotel stock in Warsaw comprises 139 hotels, making it one of the country's most developed hotel markets. It is dominated by the 3-star segment (60 hotels), while the 5-star category is the smallest with only 10 hotels.

After a slight decrease due to the global economic crisis in 2009, the market showed a steady upward recovery until 2011. From 2009 to 2011, the growth was driven mostly by occupancy, representing a growth rate of 7.1%, while at the same time the average daily rate increased by only 2%. 2012 was record-breaking thanks to the UEFA European Championship; however, this resulted in a sharp decrease in performance in 2013. The new supply added to the market prior to the championship put pressure on RevPAR for the years after 2012; the ratio dropped to PLN 187 in 2014, before recovering to PLN 205 in 2015.

The hotel market in Poland has been continuously getting stronger. Latest data YTD May show an encouraging increase of RevPAR by 10.4%, driven by both occupancy 5.3% and ADR 4.8%.

As a result of recent threats in Europe, we have seen changes in both the leisure and MICE segments. Tourists are seeking safer destinations and we predict that both occupancy and ADR will increase on the Baltic coast this summer. The same applies to the MICE segment, where the decrease in RevPAR has been obvious: −13.3% for Brussels, −3.1% for London and −12.4% for Paris YTD April 2016, while Warsaw experienced a growth of 10.4% in the same period.

Author: Šárka Chapman, Senior Analyst – Poland, Global Hospitality Group in Cushman & Wakefield.