Fast-growing hotel business

Details: Published on Friday, 19 August 2016 00:00; Written by BK

Hotel industry in Poland is currently experiencing its best period. It is indicated by the growth rate of the market benchmarks. Investors involved in the market are intensifying their operations.

Walter Herz experts believe that the flourishing market is primarily a result of the increasing number of foreign visitors in our country, who are wealthier than the domestic tourists. An important aspect is also the development of business travels, which provide higher occupancy rates during the week. Companies investing in that real estate sector certainly cannot complain about the lack of demand.

According to Central Statistical Office data, over the past nine years the number of guests using hotel services in Poland increased by 86 per cent. - We are visited mainly by people arriving from Germany, Great Britain, Ukraine and the United States. The domestic demand is also strong, which is why Polish market did not suffer as much as the other countries from the decrease of interest in services during the global crisis - point out Walter Herz experts.

In 2012, sector saw record results thanks to the European Football Championship held in Poland. The threat of terrorist attacks, which can recently be observed on our continent did not hurt the market either. While the other European capitals note a revenue decline, Warsaw sees an increase in the market indicators. In addition, the largest Polish cities are becoming increasingly important business destinations, often acting as regional operating centers.

Increase in the number of visitors and strong domestic demand

Dominik Sołtysik, member of the Orbis S.A. management board points out that despite the global economic environment, which could be considered as rather unstable, in 2016 major economies of Central and Eastern Europe, including Poland, saw, as expected, a strong growth. - Virtually all markets on which Orbis is present are among the fastest growing economies in Europe and show an increase in the number of visitors in the hotels. In addition, the markets are also driven by the stronger domestic demand - says Dominik Sołtysik. He points out that after the recent tragic events in some of the traditional tourist destinations, Poland has become an attractive vacation spot for many fellow citizens who used to choose such countries as Turkey, Tunisia and the French Riviera.

- In the first half of 2016, we witnessed a further increase of demand in the business and tourist segment in Poland and Central and Eastern Europe. Due to the increasing number of sporting, cultural and entertainment events the number of incoming tourists is growing. We also saw a significant increase in the number of visitors during the weekends - says Dominik Sołtysik, member of the Orbis S.A. management board.

Małgorzata Łagodzińska, Development Project Manager at B&B Hotels points out that the development of the hotel market in the major Polish cities is a natural consequence of the development of Polish economy and local economies. - In individual cases, factors such as active policy of local authorities and convention bureau, development of transport infrastructure (roads, railway connections, airports), MICE infrastructure development, the development of the high standard hotel base and the appearance of significant investments in the location have strong impact on the development of the market. In some cases a large number of foreign students and different cultural, entertainment or sports events are also important - says Małgorzata Łagodzińska.

According to Michał Świgost, director of sales and marketing at Satoria Group S.A., the investment opportunities in the hotel market in the long term are created mainly by the development of road infrastructure and the construction of sports arenas, which attract large concerts and other mass events. - Another important factor is the development of low-cost airline connections, which are always an important driving force for the tourism market, and record results of Modlin and Pyrzowice airports confirm that. Also, the perfectly executed Euro2012 football competition had an impact. Many football fans returned to Poland with their families for a holiday or 'a city-break' - says Michał Świgost. In his opinion, the observed increase in supply on the Polish market is also connected with the unrest in the world, which seems to confirm a multitude of investments on the Baltic Sea.

Increasingly attractive hotel base

The condition of Polish accommodation facilities continues to improve each year. According to CSO reports, at the end of 2015 Poland had 2316 hotels, most of which were three-star facilities. Last year, 66 new facilities appeared. From less than a decade, the volume of hotels has increased in the country by almost 80 per cent. The market is dominated by medium and economy class buildings. The representation of luxurious buildings is still not very high. The recently opened hotel, located in Pałac Prymasowski in Warsaw Old Town is the 13th five-star hotel in Poland.

High demand for hotel services in Poland prompts investors to act. Brands present in our market are systematically expanding their network of branches. The largest hotel operator in Central and Eastern Europe - Orbis Group is planning to open two new facilities in the second half of the year. Mercure Kraków Centrum and ibis Gdańsk Stare Miasto, which will offer a total of 320 rooms will soon join the 114 hotels, which are currently in the portfolio of the group.

- We have selected 7 markets in Poland which we plan to invest in: Warsaw, Cracow, Szczecin, Poznań, Wrocław, Katowice and the Tri-city. We also believe that the same development is awaiting Bulgaria and Romania, which have the potential for the development of individual hotels, as well as the international networks. Orbis Group has about 30 hotels to be opened within the next 30 months, contracted in the form of a franchise or management. Thus, our network will increase by approx. 25 per cent - says Dominik Sołtysik, member of the Orbis S.A. management board.

New hotels in the biggest agglomerations

Several new hotels will also be opened under the flag of the Hilton brand. DoubleTree by Hilton Hotel has just been inaugurated in Wrocław's OVO Wrocław complex, with 189 rooms and suites available for guests. The opening of Hampton by Hilton in Lublin by Północna Street, which will offer 123 rooms is planned for the next year. Also, Hampton by Hilton hotel with 149 rooms will be a part of the multifunctional complex Piotrkowska 155 located in the center of Łódź. The facility will be completed in the first quarter of 2018. In the middle of the next year hotel Hampton by Hilton with 100 rooms is scheduled to open in Gdańsk by al. Grunwaldzka Street. And another Hampton by Hilton in the city is to be located in Gdańsk's Old Town by Długa Street.
According to Michał Świgost, director of sales and marketing at Satoria Group S.A. in the near term, the company is to start managing the two entities that operate under an international brand of Hampton by Hilton, that are emerging in Łódź and Gdańsk. - These two greatly located 150-room hotels will be a significant addition to the existing portfolio of the company - admits Świgost. Satoria Group is currently running 7 other hotels in Warsaw and Cracow, as well as two conference centers in Warsaw and Zegrzyński Reservoir. Michał Świgost emphasizes that they currently have been working on other projects that Satoria intends to implement in the longer term. The Group is diversifying their portfolio of investments, and is also developing the portfolio of office projects.
Expansion of the Western hotel chains
American corporation Marriott International also decided to label another investment in our country. Double hotel with 250 rooms under the brand's name will be built in Szczecin. The project is implemented by Calbud company as a part of the reconstruction of the former department store Posejdon at the Harbour Gate. Apart from the hotels, which in Posejdon will operate under the brands of Courtyard by Marriott and Moxy, the facility will also offer commercial and office space, as well as a conference center. The completion of the project is scheduled for mid-2019. This is the second double contract of the company in our country. After the last year's contract for the project by Galeria Mokotów mall in Warsaw, the company plans to build Residence by Marriott and Moxy facilities.
Austrian hotel chain Vienna House, which in Poland has five facilities, is also planning further expansion in our region of Europe. The company wants to expand their portfolio by four more facilities in Poland, over the next four years.
B&B Hotels chain also has extensive development plans in Poland. The operator currently has three hotels in our country, in Warsaw, Toruń and Wrocław. In September, the company will open two more - in Katowice and Łódź. B&B Łódź Centrum Hotel, with 149 rooms is emerging by al. Kościuszki 16 Street, in close proximity to Piotrkowska Street. B&B Katowice Centrum Hotel with 105 rooms is situated at Sokolska 4 Street, by the Silesian Philharmonic building, near the main railway station in Katowice. According to Małgorzata Łagodzińska, further development plans of the company concern major cities in Poland, including Poznań, the Tri-City, Cracow, but also Rzeszów, Lublin and Białystok. - We are also looking for locations in the smaller regional cities, such as Opole, Gliwice where our hotels will have as many as approx. 100 - 120 rooms. In the case of the larger markets, we can talk about facilities offering approx. 150 rooms and more. Our network of hotels is developing due to signing lease agreements as well as through investments, such as purchase of plots of land and construction - informs Małgorzata Łagodzińska.
Hotels in resorts

American chain Best Western is also heavily focused on the development of the Polish branch. After the recent opening of the hotel in Jurata, the operator intends to launch more facilities in Sulejów, Katowice and Zakopane.

New hotels of Radisson chain belonging to the Carlson Rezidor Hotel Group are to be built over the next two years in Poznań and Szklarska Poręba. The company plans to strengthen its hotel portfolio in Poland, where it currently runs 12 hotels. The hotel in Poznań with 166 rooms, which is scheduled to open in the second quarter of 2017 will operate as Park Inn by Radisson Poznań. The second facility with 180 rooms - Radisson Blu Resort & Spa Szklarska Poręba will be launched by the operator by the end of 2018.

Sector assets under scrutiny of investors
The growing hotel market in Poland attracts more and more attention of investors looking for opportunities to benefit from investing their capital, since it ensures a higher rate of return than the markets in Western Europe. Walter Herz experts admit that investors are beginning to perceive large hotel facilities located in our country as a stable asset, representing an attractive alternative to the office and retail real estate segment. - Mainly German funds, but also those from the UK, France and USA are looking for hotels in Poland - point out the experts.
Due to the amount of revenue, the increasing attendance rate and RevPar, the most interesting facilities for investment are located in Warsaw, Cracow, Wrocław and the Tri-City - according to the representatives of Walter Herz consulting company.
Among the major transactions conducted recently in Poland, the experts enumerate the contracts for the Holiday Inn Warsaw - City Centre, Radisson Blu in Wrocław and Warsaw Sheraton Hotel.