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Poland is a popular tourist destination, with 15.2m visitors coming to this country
in 2005 and an around 6% annual increase in that figure expected in the next few
years. The growing demand for travel and tourism in Poland has boosted interest in
hotel real estate. The first signs of revival in the area of hotel construction may already
be noted, and investments in construction of new hotels are expected to grow in the
years to come. Poland is a popular tourist destination, with 15.2m visitors coming to this country
in 2005 and an around 6% annual increase in that figure expected in the next few
years. The growing demand for travel and tourism in Poland has boosted interest in
hotel real estate. The first signs of revival in the area of hotel construction may already
be noted, and investments in construction of new hotels are expected to grow in the
years to come.
The number of hotels in Poland is steadily rising. According to the Institute of Tourism,
at the end of 2004 Poland had 1,202 hotels, which represents a twofold increase on the
slightly more than 600 of a decade earlier.
The largest share in the structure of Polish hotel industry is held by average (i.e. twoand
three-star) hotels. At the beginning of 2005 only 13 of the hotels operating in the market
(including 10 built after 1995) boasted the highest standard, and 63 were classified as fourstar.
At the end of June 2006 the number of five-star hotels rose to 18, representing the
highest growth pace.
The hospitality sector development prospects vary considerably from region to region.
The best hotel infrastructure exists in the regions which are particularly attractive both in
terms of business and tourist opportunities, i.e. in Mazowsze, Dolny Slask, Malopolska,
Wielkopolska and Pomorze. The poorest in this respect are the Opolskie, Swietokrzyskie,
Lubelskie, Podkarpackie and Podlaskie voivodships.
A comparison of the accommodation resources in particular regions of Poland may be
based on the Hotel Territorial Index prepared by the Institute of Tourism. The largest hotel
resources are found in Dolny Slask and Malopolska. These two regions recorded the highest
pace of growth over the last decade.
The dominant position in terms of rooms available is held by Warsaw (19,000 at
the end of 2004), closely followed by Malopolska (16,200), Dolny Slask (14,000) and
Wielkopolska (10,200).
600m EUR for hotels every year
The hotel market enjoys exciting prospects for the coming years. Christoph Harle, Vice-
President of Jones Lang LaSalle Hotels, says that Poland is an attractive market for foreign
hotel chains. He estimates that expenditure on new hotel buildings in the immediate future
may reach several hundred million euro per year. The exact amount of such investments is
rather difficult to determine, as the construction of even one five-star hotel is such an immense
project that it may distort the estimations.
Based on the information concerning investment projects that have already been
announced, we expect that the expenditure on hotels in Poland will amount to at least €600m
per year.
Tomasz Dziedzic, hotel market analyst at the Institute of Tourism, forecasts that it is the
medium standard, or economy-class, hotels that will see the highest growth in the coming
years, in line with the demand for this type of hotel services from a growing number of
customers on medium income, looking for accommodation of average standard. In his opinion,
the most attractive development prospects exist in Malopolska, Dolny Slask, Mazowsze and
Pomorze. It is difficult to formulate projections for the other regions as the hotel market is
rather poorly developed there.
These forecasts are in line with the plans of the Orbis group. Already in the market there
is strong demand for hotels of medium and lower standards. This type of investment projects
feature shorter periods of return on the invested capital, and thanks to lower prices of the
rooms offered, such hotels are less sensitive to industry downturns.
We expect to see an upturn of investors’ interest in large cities other than Warsaw,
where the supply of new hotels is on the wane. One of the cities with positive climate for
hotel investments is Lodz. Its authorities, well aware of the weakness of the local hotel market
(shortage of high quality hotels), have sought to encourage investors by offering attractive
locations for new projects and property tax incentives. Several investors have already
announced their plans to execute projects in the city. According to our sources, quite a few
major investment projects in the hotel business are also underway in the Tri-City (Gdansk,
Gdynia, Sopot).
Key Drivers of Growth
More visitors
Since 2003, the number of tourists visiting Poland has been going up, to some 15.2m
in 2005. According to the analysts of the Institute of Tourism, the figure is to grow by another
4.5% per year to approx. 19m in 2010. What is particularly noteworthy is the dynamic increase
in guest flows at collective accommodation establishments since 2002. In 2005 some 4.3m
foreign tourists stayed at hotels, and this number is expected to grow by 6.8% every year to
6m in 2010.
Insufficient number of hotels, including in particular high-standard
hotels
The hotel resources in Poland are very limited not only in comparison with the
economically developed Western Europe but also with other countries of Central Europe.
A mere 60 four- and five-star hotels were built in Poland over the last decade. According to
Tomasz Dziedzic, hotel market analyst at the Institute of Tourism, the share of this type of
hotels in the Polish market structure is two times lower than the world’s average.
In terms of the number of hotel rooms per capita, Poland is at the very end of Central
European statistics. Germany has 200 hotel rooms per 10,000 inhabitants, the Czech
Republic – 220, and Poland – only about 40. The comparison reflects, on the one hand, the
market’s underdevelopment and, on the other, its enormous potential.
Another manifestation of the potential is the higher occupancy rate in 2005, which
proves that the demand for hotel services is rising and should translate into intensified
investment activity in the sector.
The shortage of hotels of the highest standards, coupled with good and stable general
economic forecasts for Poland, make the market particularly attractive for foreign hotel chains,
whether not present at all or only in several locations here. A good example is the construction of a Hilton hotel (€50m) in Warsaw or investment projects by the Starwood group. It must be
noted that a majority of the largest international chains have their hotels only in Warsaw.
Poland’s improved travel accessibility
The presence of low-cost airlines is a major encouragement to travel and makes air
flights much more accessible. The carriers bring a large influx of tourists to Poland, particularly
to Warsaw, Krakow, Poznan and Wroclaw. The number of passengers at the Polish airports is
increasing rapidly. Five of the top ten carriers in Poland in 2005 were low-cost airlines – Wizz
Air (Hungary), Centralwings (Poland), SkyEurope (Slovakia), easyJet (UK) and Ryanair (Ireland).
They carried more than 31% of all passengers on scheduled flights (relative to a mere 13% in
2004). That share is expected to grow even further in 2006.
Motorway construction offers an exciting opportunity for hotel market investors in
Poland. Three new motorways are to be completed by 2013 – A-2 and A-4, joining the east
of the country with the west, and the North-South A-1 motorway. The new roads must be
accompanied by car parks, petrol stations, bars, restaurants and motels. We expect to see
considerable investment in this area over the next few years. The construction of motorways
is also a prerequisite to making large cities more attractive to tourists. Easy motorway access
is one of the key considerations for investors wishing to build new hotels.
Investment projects by selected hotel chains in Poland
Orbis – PLN 863m earmarked for investment until the end of 2009
Orbis is the largest hotel company in Poland and Central Europe. It has 64 hotels in 31
cities in Poland and one in Vilnius, Lithuania, offering 11,930 rooms. The hotels operate under
the Sofitel, Novotel, Mercure, Ibis and Orbis Hotels banners. The Orbis Group employs over
5,250 hotel staff. According to the company’s strategy, by 2009 the Orbis chain is to comprise
of 83 hotels offering 13,600 rooms.
Orbis is plannings to launch a chain of economy-class hotels under the brand name
Etap and to continue the expansion of the Ibis chain. With the capital expenditure estimated
at PLN 487m, the chain of Orbis economy-class hotels will grow from the current nine to 44
by the end of 2009. A further PLN 49m is earmarked for development of other Orbis brands.
The company also plans to modernise its existing hotels, which will require expenditure of
PLN 327m (including reconstruction expenses).
Hotelsystem
Hotelsystem is an innovative project on the Polish market. It was launched by the
Krakow-based developer Salwator, which established a separate company to invest in and
run hotels. Participation in the project is offered to private investors. Currently Hotelsystem
has two hotels in Krakow and one in Poznan, with further four being constructed in Wroclaw,
Dzwirzyno, Katowice and Zakopane, and five still at the design stage. The construction of the
Dzwirzyno hotel itself cost PLN 35m.
Qubus
The Qubus chain has been operating in Poland since 1994 and currently has nine hotels.
The company is completing investment projects in Krakow (four-star hotel in the city centre;
scheduled for completion in July 2006) and Kielce (three-star hotel planned to be launched in
October 2006). These PLN 70m projects are being executed by Echo Investment of Kielce. Qubus
is also building a three-star hotel in Lodz. In this case the contractor is Warbud of Warsaw, which
has signed a PLN 14.1m contract with the Qubus chain.
Hotel 500
The chain has one three-star hotel in Tarnowo Podgorne near Poznan and four twostar
hotels in Zegrz (Mazowieckie voivodship), Strykow (Lodzkie), Cieszyn (Slaskie) and Swieta
Lipka (Warminsko-Mazurskie). In 2006 the company plans to start four new projects, including
the construction of a SPA hotel in Krynica Gorska.
Vienna International Hotel
Currently the chain has only three hotels (two in Krakow and one in Miedzyzdroje),
but it has already commenced the construction of another one in Krakow (near the Galeria
Kazimierz shopping and entertainment centre) and plans to launch further two projects in the
city.
Radisson SAS
Three five-star hotels of the Radisson SAS chain operate in Warsaw, Wroclaw and
Krakow. The chain also has a four-star hotel in Szczecin. The construction of another facility,
planned to open in mid-2007, is underway in Gdansk. Radisson SAS also intends to construct
a hotel at the St. Wojciech hill in Poznan.
InterContinental
The chain has one InterContinental hotel in Warsaw and four Holiday Inn hotels in
Warsaw, Gdansk, Krakow and Wroclaw. Another one, named Aquila Park – Holiday Inn, is
being constructed in Jozefow by the construction company Mitex.
Starwood
The Starwood chain currently has two Sheraton hotels (in Warsaw and Krakow) as well
as Westin and Le Royal Meridien Bristol hotels (both in Warsaw). It is constructing a Sheraton
hotel in Poznan and plans one more five-star hotel of the same brand in Sopot.
Campanile (Envergure Group)
The Campanile chain has nine hotels in Poland, with the tenth (two-star) currently under
construction in Lodz. |
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