A more hospitable market
A surge in supply left many markets in CEE overburdened with hotels, particularly at the top-end of the market, and the market suffered widely as a result. Many capital cities, however, have begun to turn a corner, such as Budapest. Warsaw remains the weak link in the region, however, and the problems that have plagued the region are particularly prevalent in the Polish capital.
During a discussion on the hotel industry at CEPIF 2005, Christoph Härle, executive vice-president at Jones Lang LaSalle, introduced research that painted a somewhat glum picture of the Polish capital. "Warsaw is the worst performing market [in the survey] for around the third consecutive year. It had a very tough task in terms of oversupply and it is now improving. The low-cost airlines coming into the market are increasing the leisure demand [but] we do not yet have the same appeal as a Prague or Budapest in terms of weekend and leisure business."
However, there is some room at the inn for optimism. "2005 is already looking much better than 2004," says Härle. "We are just about to see the light at the end of the tunnel in Warsaw ... Investor interest in the [Warsaw hotel] market is slow and it hasn't turned yet ... We have not reached 60 percent occupancy in Warsaw and until we do there is not the pressure to increase room rates."
As in other real-estate sectors, the Polish hotel market is being viewed in terms of Warsaw and outside Warsaw, with regional cities catching up rapidly with the capital. According to Christoph Lang, vice-president of project finance at Erste Bank, it is "not capital cities, but second-tier cities," that are attracting the most investor interest, with the "top-quality hotel market now saturated."
The future, he believes, will bring an "increasing demand for the financing of mid-market and budget hotels [and] boutique hotels particularly in second-tier cities [with] the increasing presence of institutional investors."
Prague continues to lead the CEE pack. "Prague is one of the hottest markets across Europe at the moment," confirms Härle, and also point to Moscow and Budapest as strong regional players. However, these more risky markets present their own problems that must be overcome before they can experience the booming trade that eastern European capitals such as Prague have enjoyed in recent years.
"One of the risks is access and transport and we have seen this in the EU accession countries," says Härle. "Travel has gotten so much easier [but] getting to Kiev and Moscow is still a pain, so you wouldn't normally go there unless you really had to. If traveling access is made easier and affordable than people will come." Budget airlines continue to be a mainstay for local tourists industries, with many cities depending on low-cost carriers servicing their airports to keep the weekend leisure activity ticking over.
One area that has some potential is for those of a more spiritual nature, says Karl Hala, the general manager at the InterContinental in Warsaw, and some hotel managers would do well to put their faith in God when looking to keep their rooms full. "The pilgrimage trail is rapidly developing in Warsaw and Kraków," says Hala, and there certainly appears scope to develop services for those looking to visit the home of the late Pope John Paul II.
During a discussion on the hotel industry at CEPIF 2005, Christoph Härle, executive vice-president at Jones Lang LaSalle, introduced research that painted a somewhat glum picture of the Polish capital. "Warsaw is the worst performing market [in the survey] for around the third consecutive year. It had a very tough task in terms of oversupply and it is now improving. The low-cost airlines coming into the market are increasing the leisure demand [but] we do not yet have the same appeal as a Prague or Budapest in terms of weekend and leisure business."
However, there is some room at the inn for optimism. "2005 is already looking much better than 2004," says Härle. "We are just about to see the light at the end of the tunnel in Warsaw ... Investor interest in the [Warsaw hotel] market is slow and it hasn't turned yet ... We have not reached 60 percent occupancy in Warsaw and until we do there is not the pressure to increase room rates."
As in other real-estate sectors, the Polish hotel market is being viewed in terms of Warsaw and outside Warsaw, with regional cities catching up rapidly with the capital. According to Christoph Lang, vice-president of project finance at Erste Bank, it is "not capital cities, but second-tier cities," that are attracting the most investor interest, with the "top-quality hotel market now saturated."
The future, he believes, will bring an "increasing demand for the financing of mid-market and budget hotels [and] boutique hotels particularly in second-tier cities [with] the increasing presence of institutional investors."
Prague continues to lead the CEE pack. "Prague is one of the hottest markets across Europe at the moment," confirms Härle, and also point to Moscow and Budapest as strong regional players. However, these more risky markets present their own problems that must be overcome before they can experience the booming trade that eastern European capitals such as Prague have enjoyed in recent years.
"One of the risks is access and transport and we have seen this in the EU accession countries," says Härle. "Travel has gotten so much easier [but] getting to Kiev and Moscow is still a pain, so you wouldn't normally go there unless you really had to. If traveling access is made easier and affordable than people will come." Budget airlines continue to be a mainstay for local tourists industries, with many cities depending on low-cost carriers servicing their airports to keep the weekend leisure activity ticking over.
One area that has some potential is for those of a more spiritual nature, says Karl Hala, the general manager at the InterContinental in Warsaw, and some hotel managers would do well to put their faith in God when looking to keep their rooms full. "The pilgrimage trail is rapidly developing in Warsaw and Kraków," says Hala, and there certainly appears scope to develop services for those looking to visit the home of the late Pope John Paul II.
