Host of opportunities
Hotel development in Poland is back on the rise, with construction for the tourism industry expected to generate zł.1 billion over the next five years. According to data from market research firm PMR, by 2012 Poland will boast some 30,000 rooms in 500 new hotels of all standards - from five-star skyscrapers and boutique hotels in big cities and holiday resorts to budget hotels and conference centers region-wide.
Polish potential
Europe is the world's largest hotel market, with over five million rooms - compared to 4.5 million in all of North America. According to data from Eurohypo, a bank which specializes in real-estate financing, hotel markets across the region are seeing a revival. While Western European capitals will retain their position as the preferred location for hospitality investment, decreased risk in Central and Eastern Europe has made it a new focal point for local and international investors. Since 2006, the emphasis on development in the region has shifted from Russia and Turkey to Poland and other CEE countries. In Poland alone, the number of tourists is expected to rise from 15.7 million in 2006 to over 20 million in 2012.
"A clear indication of the growing demand for hotel acomodation in Poland is the rapid growth of occupancy levels and increased prices recorded in H2 2006 and H1 2007, particularly with regard to luxury-standard hotel rooms and conference centers," stated Bartłomiej Sosna, a construction market analyst at PMR. "Due to the low saturation levels of the Polish hotel market, the number of hotels constructed is expected to increase in all categories," he added.
Improving infrastructure and transport access, along with the prospect of hosting of the Euro 2012 soccer championship, are serving as major catalysts for the tourism industry. According to Douglas Noble, president of Orco Property Group in Central Europe, the boost to the tourism industry in both Poland and Ukraine during the championship could last well after the games by raising awareness of Poland among European travelers.
"Poland has huge potential to become a very popular tourist destination for both tourists and business travelers beyond the games," said Noble. "Orco is open to various business opportunities, including a possible range of new hotels in strategic locations and the refurbishment of existing buildings in historic city centers for our Mamaison boutique hotels."
Upmarket interests
Wings Properties, a subsidiary of capital group Star Enterprise, is currently collaborating with architectural firm Gottesman-Szmelcman to renovate one such landmark property - a 16th-century granary in Wrocław - into a luxury hotel. They're also working together on the development of a futuristic five-star Hilton hotel in Wrocław - an investment worth some zł.300 million. When completed in 2010, the hotel will offer 420 rooms on six storeys, along with restaurants, conference rooms, a fitness club and spa, various shops and services, a contemporary art gallery and a Blue Note jazz club.
Major hotel operators like Warimpex and its partner UBM - whose portfolio includes the five-star Intercontinental hotel in Warsaw and the newly-opened four-star Andel's Hotel in Kraków - will continue to open high-standard hotels throughout the region. Independently, Warimpex will also build a five-star Le Palais hotel on the site of a landmark property in Warsaw.
UBM's CEO, Karl Bier, expressed confidence in the Polish market and said the company "will be invested long-term in cities and holiday resorts along the Baltic."
Alternative investments
While the majority of investments in the hotel construction market involve three-star-plus projects, one- and two-star hotels account for some 20 percent. Warimpex is developing a number of budget hotels, primarily in partnership with firms such as Louvre hotels. Orbis will build at least a half dozen new properties under its Novotel, Ibis and Etap brands by 2012. Aquila Hotele, which will soon celebrate the grand opening of its four-star Holiday Inn hotel and conference center in Warsaw-Józefów, is planning at least a dozen new upscale and budget hotels in Poland over the next few years.
According to Paweł Grzàbka, managing director of real-estate consultancy firm CEE Property Group, "aparthotel" projects will also be among the most interesting new products on the market. "Such properties, usually located in popular tourist cities and resorts, are purchased by investors for their own personal use, as well as for their leasing potential," said Grzàbka. Typically, these properties are large, upscale homes or apartments, managed by the developer or a separate company which provides concierge-style services for residents and visitors.
As the industry gears up for a boom and investments grow, the roles of hotel developers and hotel operators are becoming even more divergent, particularly as hotel management acquires a more sophisticated gloss and brings on specialized management teams. UBM and Warimpex have a long-standing collaboration with Vienna International, which will manage their Hotel Andel's in Łódź and the Hotel Angelo in Katowice.
In addition, many hotel developers are opting for brand-name international hotel operators, such as Hilton and Raddisson. This in turn gives global networks opportunities for quicker and easier expansion through regional markets.
With prices on Poland's residential market flattening, hotel development looks like it could be the next big thing. Portfolio transactions are also becoming increasingly popular as commercial property values should enjoy healthy growth over the next few years.
