Room at the inn
However, following the recent explosion in five-star palaces, experts say budget inns are the smart investment, and industry groups have begun some attractive incentive programs to fill the gap in the country's low-cost hotel market.
Though Poland could do with more hotels, you wouldn't know it from a tour of the country's capital. Warsaw already offers some 5,000 hotel beds, and the average occupancy in the existing hotels doesn't exceed 70 percent. The average rate for a room is EUR 90.34 (zł.353), which is 10-20 percent less than in Kraków, Prague or Budapest. Despite this, the world's sixth-largest Hilton Hotel, with over 300 rooms, will open in Poland's capital next year. Experts say this addition will force prices at Warsaw's five-star hotels - which correspond with those at three- and four-star hotels abroad - even lower.
Each year some 60 new hotels are established in Poland. The Institute of Tourism (IT) estimates that annually only one percent of all investments in the country goes to hotels. A return on such an investment can be expected only after 10 years. The latest report from PKF Hotel Experts maintains that Poland is still a profitable hotel market, but experts say future investors should direct their attention to Poland's secondary cities.
Warsaw's posh palaces
According to the Central Statistical Office (GUS), in 2005 hotels in Poland accommodated 8.7 million guests - some 10 percent more than in the previous year - and offered 16.3 million overnight stays. GUS' Teresa Buczak says that within the next two years, the demand for rooms will rise by some 4.5 percent per year.
But the bulk of that demand will not come from the capital. As a more developed hotel market, Warsaw now demands luxury boutique hotels located in the city center, with each room uniquely designed - hotels like the Rialto, the Polonia Palace or the Residence Diana.
"Since these hotels don't represent mass hotels with 500 rooms, they have a high occupancy rate. Such beautifully arranged hotels which are located in nice areas have prospects in Warsaw. These hotels will take on the best guests from network hotels," says Zbigniew Bugaj, president of the Hotel Market Institute.
Room for growth
Krzysztof Milski, president of The Polish Chamber of the Hotel Industry (PIH), says that what Poland is really missing is mid-market accommodation. There are only about 1,400 star-rated hotels in Poland altogether. In Italy, Rimini alone has around 1,200 hotels. In Orlando, Florida, there are more hotel rooms than in all of Poland.
However, there is a lot of potential for hotel investments in Poland. In terms of room sales, Łódź appears to be one market with excellent prospects. Bugaj says the city could use at least three three-star hotels and two four-star hotels. Other attractive markets include Kraków, Wrocław and Gdańsk, where 11 hotels are being developed respectively now. Experts say Sopot and especially Zakopane also have very good prospects. However, "in the eastern part of the country the number of four-star hotels is satisfactory" says Bugaj.
Cheap and cheerful
Still, the industry maintains there is plenty of room for two- and three-star hotels in Poland, and PIH has established a program called SRW Chaber, which it hopes will help fill the gap. The organization has already prepared a design for two-star hotels, which it offers to build and for which it will provide a zł.2.5-million loan. Future hotel owners will only have to acquire a 2,500-sqm plot. The hotels will have 28 rooms with double or single beds. According to Milski, they should bring in around zł.1 million in net profit per year. The rate per night per room should not exceed zł.150. The project was launched in March, and a hundred such hotels are planned all over the country.
"Within the next ten years, we are planning to deliver over 200 Chaber hotels. Each hotel should be completed within six months," says Milski.
Personal service
But budget hotels are not the only possibility for profit. The number of bed & breakfasts (B&B), meaning small hotels for a maximum of 40 visitors, is increasing, but there are no regulations regarding such businesses.
"The lawmakers didn't foresee that this is a well-known type of accommodation and people from abroad look for it when they arrive in Poland. Like them, I myself choose B&Bs because I know I will be treated as a personal guest of the owner," says Marek Szwaj, president of the Bed & Breakfast Association. He estimates that in Poland there are about 80 registered B&Bs, offering around 1,000 beds.
There are also many hotels in rural areas, and thanks to numerous wedding receptions, conferences and restaurants, these frequently not only break even, but often do quite well. "They don't have much competition, so very often they earn enough with 30-percent occupancy, whereas in the West it has to be 70-percent," says Bugaj.
Counting on foreigners
On average, foreign visitors amounted to some 40 percent of all hotel guests. In Małopolskie and Zachodniopomorskie voivodships the number exceeded 55 percent. "All around the world the hotel sector depends on the domestic customer. In countries comparable to Poland in terms of population and location, hotels depend heavily on domestic clients. For example in Germany, Scandinavia and the Benelux countries, foreign guests account for only about 25 percent of all visitors. Thanks to the locals, growth is possible," says Bugaj.
Experts claim that the Polish hotel market is being hampered because people have to spend so much on their apartments that they cannot spend money on holidays.
But there are also mental barriers. "Polish people still believe that staying at a hotel is a luxury they cannot afford even if they have money. The first thing needed is higher incomes, the second - a mental change," Bugaj says.
