As the hunt for yield continues, increased interest in Poland from the brands is being matched by that from investors.
“There is rising interest in hotel acquisitions from German, French, British and U.S. investors,” Lukas Hochedlinger, managing director, Central & Northern Europe, Christie & Co, told HOTEL MANAGEMENT, noting that German institutional investment funds in particular are looking for products that provide a better return than in Western Europe. “Over the last years, the presence of opportunistic funds, mainly American, French, British, but also Asian, interested in hotels operating under management or franchise agreements has increased. These kinds of investors plan to increase the property’s value by actively engaging in its management. For institutional buyers a brand seems to be definitely a must.
“Poland’s hotel investment market may still be in its infancy, but there are many reasons why investors are convinced of the country’s potential. Factors include the improvement of hotel indicators, more international hotel chains, the enhancement of the country’s meetings and conference industry, improving road and rail infrastructure, as well as favorable property prices in comparison to key European markets, such as London, Paris or Munich. In fact, all kinds of hotel properties from the budget to luxury segments are in demand.”
In August, InterContinental Hotels Group signed a franchise agreement to open the first Staybridge Suites in Poland and the brand’s eighth property in Europe. Early last month, Marriott International opened the Sopot Marriott Resort & Spa, one of the largest spa resorts in Poland.
Poland's Rising Numbers
Between 2012—when the country hosted the UEFA Euro 2012 football tournament, alongside the Ukraine—and 2016, the number of hotels increased by 22 percent from 2,014 to 2,463. Three-star hotels, with 49 percent of supply in 2016 and an annual growth rate of 7.2 percent, dominate the country’s hotel market. Christie & Co. said that the upper midrange segment continued to expand, with four-star establishments experiencing a growth rate of 12.4 percent. An additional 107 hotels remain without categorization.
From 2012 to 2016, the number of tourism arrivals in hotels increased by 46 percent, reaching approximately 19.6 million—a compound annual growth rate of 9.9 percent. The number of overnight stays rose from 24.9 million in 2012 to 37.2 million in 2016, increasing 10.6 percent each year. Approximately 20 percent of overnight stays were visitors from key international source markets, such as Germany, Great Britain, Ukraine, Italy and the U.S. The country recorded 11.2-percent growth in 2016, almost twice as high as that of the West.
“In all key cities bed occupancy rates have reached levels of almost 50 percent,” Constanze Maas, associate director advisory & valuation, Christie & Co., said. “This can be attributed to a higher double occupancy factor than is usually registered in Western markets. Overall, the strong demand in all key cities surpassed the supply growth rates, resulting in higher traveller-to-bed rations and thus, suggesting room for additional supply.”
Almost 50 percent may not sound the stuff of investors’ dreams, but as returns are hard to come by in the mature markets and as the cycle moves on, the search for the next star is warming up.
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.