Short stay is the new black
There are 40 million reasons why investors should take note of Poland’s hotel industry, says InterContinental Hotel Group’s Joanna Kurowska.
The room of international journalists assembled on the 38th floor of the Warsaw Spire was nearly caught off guard when Joanna Kurowska said that the Polish hotel industry is set to register 40 million overnight stays this year – an increase of 15 million since 2012. The audience had just heard about the record gains in the local commercial real estate market, but not even the local journalists would have expected to hear that the Polish hotel market had nearly doubled in just seven years.
Of course, it was nothing new for Kurowska, IHG’s recently appointed Director of Operations, Luxury & Managed, Northern Europe. She had seen this development way back in 2011 when she returned to Poland after working abroad and took a position at IHG’s Warsaw office. She arrived just in time to see UEFA Euro 2012 open Poland to the world and the new regional airports and budget airlines bring in record numbers of tourists – 19.6 million international visitors travelled to Poland in 2018, up from 14.8 million in 2016.
This type of growth, Kurowska said, has led the UK-based IHG Group to mark Poland as a priority market. IHG was one of the first major international hotel chains to move into Poland when it opened its first Holiday Inn in Kraków in 2001 and two years later, the InterContinental in Warsaw. The group currently operates 11 hotels in Poland through four brands: InterContinental, Holiday Inn, Hotel Indigo and Holiday Inn Express.
In the past three years alone, it has opened five hotels, including this summer’s big opening, the Holiday Inn – Gdańsk City Centre, housed in the city’s flagship development location, Granary Island. “What we see from the numbers is that Warsaw and the Tricity areas are growing at the same speed,” Kurowska told the 24 journalists during Poland Today’s International Media Tour.
“In three years, those two markets will continue to grow by 30%. That’s simply unprecedented.” She then went on to reveal that IHG has another 18 new hotels in the pipeline to be completed by 2023, which will extend its market footprint to nearly 30 hotels across the country, from Kraków to Gdańsk and Rzeszów to Szczecin. For perspective, IHG operates a combined total of 15 hotels in Austria (five), the Czech Republic (four), Slovakia (four) and Hungary (two).
The overwhelming majority of IHG’s guests (70%) are Poles, the largest segment of which are business travellers. It’s easy to understand why IHG would welcome the development of a modern convention centre in Warsaw, especially considering that around 50% of its local assets are located in the capital. It has been a moot point that has been hanging over the city for more than 15 years.
“It is crucial to have a modern convention centre and definitely Warsaw is losing competitiveness as a business destination, especially when we consider that Kraków, Katowice and Rzeszów all host convention centres,” Kurowska said after the tour. “We have seen the impact in Germany. Berlin, Munich and Frankfurt benefit greatly from their convention centres, with visitors coming from all over the world. Trade shows drive demand and bring new investments to these locations.”
Like other sectors, the local hotel industry faces recruitment challenges in the labour market and development has been affected by the increases in construction costs. Kurowska also noted that more international players have arrived on the scene, increasing competition around a selection of cities. “However, we still see growth opportunities especially within the midscale, boutique and lifestyle segments,” she said, before earmarking the east of the country as a growth area of the future.
The area should benefit from the completion of the S8 motorway between Wrocław to Białystok (via Łódź and Warsaw) and the development of S7 motorway between Gdańsk and Kraków (via Warsaw, Radom and Kielce). “Once the infrastructure improves, it’s only a matter of time for the hotel industry to pick up pace in these regions,” she said.