The hotel investment market in Poland is still relatively immature. In an average year, the city of Berlin alone receives twice the number of hotel transactions than Poland as a whole. However, Poland has developed a strong track record in other commercial real estate sectors and, as a result, has an even stronger brand for investing. This has laid down the foundations for global capital to enter the hotel sector, and, indeed, there has been an uptick in the number of international hotel investors actively pursuing opportunities in Poland.
Whilst the pandemic has put many investment decisions on hold, the long term view remains unchanged. Travel and hospitality will bounce back as it has done in the past. Yes, the interests between operators and owners will have to be realigned. Yes, there will be a new set of risks that will have to be accounted for. And yes, the direction in which investors are looking will change.
Large institutional capital has always been attracted to business hotels in major Polish cities. These markets are by far the most transparent with extensive comparable operational evidence available. As a result, city hotels are easier to analyse, business is more quantitative and rests on demonstrable business drivers.
“What the pandemic has changed, however, is the way many investors perceive leisure destinations. Across the globe, travelling is slowly coming back to life, reinvented. Staying for weeks in lockdown was a platform for many people to rethink their lifestyles. It is the well-being and being close to nature that have emerged as a panacea to the crisis. The words ‘local’ and ‘slow’ are back in fashion. Whilst many choose to camp in the middle of the forest, hotels in top tourist destinations have not shied away. For as long as there is nature to look at, there is demand. How long will this last? Well many investors believe it will last long enough for them to enter the game”, comments Agata Janda, Head of Hotel Advisory, JLL.
This is further underpinned by the fact that hotel guest demand in Poland is predominantly domestic. With even more Poles realising that staycations in this and, possibly, next year, have a greater potential for boosting performances in domestic tourist destinations. In addition, Polish resorts are gaining more international acclaim. This not only allows for the diversification of the business mix with international clientele (mainly from Germany and the Nordics) but to also tackle seasonality in off-peak seasons.
In addition, tourist destinations in Poland are where independent hotels dominate. This means the potential for value creation: through refurbishment, adopting international brands, as well as more effective cost management.
“There is also a growing supply of institutional product that is being developed across major tourist destinations in Poland. Top class hotel brands housed in impressive architectural projects are slowly reshaping the holiday spots that we know”, adds Agata Janda.
Leisure demand is where many see great potential for growth. This increased interest is also driven by the fact that Polish destinations are becoming more popular with international travellers, especially from Germany and the Nordics.
“There is a flood of capital ready to invest in hotels. In the current market, it is mainly opportunistic investors, but institutional money will be ready to enter when the right opportunity comes along. The strongly growing tourist landscape in Poland may just do the trick”, summarise Agata Janda.
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