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Developers, consultants and operators all agree, that at a time of fierce competition in the hotel market, it is well worth looking at the potential of extended stay hotels. Any research there is into this market doesn't suggest large-scale demand

Analysts however insist that because the extended stay hotel market in Warsaw is as yet underdeveloped, there is a good chance that any such undertakings will be successful. Their potential has prompted investors, including developers and major international operators, (who until recently, focused primarily on traditional hotels), to look around for locations for apartment hotels. There's even a rumour that the Radisson SAS, the Marriott and Warsaw's Hyatt are thinking about entering this new market.

Banks said "Yes"
In another real estate magazine April last year, Michał Kubicki, Vice-President of PIA Piasecki Inwestycje (now KB Inwestycje), said this about extended stay hotels: "it's a very particular niché in the industry and not always understood by financial institutions, which are cautious about this kind of development. The extended-stay niché is well-defined in Warsaw where a number of ex-pats are in search of long-term hotel services at a reasonable price". He added an explanation as to why banks were not falling over one another to invest in these hotels: "if the business collapses, a bank would not be able to sell the project because the rooms are too big for a typical hotel and too small for any residential design."
That was a year ago. These days, banks tend to look more favourably on the prospect of financing extended stay hotels. The European Bank for Reconstruction and Development, for instance, have explained their decision to enter into a joint venture with Orco Hotels (MaMaison Residences, in which EBOR has a 33 per cent stake) by saying that the apartment hotel sector is developing at the fastest rate in the West. They add that there is no reason why it shouldn't take off in Central and Eastern Europe, where MaMaison are planning to build this type of hotel.
"The plan is to construct at least one such hotel in the capital of each region," says Frank Cisar of the Orco Property Group. "We are still looking for the right building or plot in Warsaw, ideally in the heart of the city, around Chmielna or Nowy Świat."
The exact location of the MaMaison Residences hotel in Warsaw has not yet been decided, but according to Frank Cisar, the developer does have certain deadlines to meet, and Eurobuild has learnt that a four-star 40-apartment building could well be launched in 2005.
EBOR tell us on their website that the Orco project, which they are to finance, is going cost them EUR 142 mln.

Diana's only owner
EBOR's partner, Orco, a developer and an operator, has plenty of experience running extended stay hotels in Central Europe. They manage 70 hotel apartments (in two buildings) in Prague and 40 in Budapest. Frank Cisar claims that in Prague, the apartment hotels have 30 per cent more occupancy than Orco's traditional hotels.
How well the "Diana" apartments, (currently being constructed on ul. Chmielna 13a in the centre of Warsaw), will do, won't be known until July next year when the hotel starts welcoming guests.
Although the history of the "Diana" hotel and office complex is somewhat long and complicated, it seems to be drawing to a happy conclusion. Last April, PBK Property, a daughter company of BPH PBK bank, became Diana Development's sole shareholder. "Since then we have signed agreements with the general contractor, PBK Poludnie, and project manager EC Harris. Most importantly, however, BPH PBK have granted us credit to complete the investment", says Zbigniew Sajdak, President of PBK Property. "We've already signed a lease agreement for 1,400 sqm of office space in "Diana" with the Goethe Institute, which we consider a success."
PBK Property are conducting talks with prospective operators for the hotel, which will contain 41 apartments of a size ranging from 27 to 117 sqm. Sajdak won't divulge the names but will hint that large traditional hotel chains are among them.
"Why hotel apartments? Because there's demand for this sort of service. We commissioned Arthur Andersen [in November 2000] and DTZ to conduct analyses for us and the results have confirmed our predictions."
30 per cent of the "Diana" project has been completed and its total value has been estimated as EUR 10 mln.

Untypical
Warsaw Apartments joined the circle of apartment hotel operators somewhat accidentally. The company's shareholders wanted to take advantage of the tax allowances which come with building flats for rent, and they created three such estates.
"We aren't a typical hotel and don't see ourselves as such," says Marta Bandosz, Marketing Director of Warsaw Apartments Sadyba Wilanów. "We rent apartments for days, weeks and months. Our clients are both those who work in Warsaw, and tourists."