Rows of new chairs

Many large projects have recently been built alongside hotels offering a few thousand square metres of conference space. Each can accommodate a thousand to a few thousand people at the same time. A large number of these conference-hotels have been commercial successes and are now firmly established as venues in the minds of meeting organisers in Poland. Notable examples popular in this category include such hotels as: the Hilton Warsaw Hotel & Convention Centre (opened 2007), the Sheraton Sopot Conference Centre & Spa (2008), Ossa Congress & Spa (2008), Andel’s Łódź (2009) and Gołębiewski Karpacz (2010), as well as Warszawianka in Jachranka (extended by a conference centre in 2012), Narvil Conference & Spa (2013), Gromada in Kraków (2013), and two DoubleTree by  Hilton hotels – in Łódź (2013) and Warsaw (2014). The boom in this segment is undoubtedly related to the growth of the corporate meetings industry as the Polish economy becomes more developed and is a phenomenon that fits in with the global trend for the growth in such services. According to the International Congress and Conference Association (ICCA), the global large international meetings market is expanding by app. 10 pct per year. The hotel industry has now been scrapping it out for the conference market, which comprises both small, local meetings as well as large international ones, for the last few years. A good example of the market’s mobilisation is the Hilton chain, which has ten hotels in Poland. Four of them operate under the Hampton brand, two as Hilton Garden Inns, two as Hiltons and two as DoubleTree by Hiltons. The vast majority include conference halls but as many as three have conference centres that are among the largest in the country. “We had previously noticed the lack of such large facilities, therefore we opened our first Hilton in Warsaw with a 3,000 sqm conference area, including 12 conference rooms and a 1,400 sqm ballroom, which we built in 2007. As can be seen, seven years later we now have a few more hotels like this. This is a result of the demand we have noted, as well as the hotel owners who invest in their facilities,” commented Magdalena Sekutowska, the CEE development director at Hilton Worldwide.

No crowd-pullers

So how does the development of conference hotels compare to the growth of the entire market of hotel facilities? “You need to be cautious with statements such as ‘a wave of conference hotels’. In my opinion, the development of the sector simply harmonises with the development of the entire hotel market,” remarks Małgorzata Dybaś, the managing director of Hotels Asset Management Poland. Magdalena Sekutowska is of a similar opinion – as she points out, it is the high construction costs of conference hotels that are hindering the development of the sector. A Polish guest does not have a large budget, so in many locations it does not make any sense to plan an expensive hotel that will have difficultites staying afloat on the market. It should be borne in mind that economy class hotels are the fastest growing segment.
“They offer a faster return on capital. That is why they do not require such high expenditure and correspond better to the market situation in a lot of places. In our portfolio the segment is represented by, for example, the Hampton by Hilton brand,” argues the development director of the Hilton chain.In this sense conference hotels are at the other end of the spectrum. They require a larger area, their construction is more difficult and more expensive. The quality is also important, it is clear that it is not easy or cheap to build large halls without any columns. “In Poland there are many projects for conference halls with lots of pillars, but guests do not really want to use them,” explains Wojciech Liszka, the president of the Meeting Professionals International Poland Club. “A conference hotel is classified as a ‘full service’ facility. It should have larger communal areas, more fitness facilities – often with a spa – and one or two restaurants. So such complexes are varied, offering many other attractions, which of course has an impact on the operating costs,” explains Magdalena Sekutowska. In addition, to prepare an event, its conduct, disassembly and the swift preparation of for subsequent events requires a very large number of operational staff, but first of all, coordinating everything coming to the event and leaving directly after it is finished to provide space for the next event. It resembles somewhat the organisation of a concert at a popular arena or a fair in an exhibition hall,” explains Sebastian Szczepski, the general manager of the DoubleTree by Hilton Warsaw in Wawer district.
We have even reached the point where brands usually not associated with business clients offer small conference rooms. “City hotels that exclusively rely on tourists usually have two seasons –winter and summer – peaking during the summer holidays and at Christmas, i.e. June to September and December. Thanks to conference guests, the peak period is extended, because meetings usually take place from September until November,” says Šárka Chapman, a senior consultant in the global hospitality group at Cushman & Wakefield for the CEE region. Moreover, the conference client is more attractive for hotels as they spend most of their time at the hotel and enable the hotel to generate revenue from catering, starting from coffee breaks all the way up to meals.

The place is what counts

To be successful, an investor needs to get to know the market conditions very well before taking the decision to launch a project. “There are many hotel projects in Poland, in large cities and small towns, which seem to have problems in terms of profitability. Because small details can determine success or failure,” cautions Wojciech Liszka. Of course, success largely depends on the location. However, the needs related to locations evolve. “Originally many events like this took place in Warsaw, but as time went by the city’s appeal waned and there started to be more interest in places outside the capital. Such hotels include Warszawianka in Jachranka or Ossa in Rawa Mazowiecka. More are being developed, focused on holding cyclical corporate events,” says
Wojciech Liszka. A bit of peace and quiet, a lake, the mountains or the sea – they create an attractive environment for the meeting industry. Furthermore, the organisers sometimes prefer to avoid urban locations, where participants could easily disperse and find a different activity before the end of the conference. In this context it is worth mentioning the largest conference hotel in Warsaw at this time – the newly-opened DoubleTree by Hilton in the Wawer district (with a conference area of 5,000 sqm, including a 2,000 sqm ballroom and 360 rooms). It is not located in the city centre, nor is it an area that would be considered a destination in itself. “Wawer is not currently associated with business, tourism or conference venues. It might be difficult to draw clients to the hotel, which has to compete with the existing hotels located in the city centre, in the vicinity of the airport, business centres or even the Zalew Zegrzyński lake,” believes Małgorzata Dybaś. So the future of the complex should give us some idea about the true capacity of the capital city’s market. The hotel manager insists that its performance in the first half of the year gives grounds for optimism. “The occupancy of the hotel exceeded our expectations. In the first year of our operations we expected an average occupancy rate at a level of 73 pct. The current data for the hotel indicate that this is a level that will be easily achieved,” declares Sebastian Szczepski, the general manager of DoubleTree by Hilton Warsaw. He also goes on to add that the hotel is planning to compete against facilities located near Warsaw for the large conferences market. For individual business clients as well as small MICE events it should compete with the high class hotels in the city centre. Currently conference clients constitute 80 pct of all the guests.

Market potential

According to Magdalena Dybaś of Hotels Asset Management Poland, large cities are currently the favoured locations: Warsaw, Kraków and Gdańsk. Warsaw is a also unique place because many companies have their own conference bases here, as a result of which there is a reduced demand for small rooms. “However, there is clearly a shortage of the large rooms that could attract the largest meetings. Meanwhile, in Kraków many groups come to the city from Europe and all over the world. There are many days in the year when all the hotels are full, so there is surely room for some more of them,” believes Wojciech Liszka. In addition there has been a synergy effect: the city’s decision to build the ICE Kraków Congress Centre, the extension of the airport and the construction of the Kraków Arena sports and entertainment hall have all had a positive influence on the demand. On top of this there is the EXPO Kraków international fair and congress centre, which is being developed by a private investor. “This stimulates the demand very much. I would not be surprised if the number of beds doubled in Kraków within the next ten years,” predicts Wojciech Liszka.
Developers are also hopeful about this demand. A DoubleTree by Hilton is to be opened in Kraków next year and could accommodate 2,000 people in its conference rooms. A Radisson Blue is to be built in Świnoujście in 2016 with a conference centre for 1,000 people. So what will the future of the market be like? “Compared to western countries we still have much in reserve, with around 50 pct of the saturation observed in other countries,” believes Wojciech Liszka. There has also been an increase in terms of customers’ expectations, which has forced old facilities to give way to new ones. The representative of Hotels Asset Management Poland is of a similar opinion: “We can still see some room for development, quite a lot of room actually, just as there is for the entire hotel market,” claims Małgorzata Dybaś. ν

Where the heart of Poland beats
Łódź has a large appetite in terms of attracting players from the MICE sector. The Łódź Convention Bureau was established at the beginning of this year, dedicated to promoting the city to meeting organisers. “Our location in the centre of Poland, particularly in terms of the national events market, is a great asset. On top of that there are the improving transport links, as we are close to the junction of the A1 and A2 motorways. The number of exits from the motorway towards the city will increase soon, which will considerably improve the situation, while the renovation of the railway line between Łódź and Warsaw is to be completed next year. The opening of the new Łódź Fabryczna station is planned for 2016,” says Anna Mokrosińska, the manager of the Łódź Convention Bureau division. The chances for attracting a large number of international conferences should also grow as the number of flight connections with Europe increases. So far there is only business connection with Munich, but other airlines are already in negotiations with Łódź airport. As well as the location and the transport links, they emphasise the unique character of the city. “The revitalisation process that started in Łódź is unprecedented on the European scale. Łódź has focused on investment in, and the revitalisation and renovation of its 19th century architecture. This is the secret to its uniqueness,” claims Anna Mokrosińska. One element of this strategy is the ‘100 Tenement Houses’ programme, which involves the renovation and gradual revitalisation of buildings by the city, along with the Nowe Centrum Łodzi project involving the redevelopment of the EC1 mixed-use complex and the Łódź Fabryczna station and its immediate area. The largest conference hotel in Łódź at this time, the four-star DoubleTree by Hilton, was only built a year ago. Its investor, the Toya group, gradually increased its conference area by restoring the former film production halls that used to belong to the Wytwórnia Filmów Fabularnych film studio. After the completion of the renovations, which is to take place in December this year, it will have a conference area of over 5,200 sqm, with the largest hall having an area of app. 1,100 sqm. “Thanks to these areas, we can compete with conference hotels across the country,” says Piotr Matulka, the senior sales manager. When creating their price policy the hotel management also keeps an eye on their local rival Andel’s, which has been operating for a couple of years now. The aim is to stay in the middle, with prices neither higher nor lower than most competitors. ”Currently 90 pct of our clients are business clients, and half participate in conferences organised here,” says Piotr Matulka, the senior sales manager. Even though the hotel has not revealed its current occupancy rate, some market sources report that Hilton has a chance of achieving app. 50 pct occupancy rate in the first year of its operations, while the level of 60–70 pct would be a satisfiying result for the future. Its main competitor, Andel’s, itself has a unique character. It was opened in a refurbished 19th century factory that used to belong to the Poznański family and is one of the most successful hotel projects in the city, with spacious conference areas (3,100 sqm) and a large ballroom with an area of 1,300 sqm. The two other four-star chain hotels in Łódź (Novotel and Holiday Inn) are also business hotels that draw a decent share of guests from the organisation of conferences. “Łódź offers a good price-to-service quality ratio. They are new facilities, designed according to very original ideas, with a lot of attention to detail and the quality of the furnishing and finishing. This puts Łódź’s MICE offer at a surprising high level,” believes Anna Mokrosińska. The city expects to become an important centre for all kinds of meetings from the MICE sector, including fairs. “We have a new fair centre, Expo, so we expect there to be many participants of corporate events as well as of conferences and science congresses,” adds Anna Mokrosińska. The international and nationwide conferences that have recently taken place in Łódź include: the Congress of the Association of Polish Surgeons (2,500 people in the building of the faculty of law and administration of the University of Łódź), the 4th Railway Congress (900 people, Expo Łódź), the 7th European Economic Forum (1,000 participants, DoubleTree by Hilton), and the 41st PIKE 2014 International Conference and Exhibition (650 participants, Double Tree by Hilton).