A market divided

The hotel market in Poland is still very absorbent and many new hotels are under construction in Poland’s largest cities with around 4,700 hotel rooms being developed in Warsaw, around 1,500 in Kraków and a similar number in Gdańsk. The upcoming opening of Raffles, a new luxury hotel, is causing a stir. Upscale and midscale hotels clearly dominate the capital city (accounting for 42.3 pct and 45.3 pct of total room numbers), but no economy hote s are under construction in Warsaw. New hotels under construction in Kraków are mostly positioned high and are mostly in the upscale (57.9 pct in room numbers) and upper upscale (28.9 pct) segments, while the smallest segment is the midscale (4.4 pct). In Gdańsk upscale and midscale segment hotels make up the majority of those under construction. Of the three cities, Gdańsk has the most economy hotels under construction (15.8 pct in terms of the number of rooms). According to Dorota Malinowska, a partner at real estate consultancy ProValue, the differences between the individual segments are not always clear. Some brands such as Moxy (a brand belonging to the Marriott group) or Ibis Styles, fall between the segment definitions based on prices and stars.

In the market for luxury

In most countries around the world, the market is dominated by the economy segment, with the market segmentation resembling a pyramid with the most reasonably priced hotels at the bottom. The situation in Poland is different. Laurent Bonnefous, the chief development officer at B&B Hotels, believes this results from the lack of good locations in Poland’s largest city centres. “Plots are expensive. They are often ferociously fought over and as a result the economy sector loses out against brands that are positioned higher. However, the situation will probably change over time,” he says. Interestingly, the highest average occupancy is currently seen in the upper upscale and luxury hotel segments in Poland. “This is simply because there is a lack of cheaper hotels in good locations,” he argues. One of the most exciting projects at this time is Raffles, which is to be opened soon opposite another luxury hotel, the Bristol, which is operated by Marriott International. “Two or three years ago we were asking ourselves whether Warsaw had the space for new luxury projects. Nowadays we are curious to see how Raffles will fare. This is what will determine whether other projects in this segment emerge,” says Małgorzata Morek, the franchise development director of Accor Hotels. Janusz Mitulski, the international development director at Marriott International, believes that investors have become interested in the segment again due to transactions that have been completed this year. Especially worthy of note was the sale of the five-star Sheraton in Kraków.

Lifestyle – what’s it all about?

Lifestyle hotels cross segment boundaries and it seems as if all the major operators in Poland are – in one way or another – following this trend and adjusting to its requirements. “The lifestyle phenomenon touches all brands, regardless of their positioning in particular segments. The customer experience is becoming more and more important and not the product, which is the hotel. Lobby areas are being extended and customers are being drawn in by food and drink. This is exactly what Moxy, which is being developed in Warsaw’s Koneser centre, is going to be like,” says Janusz Mitulski. “Customers now expect the latest technology and are looking for new experiences. The main brands are becoming less important. What counts now is the place. Change is a necessity,” he adds. Małgorzata Morek (Accor Hotels) believes that there will always be room on the market for traditional hotels with standards based on particular brands. “However, we are of course sensitive to innovation and customer needs. That is why we’re looking for new locations for our Ibis Styles brand. What does lifestyle mean for us? The hotels have to have something which distinguishes them: it might be a historic building, a unique location or designer furnishing,” she said. For Laurent Bonnefous, lifestyle is simply a certain characteristic of a hotel with its own uniqueness and a lack of standardisation. “We don’t have a separate lifestyle category for our hotels. But we have B&B hotels in Milan and Madrid that haven’t been standardised and as a result they are unique. In this sense they are lifestyle hotels,” he claims.