Open the doors and take a breathHotels
Many sectors of the economy have suffered immensely due to the onslaught of the coronavirus. The conference and event segment – which is closely related to the hotel sector – is still on its knees. Retail also has yet to fully recover, while short-term rental apartments remain empty. Hotels, guest houses and rented apartments were all forced to shutter up until May – and even then their doors were only opened to those wearing masks and using disinfectant. According to a recent report by CBRE, occupancy fell by 10 pct in March, the first month of the lockdown. The figure sank to almost zero in April (although some hotels were allowed to put up medical workers). When the government began to ease the restrictions in May, hotels were finally allowed to take in regular guests, but only under the most stringent hygiene controls. In June, after the restrictions were eased once again, hotels were only seeing occupancy rates in single figures. So does the hospitality sector even have a future?
Demand set to bounce back
Agata Janda, the head of the hotel advisory at JLL, believes that due to the specific nature of the market in Poland, demand might recover much sooner than in other countries around the world. “This is because the demand for Polish hotel rooms, both from business and tourism, is largely domestic,” she explains. According to CBRE, the TriCity has the best prospects in the short-term due to its popularity as a short-stay destination, while Kraków has one of the worst prospects, being more popular with foreign travellers, who in 2019 accounted for as much as 50 pct of all tourist stays in the city.
According to CBRE’s research director Agata Czarnecka, a full recovery would require a return to unrestricted travel, mass meetings, conferences and trade fairs. “For this to happen we will have to wait for the relevant sectors to return to business as usual. The other factors required for any improvement on the market would include restoring the trust of travellers, new hotel openings as well as a revival in the market for tourism services and excursion organisers,” she explains. Agata Janda of JLL is another who makes the point that how well hotel manage the crisis is going to be determined by several factors. “All depends on who the owner is, what kind of structure they operate with, how the hotel is financed, the working capital that was put in during the lockdown, along with the success of the reopening and also how quickly business recovers afterwards,” she insists.
When the lockdown was partially lifted in Poland on May 4th, hotels could once again take in guests. But what did it take back then to actually reopen? Wiktor Wróbel, the CEO of Nosalowy Dwór, says that the preparations to reopen mostly involved ensuring the appropriate hygiene standards were in place to prevent the spread of the coronavirus. “We quickly set up a strict health and safety regime, and improved it when necessary, which we called ‘Safe in Nosalowy’. Obviously in such an uncertain situation our guests have to be sure that the hotel is taking every precaution to ensure their health and safety. Such an approach is equally important when it comes to our employees, who have the right to expect to be provided with protective gear and that their workspace is also thoroughly prepared,” he explains. The company has not only reopened all its existing locations, but also opened a new hotel at the beginning of July – the Nosalowy Park Hotel & Spa in Zakopane.
Despite the epidemic
Other openings of new hotels have also taken place. Even though many of these had been delayed, some locations (in particular, tourist locations) are still capable of catching the eyes of developers. According to CBRE there have been many examples of hotel openings. The Radisson Blu Sopot and the Sopotorium Medical Resort have opened in Sopot, while a Radisson Hotel has opened in Szklarska Poręba. In Warsaw, meanwhile, 580 rooms have been added to the market, such as those in the A&O Warsaw Wola, the Holiday Inn Express Warsaw Mokotów and the Mercure Warsaw Ursus Station. Investors also have big plans for the future. Over the next two and a half years, the number of hotel rooms is set to grow by 30 pct, while in regional cities it should increase by around 10–30 pct.
Anthony Campaniaris, the managing director of the Nobu Hotel Warsaw, is of the opinion that Covid-19 did not have a major impact on its opening or the launch of the brand, apart from delaying the opening slightly. “We used the extra time wisely to allow the operating team to work out a new health and safety regime that goes far beyond what other companies are doing. Keeping the focus of the hotel’s team fixed on health and safety is an interesting challenge. It is extremely important right now to be responsible and oversee this key aspect for our guests,” he insists.
Coupons to the rescue
At the beginning of August a tourism coupon system was launched in Poland. These are granted to families with children that are entitled to child benefit or payments under the government’s 500+ scheme. For such children a PLN 500 coupon is granted, unless they are disabled, in which case this goes up to PLN 1,000. According to the state statistical body Statistics Poland (GUS), more than 13,600 companies in the tourism sector have declared their willingness to offer services under the scheme, which will run until March 2022. Its impact can already been seen. In its first week, Sun & Snow, a company that manages tourist apartments across Poland, registered bookings worth PLN 830,000 under the scheme, with the average payment when the coupon was used being PLN 832.
Some hotels, however, have not received any government support, and neither the further easing of the restrictions nor the tourist coupon scheme is likely to alleviate their situation. These include, for example, spa hotels. Some have even shut down for good, such as the Sofitel Wrocław Old Town, which Orbis closed in early August. Sadly, many more hotels are finding themselves in the same situation.
We will only find out how many hotels eventually close in due time. Agata Janda of JLL believes that September will be the crunch month for many of the city-based hotels that are largely dependent on business and international travellers. “Clearly, many companies are going to reduce their business trips for economic and organisational reasons. Many more business meetings than usual will take place online. How much international travel there is going to be will be largely dependent on the global scale of the pandemic as well as the quarantine regulations,” she admits. In her opinion, the MICE sector, which is umbilically linked to the hotel sector, will not start to recover until next year. However, hotel owners that have the support of financial institutions are very much determined to weather the crisis. Some hotels have been devising new marketing campaigns to win new customers. However, Agata Janda offers some encouragement: “The hotel and tourism sectors are prone to the occasional shock, but time and time again they have proven that they recover from them.”