Economic equals strategic

The popularity of budget hotels is reflected in, for example, the expansion of big chains, which see a chance for profit in such facilities. Budget lines are being developed by, among others, the Orbis/Accor group with its Ibis and Ibis Budget concept; Louvre Hotels with its Campanile and Premiere Classe facilities; InterContinental Hotels Group with its Holiday Inn Express brand; Hilton Worldwide with its Hampton by Hilton as well as the B&B chain. An Ibis and Ibis Budget (formerly known as Etap) complex has opened in Warsaw this year as well as a similar facility in Kraków. The Louvre Group has also opened two hotels in Wrocław, with others planned for Bydgoszcz and Zielona Góra. The French B&B chain of budget hotels already has hotels in Toruń and Warsaw and is planning to launch others in Wrocław and Łódź. Meanwhile, Holiday Inn Express in Wałbrzych welcomed its first guests in June and a similar facility is to be opened in Warsaw later this year. Additionally, Hilton Worldwide, well-known in Poland for its five- and four-star hotels, is developing its strong Hampton by Hilton budget brand in the country its first hotel was opened in Świnoujście this year, while construction work on two others has started in Warsaw and Gdańsk. In Poland the time has now come for branded budget hotels. The market is ready and it can be confidently said that a budget facility in a good location, operating under a recognised brand, will have no trouhble finding a place for itself on the market,? says Dorota Malinowska, a hospitality consultant in the capital market group of Cushman & Wakefield. French chain B&B is not resting on its laurels either and is planning to open a few new locations in Poland. We have some more projects in the pipeline. We have already launched construction work in Wrocław. The opening of the facility in the Lower Silesian capital is planned for H2 2013. We are now working on hotel projects in the biggest cities in Poland: Gdańsk, Kraków, Łódź, Katowice, Poznań and Warsaw,? reveals Beatrice Bouchet, president of the management board of B&B Hotels Polska. The company has not excluded the introduction of a franchise system, even though, as Beatrice Bouchet says, this is not a priority. Meanwhile, a completely different approach to franchising is being taken by Accor. ?Around 80 pct of our hotels will be run through franchise and management contracts and 20 pct through subsidiaries. We will continue to use our subsidiary, Orbis we are the majority shareholder as a tool to grow in Poland and in Lithuania, where we run a 125-room hotel on a management basis. Over the next 3?4 years we intend to increase the number of our hotels in Poland from the current figure of close to 60 to around 80 or 90 under all three models, says Yann Caill're, the president and chief operating officer of Accor.

The head of the French company acknowledges that now it is ready for expansion. Like their competitors, Accor's priority is budget hotels, but these form only one part of the company's strategy. The biggest market at the moment is for the economy brands, but we are also pushing our mid-scale hotels, such as Novotel, Mercure and up-scale ones like Sofitel and Pullman. And we are gradually adding more brands, explains Yann Caillre.

The way to tackle costs? Modules
The concept of module hotels is blazing a trail on the Polish market. Wyndham Hotel Group is introducing such projects, under the name of Super 8, onto the Polish market. The first such hotel is to be built in Warsaw and is to be opened in Q1 2013. Super 8 are two-star facilities that can be quickly and easily assembled because they consist of pre-fabricated modules, thanks to which their construction costs are considerably lower. According to estimates, the cost of building one room amounts to EUR 35,000?40,000. Moreover, the format of module hotels makes it possible to move them to another site if needed. ?One advantage of such a solution is the speed of project preparation as it can be built in under a year. This is about a year faster than traditional methods. Moreover, later on such a hotel is much cheaper to run,? explains Roman Jakubowski, the director of Unibep subsidiary Unihouse, which is not involved in Super 8 but has also introduced a similar concept that it is planning to launch on the Polish market. According to Roman Jakubowski there is a lot of interest in it, negotiations with investors are pending and the market is ready to absorb new, cheaper solutions. We have our own projects called Hotel 51 and Hotel 30 ? the names refer to the number of rooms. The first facility of this type in Poland has been developed in Mięrzęcice near Katowice, where we have built a three-storey hotel for an investor - Pol-Trans Catering. The building has an area of 1,400 sqm and was built within three months. This was the beginning of our work on module hotels, adds Roman Jakubowski.

Price + concept = customer
Where does the popularity of budget hotels stem from? An important factor in this is that the customer is increasingly paying attention to the quality-to-price ratio. Poles are not the sort of people who like to overpay. Furthermore, corporate customers, travelling across Poland, are slowly moving away from booking luxury hotels as their accommodation because they are realising that they often do not have any chance to use the full range of services of such facilities. They spend most of the day in business meetings and come back to the hotel only to rest, sleep or work a little if necessary. And people travelling as tourists use most of their time sightseeing or participating in cultural events. The most important thing for them is a clean, comfortable and inexpensive hotel room, claims Beatrice Bouchet. The numbers confirm this. We can say that budget hotels operating under a recognised international brand and located in the centres of big cities reach an annual occupancy rate of app. 70 pct, says Dorota Malinowska. Beatrice Bouchet also highlights the high demand for low-budget facilities. The B&B hotel in Warsaw has an occupancy rate of 70-75 pct five months after its opening.
The attractiveness of this format is enhanced by the fact that budget hotels are not a big financial burden for investors. The relatively low investment expenditure needed for the construction of budget hotels signifies a low development risk and easier access to financing, which is of great significance during the economic slowdown. The construction costs for such a facility amount to app. EUR 40,000?60,000 per room. Whereas in higher standard hotels the lowest cost range starts at EUR 90,000-100,000 per room. Moreover, branded budget facilities are more resilient to the fluctuations of the global economy. They are characterised by high operating efficiency and a shorter period needed to reach their maximum operational capacity compared to medium and higher class hotels. Budget hotels of good brands generate returns after 67 years on average, and this period could even be shorter in the case of very good locations,? says Dorota Malinowska. This is mostly down to the concept. Budget hotels have simple architectural designs with smaller rooms and communal areas and are usually categorised as one- or two-star facilities. Also, the price is important and usually ranges from PLN 150 to PLN 200 per night.

Hotel customers should be glad to hear before the summer holidays that the choice of inexpensive accommodation is getting wider. Perhaps the number of guests, who have until now been afraid of high prices, will also get bigger.