C&W: supply on the hotel market in Warsaw to grow by ~6.1% in 2021-2022

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According to an analysis by Cushman & Wakefield (C&W), the supply on the hotel market in Warsaw should continue to grow in 2021-2022 at an average annual rate of around 6.1%, compared to an increase of 7.4% in 2020. 2021 should also bring greater activity on the hotel real estate investment market.

Due to the pandemic, there were no major hotel deals in 2020 and investors followed the “wait and see” strategy, while the owners were not willing to get rid of assets at that time, especially at a discounted price, according to Lukasz Bondyra, the hospitality market advisor for Poland (C&W).

Due to the above factors, hotel transactions were frozen – the situation was also worsened by the limited access to financing for hotel acquisitions. The dynamically changing restrictions, as well as a prospect of the third wave of COVID-19, but above all the operational challenges related to the level of demand for hotel and conference services will be a serious challenge for hoteliers. However, there is a chance for a faster recovery due to the strong domestic demand of Warsaw – the capital is also less dependent on international markets compared to other CEE and SEE markets. It is set to be one of the first capitals to rebound demand to pre-pandemic levels. Some investors remain active, but the supply of hotels for sale is limited, which was also typical of the market in previous years. Nevertheless, an increase in investment activity in the local hotel market is to be expected in 2021, while the sale transaction of the Regent Warsaw hotel was closed in February, Lukasz Bondyra emphasised.

In 2020, the RevPAR ratio (revenue per available room) decreased by almost 74% in Warsaw. Despite this, the Polish capital was one of the least affected main markets by the pandemic in the CCE region, precisely because of the strong domestic demand as well as the greater resilience of the Polish economy. The supply on the hotel market in Warsaw increased by 7.4% in 2020, and is expected to continue to grow over the next two years, but at a lower average annual pace – according to C&W estimates, it will be 6.1%. Tourism demand from Warsaw in 2020 decreased less sharply compared to other major markets (by around 65% according to STR), thanks to the mentioned strong domestic demand, which before the pandemic accounted for as much as 62% of tourist accommodation.

The COVID-19 pandemic has also delayed or even cancelled several projects in the CEE / SEE region, which is beneficial for hoteliers as it is likely to limit the increase in supply. Several pre-pandemic projects still opened in 2020, such as Nobu Warsaw and Crowne Plaza & Holiday Inn Express Warsaw Hub. Most of the remaining projects are, admittedly, behind schedule, but they will continue, C&W predicts.

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