Hotels closed for May holidays. The industry records 67% drop in arrivals

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Ten post dostępny jest także w języku: polski

Domestic tourists were responsible for as much as 70% of hotel occupancy in Poland in 2019, according to CBRE. This is a good prognosis for this year as long as hotel facilities open. The key will be vacations, for which Poles have already started making reservations. However, it is not known when the government will decide to open hotels. And the industry is in quite a bind. Data compiled by CBRE shows that in November 2020, the number of overnight stays was down 46% year-on-year, while arrivals fell by as much as 67%. The most difficult situation is in Krakow, where the traffic is mainly generated by foreign tourists. Slightly better situation is in Wrocław and Tricity.

– The beginning of last year looked very promising for hotels in Poland. The figures for January and February showed an improvement in demand. Then the pandemic changed everything and hotels were recording month-to-month drops, with some breaks during the periods when restrictions were not in force. This year, the first recovery can be expected in the second quarter, although the decision to close hotels for May Day has shocked the industry. Domestic tourism is the key driver of the recovery and people need a rest after months of pandemonium. Therefore, resorts are likely to be the first to pick up the slack. However, as far as business city hotels are concerned, their recovery may take even two years from the easing of restrictions – says Grzegorz Kaleta, hotel market expert at CBRE.

Big drops in hotel sector

Demand for hotels in Poland before COVID-19 indicated an upward trajectory. In 2019, the hotel market saw more than 23.5 million arrivals and almost 45 million overnight stays, reflecting growth of 5.5% and 6.6% respectively compared to the previous year. Tourists spent an average of 1.9 days in a hotel in 2019. The situation changed dramatically after the outbreak of the pandemic. The latest available data shows that in November 2020, arrivals fell by 46.5% year-on-year and the number of overnight stays decreased by 67.1%.

– Poland began 2021 by closing most hotels with no known date for reopening. It is also unclear how the vaccination program will affect the recovery in demand. Still, it is unlikely that large-scale investment projects will start as early as this year. Especially since so far many hotel investments have been put on hold or changed into residential projects, such as the Vienna House in Wrocław. However, the moment the situation stabilises and the uncertainty disappears, we expect an increase in investment activity – says Grzegorz Kaleta, an expert on the hotel market at CBRE.

Investors are very cautious about the hotel market, Warsaw remains the first choice. However, due to problems with bank financing, uncertain situation connected with COVID-19, we should expect postponed opening dates of new facilities and high level of postponement of projects in time. Investors with significant hotel holdings in their portfolios are considering new opportunities for now, and potential hotel acquisitions will be scrutinized more closely, with only the best properties in the best locations being considered.

Source: CBRE

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