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Enthusing and disillusioning

Conference "Spotlight Hotel Investment Poland" reveals volition and reality

Warschau Touristen
Poland still lacks of international tourists. International hotel brands could change it.

Warsaw (June 27, 2014). For international chains, Poland is a promising land as the country has several good cities with potential and the chains are able to spread their brand portfolio. In general, investors are positive even if Polish banks are very conservative. At the beginning of June, the first hotel conference "Spotlight Hotel Investment Poland" in Warsaw provided insights concerning expectations, hopes and potentials.

At the panel discussion during the one-day conference at the Golden Tulip Centre in Warsaw, the chains revealed clearly where their priorities and brand interests in Poland are. For example, following the entire strategy, the German Steigenberger hotel group wants to enter the cities with the InterCity brand and maybe expand to the Baltic Sea with the Steigenberger brand; Rezidor is coming in with Park Inn and maybe with the two new brands Radisson Red und Quorvus too; Marriott favours the new budget brand Moxy and Courtyard too, and ogles with the expansion of its soft brand Autograph Collection in Poland. Starwood focuses the middle segment on the level of aloft, Golden Tulip wants to select from its entire brand portfolio and wishes for multi-brand complexes such as with Golden Tulip, Campanile and Premiere Classe in Warsaw, for example.

  Louvre Komplex Warschau Centre Golden Tulip Campanile PremiereClasse
  Louvre Group, today already a big player in Poland
demonstrates its presence in Warsaw in a triple complex of
Golden Tulip, Campanile and Premiere Classe.


Besides the chains, Worldhotels piped up too: at hotel conferences, the corporation meanwhile appears self-confidently next to the chains and presents itself as an alternative for private hotels – especially due to its licence model (White Label), and it also attracts hotels with its newly applied bonus programme. Worldhotels even targets smaller hotel groups from Poland.

The hotel operators agreed that Poland is rather a country for midscale hotels concerning value development and not for luxury (as already described in the previous article). In all cities, conversions are the obvious solution as there is a large stock of old buildings even in Warsaw's top locations; however, they are treacherous concerning ownership and therefore especially difficult for foreign investors.

Volition and reality

From this point of view, the fight for the accessible hotel projects and locations has long since begun, and besides the investors looking for locations, the hotel operating companies have to make themselves popular with their conditions among investors. For example, Starwood Hotels is willing to provide "key money" at certain locations, Steigenberger would grant key money and maybe credits depending on the deal, Golden Tulip wants to "remain flexible" and not invest any more, Rezidor is trying its luck with "manchise" agreements (after about five years, a franchise agreement becomes a management agreement), Marriott would only grant guarantees "occasionally"... As is so often the case, the statements of the chains were quite similar but very vague, as none of them wants to miss out on a deal.

Bristol Warschau Aussen  
Luxury in Warsaw - e.g. Hotel Bristol, a member
of Starwood Hotels. A new Raffles is going to
be build just opposite.

 

From an investment perspective, Ascan Kókai, Funds Management Director at Invesco Real Estate, regards Poland very positively: for seven years now, the investment company has been in the country and has invested more than 200 million euros via real estate via funds from Luxembourg. Regarding future investments, he referred to the eight-person hotel expert team in the house, which is ready to discuss hybrid agreements. "The Polish market should generate two times more premium than any other saturated market," said Dominic Seyrling, Senior Director Acquisitions Europe at the investment company Host. However, he confessed self-critically, that he was already a little too late starting investments in Poland.

Host, looking for objects for its funds, has met very self-confident investors in the meantime – with (too) high price ranges. This is disillusioning, just like the constant question of private equity companies about primary locations in Poland, which simply do not exist in abundance just now. The company UBM Realitaetenentwicklung slowed down the emerging euphoria for a very different reason: "Poland has an up-side, however, the risks are not politics but the currency. This is very important for calculations," added Dr. Rudolf Grossmayer, Asset Manager Hotelbeteiligungen, referring to the discrepancies between zloty and euro (a date for joining the euro zone is still open at the moment).

Reluctant banks

This said, Grossmayer also addressed a topic which emerged at the panel discussion about financing and left the impression that many more international players (e.g. the Aareal Bank) would join if financings in euro were available.

  Hampton by Hilton Warschau Lobby
  Lobby at the new Hampton by Hilton Warsaw which opened
last week. It is located next to the Marriott Hotel. The
Austrian S+B Group invested more into the property than
Hilton standards require it - aiming at selling the property
soon again.
/ photos (3): map

The attendant Polish banks – Bank Pekao/UniCredit and PKO BP – were very conservative concerning the topic of financings: at best, they preferred business hotels in city centres (as there are data/benchmarks available for this segment) and boutique hotels maybe as well; however, wellness resorts are off-limits, so to speak. A Pekao bank is happy to grant financings in zloty without risks, whereas with financings in euros, the cash flow has to be guaranteed.

While the PKO BP wishes for an equity ratio of 40 to 45 percent, and therefore exposes itself as very reluctant concerning credits, Warimpex representative Lukasz Adamczak said in another panel discussion that there are also financings of up to 65 percent of the capital available in Poland.

Those who deal with development and/or financing should also be familiar with the first steps in Poland: insiders advise Poland novices to counter-check their projects with the master plan of the respective (city) district prior to the building permit. / Maria Puetz-Willems

 

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