Market Report

Poland Hotel Market 2023

Before the COVID-19 pandemic, Poland exhibited robust GDP growth, outperforming many EU countries. However, the pandemic induced a significant economic downturn, with Poland’s GDP shrinking by 2% year-over-year, better than the EU average decline of 6.1%.

Recovery began in 2022, bolstered by expansionary fiscal policies, a strong labour market, and an influx of Ukrainian citizens. Nevertheless, inflation surged to 10.3% in July 2023, among the highest in the EU, with energy prices contributing significantly.

Poland's GDP is expected to grow moderately at 0.7% in 2023 and 2.7% in 2024, with inflation projected to remain high at 12.6% in 2023 and 7.9% in 2024.

Office Space Market
The supply of office space in major Polish cities reached 12.7 million square meters by mid-2023, but new office construction has significantly slowed since 2020. High construction costs, the war in Ukraine, and economic uncertainties have hampered development, especially in Warsaw, where only 221,000 square meters of new office space is under construction compared to 750,000 square meters in early 2020.

Post-Pandemic Hotel Market Recovery
The Polish hotel market is gradually rebounding post-pandemic, with large urban areas like Warsaw, Krakow, Wroclaw, and the Tri-City leading the recovery. Domestic tourism has surged, driven by Poles exploring their own country, which benefits both urban and rural hotels. Hotels are adapting to increased hygiene and safety expectations and leveraging technology for remote check-ins and enhanced customer service. Sustainability efforts are also on the rise.

The number of overnight stays in Polish hotels in 2022 increased by 103% from 2020, surpassing 2019 levels by 4.3%. Q1 2023 saw nearly a million more visitors compared to Q1 2022. Warsaw and Wroclaw hotels led in occupancy rates in 2022, while the Tri-City and Warsaw recorded the highest Average Daily Rates (ADR).

Market Consolidation
Both domestic and international hotel chains are expanding in Poland. Notably, PHH and Dobry Hotel nearly doubled their portfolios over the past three years. International chains like Accor/Orbis, Hilton Worldwide, and Radisson HG dominate the market. New brands, including Autograph Collection and Radisson RED, have been introduced, while Mövenpick's entry is highly anticipated. Conversely, Best Western has seen its portfolio halve.

Tourism Growth and Trends
Polish regional airports experienced a 12% increase in passenger traffic in Q2 2023 compared to Q2 2019. Domestic tourism remains strong, with 64% of Poles planning to vacation within the country in 2023, and 76% intending to use paid accommodation. Warsaw was named the European Best Destination in 2023, underscoring Poland's growing appeal.

The World Tourism and Travel Council projects European tourism to nearly return to pre-pandemic levels in 2023, with the sector expected to generate significant employment and revenue.

The Polish hotel market is on a path to recovery, driven by domestic tourism and strategic adaptations by the hospitality sector.