Warsaw reported the largest decline in revenue per available room (revPAR)
of any European market tracked by the HotelBenchmark Survey by Deloitte

during 2002.  The city finished the year with occupancy at 50 percent (11
percent decline on 2001) and an average room rate of EUR122 (17.9 percent
decline on 2001).  Consequently, Warsaw was the only market in Europe to
post double-digit declines in both occupancy and average room rate compared
to 2001.  Year-to-August 2003 figures unfortunately show little respite for
the city.  Of the 37 markets tracked across Europe on the HotelBenchmark
Survey, Warsaw is currently posting the second largest declines in revPAR.
During the first eight months of the year the city has seen revPAR fall by
24 percent to EUR50 compared to the same period in 2002.
Although hotels in Warsaw typically manage to achieve higher average room
rates than many other key European cities such as Berlin, Brussels,
Copenhagen, Prague and Vienna, the city remains challenged by low occupancy
levels. Occupancy currently stands at 49 percent for the first seven months
of 2003.  In addition to global economic conditions, part of the reason
that occupancy continues to remain under pressure is due the level of new
supply that has entered the market over recent years.  Although several
international hotel chains have operated in the market for a number of years
(Meridien, Marriott, Accor and Starwood), historically the market has been
dominated by domestic operators (Orbis and Syrena). 

However, given the strengthening of Warsaw’s position as the commercial hub
of Poland and the level of investment in the city’s infrastructure over
recent years, including the opening of the city’s largest conference centre
in May 2002, it is perhaps not surprising that Warsaw continues to attract
hotel investment.  International hotel operators that have recently opened
in the market include, the 250-room Hyatt Regency and the 309-room Radisson
SAS - both of which opened in 2002 - and the 366-room Westin which opened
earlier this year.  Future openings include the 226-room Courtyard by
Marriott scheduled to open this month and the 329-room InterContinental
Warsaw scheduled to open in November. 

So what of the future?  Although international tourist arrivals to Poland
have declined for the last five years, the Institute of Tourism expect that
some markets will start to show some level of improvement in 2003 and 2004.
However, it is not until 2007, that tourist arrivals are expected to return
to the levels achieved in 2001.  Economic data however is slightly more
encouraging.  Latest figures from the Economist Intelligence Unit (EIU)
forecast that Poland’s GDP will increase by 3.1 percent 2003, compared to
the 1.4 percent growth achieved in 2002.  To set this in context of the EU,
which Poland plans to join next year - EU GDP is forecast to increase by
just 0.7 percent in 2003 and 1.9 percent in 2004.  Despite improvements in
the economic environment, increased investment in Warsaw’s infrastructure
and efforts by the city to increase its profile, as an international
conference and exhibition destination the reality however is that in the
short-term, supply is likely to continue to outstrip demand. 
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