Cushman & Wakefield Hospitality Operator Beat Survey H1 2023 – CEE-12

22 August 2023

As the performance of hotels in soars above the pre-pandemic levels, regional and international operators are optimistic about the industry's outlook and keen to expand across the CEE-12 region (Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia, Ukraine). While Budapest, Prague, Warsaw, Cracow and Bucharest remain on top of their list, other regional cities are also targeted. However, there are also challenges, with around 28% of hotel projects in the pipeline facing delays or being put on hold, mainly due to the increased development costs.

Market Attractiveness

More than 26 senior executives representing regional and international hotel operators active in CEE with approx. 450 hotels with over 72,000 rooms have completed Cushman & Wakefield’s Hotel Operator Beat 2023 for CEE-12.

The most attractive markets for operators* are Budapest (4.3 out of 5), Prague (4.2), Warsaw (4.0), Cracow (3.5) and Bucharest (3.5). Whilst Budapest claims the top position due to an increased interest by 10% compared to the last survey, the overall most attractive country is Poland with Warsaw, Cracow, Wroclaw (3.1) and Gdansk (3.1) being among the Top 7 markets.

Hotel Operator Beat H1 2023 – CEE

Poland’s capital city, Warsaw being 3rd most attractive market in CEE-12, remains a priority for operators wanting to establish or grow their market presence. Whereas Cracow, Wroclaw and Gdansk experienced a slight decrease in operator’s interest by 5%, 5% and 6%, respectively, compared to the last survey. Nevertheless, these are rather small changes in light of the overall moderate to high interest of the aforementioned three markets for operators.

Performance & Outlook – Poland & CEE-12

According to STR, Poland is currently ranked second in terms of RevPAR recovery in CEE-6 countries (Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia). In H1 2023, the hotels in the country achieved a 23% increase in RevPAR compared to H1 2019 and a 35% increase compared to RevPAR in H1 2022. This increase was primarily driven by a 29% increase in ADR, although occupancy remains 5% below YTD H1 2019 level.

Operators express positive sentiments about the future performance of hotels, particularly for the Luxury and Upper-Upscale classes, with 71% and 82% of respondents being optimistic or very optimistic, respectively. Regarding hotel types, extended stay and urban hotels are perceived to have the most optimistic outlook, according to 79% and 75% of surveyed operators, respectively.

Pipeline Trends CEE-12

The survey participants collectively operate 140 hotels, comprising over 22,000 rooms in various stages of the development pipeline across the CEE-12 region (Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia, Ukraine). Despite the significant development activity, approximately 17% of the projects face delays, with an additional 11% being on hold. This is primarily to development costs and challenges with debt funding, according to 65% and 35% of surveyed operators respectively. The most common delay for pipeline projects ranges from 6 to 12 months, according to 40% of the respondents.

Conclusion

The overall data suggests that the hospitality industry in the CEE-12 region is experiencing a healthy recovery. Despite the macro-economic and geopolitical challenges, there is a solid foundation for optimism and operators are keen to expand across multiple markets within the CEE-12 region.

The fact that Warsaw has the highest rate of brand saturation among CEE-6 capital cities, does not deter operators from expanding further in the city or entering the market by operators yet not present on the market. Despite the outbreak of war in Ukraine, a promising recovery in the performance of the Polish hotel market is noticeable. Furthermore, Polish air traffic, in terms of the number of passengers carried, in Q1 2023 surpassed Q1 2019 level, making Poland one of three countries in CEE-6 to recover to pre-COVID levels. All these aspects make Poland the most attractive country in the CEE-12 region for hotel operators, resulting in their interest not only in Warsaw but also in the regional markets."

Maciej Pronczuk, Hospitality Consultant CEE & SEE at Cushman & Wakefield

About the survey

Cushman & Wakefield Hospitality conducted the Hotel Operator Beat Survey in H1 2023. Completed by more than 26 senior executives representing hotel operators with an existing presence in the CEE-12 region or interest to enter the region, they operate more than 450 hotels with over 72,000 rooms in CEE-12, and over 140 proposed hotels comprising more than 22,000 rooms in the pipeline, combined. The survey is being extended to various regions across Europe, offering distinctive and exclusive insights at a pan-European level. It covers other areas such as trends in contract terms and environmental considerations, which will be published shortly.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In 2022, the firm reported revenue of $10.1 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit: www.cushmanwakefield.com or Twitter: @CushWake

Karolina Samczyńska

Head of Marketing and Sales Enablement, Poland at Cushman & Wakefield

Agnieszka Ratajczyk

Senior Consultant at Linkleaders

+48 512 546 107