Another year full of turbulence, uncertainty, and emotions across nearly every field—economic, political, social, and environmental—is behind us. However, it seems that after three completely unpredictable years, this wild roller coaster is beginning to lose some momentum, although we still cannot be certain of what lies around the corner. The ongoing war in Ukraine, the conflict in Israel, the tense situation in Yemen, the chaos in our own government, the unprecedented polarization of society, a weakened global economy, high inflation, and soaring interest rates are just some of the challenges we face—all of which impact our sector.

There is no doubt that hospitality is undergoing significant changes on both global and regional scales, in terms of investment and operations, adapting to new conditions and circumstances. In business, more than ever before, what matters is attentiveness, anticipation of trends and economic-political scenarios, flexibility, multi-dimensional strategy, the ability to pivot dynamically, and, above all, meticulous cost control and efficient cost management.

Moving Slowly but in the Right Direction

Over the past two years, the hotel industry has once again demonstrated its remarkable resilience to crises. In 2023, in most regions, hotel performance exceeded pre-COVID levels. The most notable growth was in pricing, driven by high inflation, which significantly increased fixed and operational costs such as wages, product expenses (e.g., for gastronomy or cleaning supplies), external services (e.g., laundry, accounting, marketing), utilities, and energy costs, among others.

Although average rates rose significantly in 2023—by about 15% year-on-year—hoteliers also managed to achieve higher occupancy levels than the previous year. It’s worth noting, however, that Polish consumers’ wallets have been drained by prolonged high inflation and steep loan repayments. The domestic travel demand that was bolstered by the travel voucher program has ended. Moreover, the end of the pandemic (although COVID itself remains) has revived interest in international travel to traditional Polish destinations such as Turkey, Egypt, or Tunisia, which often compete in price with domestic vacations.

To cover rising costs, Polish hoteliers will need to continue raising prices, though the pace of increases will not match 2023 levels (and inflation itself is also slowing). In 2024, revenue managers and management teams will need to perform a delicate balancing act, carefully exploring the “price ceiling” to maintain both occupancy and rates.

Changing Market Dynamics

The war near our eastern border still raises concerns among some international tourists, particularly those from distant markets. However, we are seeing an increase in visitors from East Asia and neighboring countries like Hungary, the Czech Republic, and Slovakia, who are seeking alternatives to Croatia, now more expensive after adopting the euro.

Climate changes and the record-breaking heat of Mediterranean summers (not to mention frequent wildfires) are prompting residents of those regions to seek relief in temperate climates. Poland is benefiting from this trend, offering diverse landscapes (mountains, sea, and lakes), rich cultural heritage, and a broad range of modern accommodation options at relatively low prices compared to other European countries. Aside from risks related to Russia, Poland is also considered a safe destination for tourists, a feature worth promoting widely.

The MICE Segment and Workation Trends

The MICE (Meetings, Incentives, Conferences, and Exhibitions) segment has also changed significantly, influenced by technological advancements that facilitate remote business. COVID accelerated this trend, making virtual tools a staple. Many business meetings still take place online, as do most conferences and training sessions, which has undeniably affected our sector.

On the other hand, the flexibility of remote work has fostered the “workation” trend—a blend of work and leisure away from home—offered by some companies as an employee benefit. Hotels can tap into this trend by creating special packages and amenities for working tourists.

While technology has impacted the MICE sector, it cannot entirely replace face-to-face meetings, handshakes, or the direct connections essential in business relationships and networking. This segment is gradually rebuilding, albeit with fewer large-scale conferences and more small- to medium-sized events. However, increased operational costs have driven companies to seek savings, often by reducing the scale or duration of business trips and events—pressures that undoubtedly affect hotels catering to this market.

The Shadow Segment

In discussing tourism, particularly “business tourism,” we must mention the so-called “shadow segment,” which includes stays directly or indirectly connected to the war in Ukraine. This segment comprises the Ukrainian community, businesses, political delegations, the EU, NATO, and military personnel. For certain regions, this is currently one of the most significant market segments.

New Investments at the Starting Blocks

In recent years, numerous hotel investments have been announced across Poland. In urban areas, new branded hotels dominated, while tourist destinations saw a surge in condohotel projects. While the latter mushroomed, many traditional hotel projects awaited financing.

There are positive signs of banks becoming more open to our sector, but some investors will wait for better financial conditions, which we hope to see by the second half of the year. Meanwhile, where possible, some hotel projects have been converted into other functions, such as institutional rentals (PRS), residential developments, or student housing.

A growing trend in the coming years will be the conversion of older office buildings into hotels and the modernization of existing hotels, integrating them into branded networks through flexible new brand standards.

Optimism for 2024

Despite the challenging environment in 2023, Poland’s hotel base grew by approximately 2,800 rooms, with about 1,900 branded under global, regional, or domestic hotel chains. This is lower than in 2019, but the smaller number of new openings benefits existing city hotels, which do not need to share the growing demand with many new players.

Poland’s hotel and tourism market growth correlates with economic expansion, which could be fueled by the release of EU recovery funds. The recent election results have boosted optimism, as evidenced by the immediate strengthening of the złoty.

“Let’s Do Our Thing”

As every year, it’s time to say, “We’ve got this!” and dive into work with determination. We believe 2024 will be a good year for our sector, but success requires effort to ensure we influence the outcomes. Operational and marketing cost management, careful planning, and trend analysis will be critical.

Flexibility will be the key word for 2024—not necessarily through price reductions but by tailoring offerings to business clients, such as flexible payment terms, personalized cancellation policies, or special packages.

Technology, particularly artificial intelligence, will play an increasingly vital role, especially in marketing and online communication. However, hospitality remains a people-centric industry, and genuine human interaction will continue to define guest satisfaction.

Wishing you full hotels, growth, health, and peace,
Katarzyna Romanowska & Magdalena Konaszewska
Hotel Professionals, Hotel Professionals Management Group, NextCare Technology Solutions