During Congress 590 last October, Witold Bańka, Minister of Sport and Tourism, stressed that the data for the first half of 2019 indicated that Poland would be visited by over 20 million tourists, i.e. slightly more than in 2018. He also added that in the first half of 2019, foreign tourists left 35 billion PLN in the country. According to the ministry's data, in 2019, the tourism industry accounted for about 6 percent of Poland's GDP, with over 700 thousand people working at that time. For comparison, in 2018, revenues from tourism amounted to over PLN 124 billion, which was PLN 22 billion more than in 2015. Conclusion? All statistics and analyses indicated an upward trend for the tourism industry in Poland also in 2020 ... until the first information from China about the SARS-CoV-2 virus.
A long time ago in ... February
- 2019 was completed with an occupancy rate of 70% in over 120 managed apartments in 6 cities, i.e. Wrocław, Kraków, Poznań, Zakopane, Szklarska Poreba and Świeradów-Zdrój. We started this year with an excellent winter season. Occupancy rate in Zakopane and Szklarska Poreba exceeded 90% in the period from December 2019 to February 2020, including the Christmas and New Year's Eve period, we sold the whole thing at prices ranging from a few hundred to more than one thousand five hundred zloty per day for two or four-person apartments - says Mateusz Sabak, co-founder of RentPlanet.
However, good luck did not last long. As early as in the second half of March, the statement "short-term rental has been of great interest to property owners for several years, and in many cases generates higher income than long-term rental" has become obsolete.
The COVID-19 pandemic, the introduction of an epidemic state and then a state of epidemics, the ban on accepting guests in accommodation and the practical "evaporation" of the tourism industry put owners of hundreds of hotels, thousands of apartment owners and short-term rental operators, offering apartments with the so-called guarantee of the rate of return or operating in a sublease model for a fixed rent, in a difficult situation. Mass cancellations of up to 90%, minimum occupancy rates in accommodation facilities, closed airports and borders have caused many hotels and operators to lose liquidity at an express rate. At the end of March, job cuts in some companies in the tourism industry reached almost 70%, and forecasts indicate that over 500 thousand people are unemployed.
The problem on the market
There is no doubt that in times of good economic prosperity, short-term renting, especially in attractive tourist locations and big city centres, allowed to generate more income than long-term renting. This was possible when the operator was able to effectively manage the rental of apartments, offer high-quality service to guests, use technological support and maximize revenues.
The apartments offered by developers with the so called guaranteed rate of return, of the order of 5-10 percent per year, enjoyed particular interest among investment products. The return on investment was to be guaranteed by operators recommended or freely chosen by the investor. The other part of the market was taken over by operators who rented from apartment owners for a fixed rent and earned on the difference generated by selling accommodation to tourists. The smallest part of the market is made up of operators offering commission settlement in a commission model (revenue distribution).
- In the vast majority of cases, we offer cooperation in the commission model, where 70% of generated rental income goes to apartment owners. The advantage of this solution for owners is full transparency of settlements, maximum benefit from revenues in high seasons and building a financial cushion, among others, for such situations as we are currently facing. The advantages for operators include the absence of significant fixed costs in the weaker months of the year, such as rents and flexibility in adapting the business model to the market environment. In addition, the commission model includes an element that motivates the operator, i.e. the more money we earn for the owner, the more will be left for us," adds Mateusz Sabak from RentPlanet.
In times of crisis, we can hear critical voices of investors towards some operators. One of the examples of a difficult situation on the market are condo- or aparthotels, which until the moment of the crisis were considered by a significant part of Polish investors as a so-called safe investment. The current situation has led to problems with payment congestion and a lack of return on investment for their operators. This situation shows that the so-called return on investment guarantees are illusory and worked only during the so-called prosperity period. At the moment when the guarantee should be real security, it turned out that there is already information about filing for bankruptcy, leaving investors with the problem of managing a lease. It should be noted here that many investors bought the apartment