How and where to get capital in difficult times? The challenges that hoteliers had to face in the last several months were discussed at the Hotelier's industry conference, where Łukasz Płoszyński, Vice President of the Management Board of Focus Hotels was one of the experts of the panel on financing.
How are financial institutions currently approaching the situation in which the hotel industry has found itself and are they flexible in renegotiating contracts? How do hotels perceive financial institutions after a pandemic year? Do new projects have a chance to obtain financing today, when and on what terms? Or will banks permanently turn away from hotel financing? Or maybe it is worth considering alternative forms of financing? This was discussed during the conference "Hotelarz" Hotel Trends Poland & CEE, where one of the experts was Łukasz Płoszyński, vice president of the management board, Focus Hotels.
When do you think the mood of the financial industry towards the hotel industry will return to the 2019 level?
Łukasz Płoszyński, Focus Hotels: We assume that it will be 2024, although in individual markets this rebound may occur faster, especially in the case of locations less dependent on foreign visitors.
Then let's talk about the current situation - where are we at the moment and what the last nearly year of the pandemic looked like in terms of existing funding. How does it look from the hoteliers' perspective?
Łukasz Płoszyński: In our business model, which is based on lease, of course, when we lost a significant amount of revenues, we had to carefully look at costs and reduce them, and one of these main items is the rents that we pay to the owners of our properties. And, of course, we were aware that these hotel rent funds are largely used by owners to cover their loan obligations. Some of the companies leasing the facilities stopped paying rents at all, we focused on a dialogue in this situation, we approached each owner with a proposal to talk mainly with him, but also with the financing bank.
So these were the trialogues?
Łukasz Płoszyński: Also. Sometimes it was enough that we explained to the owner what our goal was, and he conducted these talks on his own, in some cases we also participated in the talks with the bank as a third party. Certainly, from the bank's point of view, our credibility as a company paying rents all the time was crucial, because we did not stop paying. We were in a very good financial situation as a company when the pandemic started, and we also have a large base in the form of our owner Grupa Kapitałowa Immobile S.A., whose other business segments were not affected by the pandemic, which had a significant impact on reaching an agreement in the facilities we leased.
So if an investor comes today, for example with a project of a chain hotel in Wola, will you tell him to come in the fall, or will you start talking?
Łukasz Płoszyński: We can certainly expect these loan terms to change. And this is a question for investors, whether with an own contribution of 50-60 percent they will continue to be interested in taking advantage of this funding. Generally, I expect this answer to be - no. However, it seems to me that we can expect more favorable conditions for taking over the existing facilities. But I wonder - and this is a question for financial institutions - how the use of aid shields will affect the creditworthiness assessment of hotel industry companies. The government calls it aid, but technically we're talking about a loan that completely becomes debt. In the financial statements, it does not reduce the loss of the company that benefited from it. In addition, it is subject to conditions that increase the risk. On the one hand, with some shortcomings, both serious ones, such as the collection of an amount much higher than the one that can be used or smaller, it may become immediately payable for repayment by the PFR. The second thing is that these funds are often not enough to survive, and with the obligation to maintain employment for 12 months, you have to pay extra for it. And the question is how banks will approach this by analyzing this risk.
Perhaps at the end, let's try to say something optimistic about financing hotel investments nowadays.
In my opinion, this most optimistic signal has already happened, and it was the introduction of the vaccine. It was the turning point when we all found hope. Now everything will depend on the speed of immunization. And another signal that will give us a lot of room for optimism will be the commencement of lifting the restrictions, because we are now a country unique in Europe, no other country has so tightly closed hotels.
Despite the difficult situation, the Focus Hotels chain consistently focuses on development. Three hotels of the chain remain under construction: in Bydgoszcz, Warsaw and Stargard. At the beginning of April, the contract for another facility located in Elbląg was announced. It will start operating next month.
The conclusion of the contract with the next owner of the hotel is extremely satisfying for us and shows that despite the prevailing market situation related to the pandemic, we are firmly on our feet and do not slow down the pace of development, and our offer is even more appreciated in these difficult times. We are also pleased with the opening of the first facility in the Warmian-Masurian Voivodeship. Of course, we will make every effort to ensure that the new hotel in Elbląg meets the expectations of all our guests - says Łukasz Płoszyński.