According to preliminary data from Polands Institute of Tourism (Intur), there were 60.75mn foreign arrivals into Poland during 2011 – of which 13.35mn were tourist arrivals – reflecting increases of 4.1% and 6.8% year-on-year (y-o-y) respectively. Encouragingly, tourist arrivals were increasing at a faster rate than overall arrivals to the country, boding well for the sectors overall development.
Looking at source markets, Germany remained the most significant market for inbound Polish tourism in 2011, sending some 4.42mn tourists, a decrease of 2.1% y-o-y. The second most important source market for tourists is Ukraine (1.27mn tourists, down 6.3% y-o-y), followed by Lithuania (641,000, up 3.4%), Belarus (439,000, down 54.7%) and the UK (411,000, down 15.3%).
For 2012, BMI is very upbeat on the outlook for Polands tourism industry, currently forecasting an 8% increase in tourist arrivals, to more than 14.4mn and a 12% increase in tourist expenditure, to US$12.84bn. We believe that the country will benefit this year from its co-hosting of the UEFA 2012 Football Championships with Ukraine, with four Polish cities hosting football games: Gdasnsk, Posdan, Warsaw and Wroclaw. To further encourage tourists, the Polish government recently launched a website (www.polishpass.org) where foreign travellers coming to Poland for UEFA 2012 can book all flights, accommodation, domestic transportation and even buy their travel insurance online. Beyond the current year, we are currently targeting an increase in tourist arrivals of 16.7% between end- 2012 and the end of our newly extended forecast period in 2016, indicating that Poland should be welcoming some 16.85mn tourists by 2016. Tourist expenditure should also increase, by 32.5%, to US$17bn.
Greater Clarity On Inbound Tourism Figures By Country
For 2012, BMI has added greater clarity to our inbound tourism figures by country. Previously, we had tended to look solely at foreign arrivals at border crossings, taking information from Polands Central Statistics Office (GUS). However, from our research carried out over the past year, we have seen that there were some problems with adopting solely this approach on a country-by-country basis.
As an example, although a total of 10.84mn Czech citizens entered Poland during 2011 (second only to Germany on 25.74mn in terms of overall numbers of people entering the country, for whatever purpose) only 195,000 of these people entered as tourists (as defined by Intur). Similarly, a total of 5.62mn Slovak citizens entered Poland during 2011, but only 100,000 of this total were coming to Poland specifically as tourists.
With that in mind, we have now changed our research methodology to concentrate solely on tourist arrivals on a country-by-country basis, so that we are examining inbound tourism solely for vacation purposes (as opposed to citizens from neighbouring countries using a holiday as a chance to look for jobs abroad, for example). Counting tourist arrivals as defined by Intur enables us to provide a more accurate analysis of which are the key tourism source markets for Poland.
LOT Still In The Red
Polands national airline LOT Polish Airways remains loss-making, despite recent efforts by the board to trim expenditure and boost revenues. According to a February 2012 article from Dow Jones newswires, LOT posted a core operating loss of PLN146mn in 2011; however, this was an improvement on the PLN164mn core operating loss recorded in 2010. The company attributed higher fuel costs and lower European passenger traffic as reasons for 2011s poor performance.
Airline CEO Marcin Pirog is hopeful that the airline can return to profit in 2012, targeting an operating profit of PLN52.5mn for the current year. This will be based on higher passenger traffic numbers, with the airline likely to benefit from high numbers of football fans travelling to Poland for the games the country is hosting during the UEFA 2012 football championships. Initial indications for the current year appear encouraging, with LOT recording a 14% annual growth in passengers carried (and a 26% increase in business class passengers carried) over the month of February 2012.
The Polish government is also looking to divest a majority stake in LOT over 2012, with media reports indicating that Turkish Airlines, Air France/KLM and Lufthansa are all interested in acquiring the airline. However, for the sale to proceed, parliament would first have to change a law stating that the state has to maintain a 51% stake in the airline.
BMI believes that there is a greater chance of a successful sale of LOT in 2012/13 than has been the case in recent years, when the airline came close to bankruptcy. The airline is making progress with cutting its annual losses and boosting passenger traffic numbers. That said, the companys debts and high cost base still pose potential obstacles to a quick sale of LOT.