Analysis of Macroeconomic and Microeconomic Factors Affecting Hospitality Industry in Poland

This report analyzes the economic factors affecting the hospitality industry in Poland, including GDP, unemployment rate, consumption, and prices. It also examines the impact of government policies on investors' decisions and entrepreneurial initiatives.

Business Economics
6/13/2018

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Abstract
The report is based on the analysis of the economic terms and concepts that can affect the
decisions of the investors. The concepts that are discussed include microeconomics and
macroeconomics. Macroeconomics is the process of splitting up of the economies that examine
the actions of the organization and the individual who are making the decisions related to the
allocation of the resources. Along with this, the macroeconomics is one of the important
concepts of economics that is required to be analyzed because this reflects the branch of the
economies that deals with the structure, behavior and decision making of an economy as a
whole. These concepts define the economy of the country for the investors. This is the reason
that the investors evaluate the economic factors that can affect the returns from the investment
done by them. The investor has decided to make the investment in the Hospitality industry of
Poland because this industry is growing and developing fact across the world. The report
includes the analysis of the economic concepts and the initiatives that are taken by the
government for supporting the hospitality industry.

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Contents
Introduction......................................................................................................................................3
Analysis of macroeconomic developments.....................................................................................4
GDP of Poland.............................................................................................................................4
Unemployment rate.....................................................................................................................5
Consumption................................................................................................................................6
Prices............................................................................................................................................7
Analysis of the microeconomic effects............................................................................................8
Poland Hospitality industry.........................................................................................................8
Macroeconomic development affects the hospitality industry....................................................9
GDP affect the Poland hospitality industry.............................................................................9
Unemployment Poland affect the hospitality industry..........................................................10
Consumption Poland affect the hospitality industry..............................................................10
Prices affect the Poland hospitality industry.........................................................................11
Institutional and economic environment.......................................................................................11
Government policies in Poland for the hospitality industry..........................................................12
Government policy affects investors’ decisions and entrepreneurial initiatives.......................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Introduction
The aim of the report is to critically analyze the macroeconomic and microeconomic concepts
and the issues or risk that are associated with the wide economy. The angel investor is willing to
expand the business in the Eastern European country that is Poland. The sector which is selected
by the angel investor for the investment is Hospitality industry. Poland country has been selected
for the analysis because the country is developing rapidly due to which there is the possibility of
the high turnover within the country. The development is the reason behind the selection of the
hospitality industry as in Poland there is a rise in the number of hotels in the major cities and
tourist destination in the country. The development of the popular destination will invite the
foreign tourists for the visits.
Moreover, the investor who is willing to invest the amount in Poland will be able to generate the
high revenue. According to the STR global data, the company registered the rise in the revenue
by 11% with the ranking among the best indicators in Europe. This is possible because of the
high amount of occupancy in the country. The report includes the of the macroeconomic
environment factors of the country such as GDP evolution, price level, and many others. Along
with this, it shows the impact of the macroeconomic developments on the industry sector.
Moreover, the assignment at the end includes the environment of the institutional and economic
with the policies of the government. In addition, it shows the effect on investor’s decisions and
entrepreneurial initiatives due to the initiatives of the government.

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Analysis of macroeconomic developments
This sector of the report will throw light on the analysis of the macroeconomic development
which includes the analysis related to the GDP, consumption, prices, and employment that have
changes in the last few years (Stiglitz, 2012). This is the fact that these factor change with the
change in the industry.
GDP of Poland
GDP stands for the gross domestic products which help the investors in evaluating the final
goods and services that are produced in the period. This helps the investor to evaluate the
economy of the country. The below-given image reflects the details related to the gross domestic
products in Poland from the year 2012 to 2017 along with the projections till the year 2022. Last
year the GDP of Poland was 542.89 billion US dollars. Considering the analysis, the GDP of the
country was low in the year 2015 and 2016 which increased by the year 2017. Moreover, the
GDP for the year 2018 is expected to reach 614.19 and high in the coming years (Statista, 2018).
(Source: Statista, 2018)

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This shows that there are opportunities for the rise in the GDP which results in the growth and
development in the business within the country. Moreover, this reflects the rise in the purchasing
power of the country which is the only way through which the people of Poland can spend the
amount for consuming the services of hospitality companies. Furthermore, according to the GDP
per capita, Poland is the country that acquires the 38th position out of the 50 countries. Moreover,
if talking about the parameters the population of Poland has a low level of affluence comparing it
to the 50 countries (Country Economy, 2018).
Unemployment rate
The unemployment rate is considered as one of the important macroeconomic development
elements within the country. Moreover, this reflects the economy of the county and more or less
lead to the impact on the investment done by the investors within the country.
The unemployment rate in Poland is continuously decreasing July 2017 to April 2018. This rate
has fallen to 6.3% in April of 2018 from the percentage of 6.6 in March and in line with the
market expectations. The company registered it as the lowest jobless rate from 1990 November
(Trading Economics, 2018). This shows that there is a rise in the economy of the country which
leads to the rise in the purchasing power of the people present in the country. This will allow
them to make use of the premium services that are available within the market.

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(Source: Trading Economics, 2018)
This image reflects that by the year 2017 there was high unemployment in Poland but the rise in
the development and growth of the country brought the decrease in the unemployment within the
country.
Consumption
The consumption of the product and services is also one of the important factors which are
required to be considered while analyzing the macroeconomic development factors. The major
consumption factor includes the use of the natural resources because in the hospitality industry
numerous natural resources are used by the hotels and resorts.

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(Source: Statista, 2018)
The statistics reflect that the natural gas consumption is increasing in Poland from 2005 to 2016
(in billion cubic meters). In the year 2016, this consumption of the natural gas increase and
reached to the 17.3 billion cubic meters (Statista, 2018). This data shows that it is made up of
0.5% of the world’s total natural gas consumption in the particular year. The above image
reflects the rise in the usage of the natural resources.
Prices
The prices are indicated with the help of the CPI (consumer price index) which is one of the
important macroeconomic development aspects. CPI refers to as the degree that identifies the
weighted average of the prices of a basket of the consumer goods and services which include the
healthcare, transportation, foodstuff and many others (Trading Economics, 2018).
The annual variation rate of the CPI in Poland was 1.7% in May 2018 which is tenth higher than
the month before. Moreover, it has been observed that the monthly variation rate of the CPI has

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been 0.2% and along with this, the accumulated inflation in the year 2018 is 0.6% (Country
Economy, 2018).
(Source: Country Economy, 2018)
The above-given image reflects the variation in the CPI of the year 2016 and 2017 in Poland.
This is highlighted that there is a rise in the prices of transportation by 2.6% until its inter-annual
rate reached the 4.8% (Country Economy, 2018).
Analysis of the microeconomic effects
This section of the report includes the analysis of the microeconomic factors of the Poland that
can influence the hospitality industry and their operations (Friedman, 2017).
Poland Hospitality industry
The tourism destinations are increasing in Poland due to which there is a rise in the number of
hotels in the prime or major cities. This is the fact that there are more than 20 newly planned in

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Warsaw (Herz, 2017). This is observed that there is a rise in the demand of the hotels by the
local citizen. According to the STR Global data, the revenue for the last year of Poland hotels
increases by 11% which shows the best ranking among the best indicators in Europe (Tore,
2017). The rise in the services of the hotel industry motivates the investors for the investment
which results in the expansion of numerous hotels within Poland. Considering the opinion of the
Walter Herz analysts, there are presently less than 2.7 thousand of the hotels that are categories
in Poland market. In the Poland market, there was a gain of 106 classified hotel facilities (Herz,
2017).
Macroeconomic development affects the hospitality industry
The macroeconomic developments are one of the important aspects that are required to be
considered in the analyses of the economic. The macroeconomic developments include GDP,
unemployment rate, consumption and prices and all these components can affect the working of
the hospitality industry of the country (Cowing and McFadden, 2015).
GDP affect the Poland hospitality industry
Gross domestic product analysis reflects that impact of the GDP on the hospitality industry. It is
essential for the inventors to analyze the GDP of the country because the GDP leads to the
economy of the country. The GDP of Poland is increasing due to which the economy of the
rising which leads to the opportunity for the citizen as they can get the rise in the purchasing
power. The investors in the hospitality industry like to make investments in the country where
they are able to get the best returns. Moreover, this is the fact that every company needs the
minimum returns for the survival (Terjesen, Bosma and Stam, 2016). The GDP also affects the
economic development of the country due to which the development of the destinations for the
tourists which will impact investors for investing the amount.

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The growth rate of the GDP also results in the strong political component of the country which is
essential to be determined because this can affect the investor’s decisions for the country as well
as for the industry in which they are looking for the expansion. The productivity of the country
can only be analyzed with the help of the GDP.
Unemployment Poland affect the hospitality industry
The unemployment affects the working of the company that falls under the hospitality industry.
The low unemployment reflects that most of the people of the engaged in the activities which
lead to the development. If there is high unemployment then there will be a direct impact on the
GDP and the economy of the country. Considering the same, the investors of the company don’t
like to invest the amount in the country because the development is not taking place in the
country (Zientara, Kujawski and Bohdanowicz-Godfrey, 2015). Though, on the other hand, the
high unemployment also leads to the issues for the companies who are operating the business
under the hospitality industry because they won’t be able to find the skilled and talented
employees to whom the company can offer its products (Boella and Goss-Turner, 2013).
Consumption Poland affect the hospitality industry
The consumption of the natural resource is one of the important aspects that are considered by
the companies involved in the hospitality industry. The energy consumption in the Poland is
increasing which leads to the negative impact on the investors as they won’t like to make the
investment on the place where they are finding the issues related to the environment because this
will show that the investors are supporting the energy consumption that is taking place within the
organisation (Cingoski and Petrevska, 2018). Along with this, if investors are making decisions
for investment then they need to ensure that they make proper strategies for conserving the

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environment and taking the environment safety steps. This is the better option which will help
the company in contributing to save the natural resources.
Prices affect the Poland hospitality industry
The hospitality industry is grooming due to which there is a rise in the services and the facilities
that are provided by the companies to their customers. Moreover, these companies make use of
technology for innovating effective services that can lead to customer satisfaction. This will
make them keep the high prices for the services that they are offering to their customers (Pawlicz
and Napierala, 2017). According to the data that has been extracted it has been found that from
the last 4 quarters there is a rise in the prices of the hotel rooms. There was a rise in the prices in
Lodz by 8.5% and in Warsaw by 8.4%. The prices of the hotel service increase by an average of
the both Warsaw and Lodz increase by approx. 4.4% (JLL, 2017). The rise in the prices affects
the industry because there is very less number of customers who like to consumer services at the
high prices when they are getting the option of services at low prices. Moreover, the purchasing
power of the customers is also one of the important determined which is essential to be
considered by the company.
Institutional and economic environment
The institutional and economic environment is two separate and concepts. The institutional
environment is referred to as the explanation of the rules and regulations to which organization
must ensure in order to take the support and legitimacy (Gómez-Haro, Aragón-Correa, and
Cordón-Pozo, 2011). This institutional environment consists of the national structure related to
the regulations, adjudication and the policymaking.

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Different from this, economic environment include the external factors that create an impact on
the working of the company. In other words, it can be said that these are the issues that lead to
the impact on the hospitality industry and the companies that are involved in the hospitality
industry. The economic environment includes the social-cultural institutions which include the
informal norms (Kirk, 2010).
Government policies in Poland for the hospitality industry
The government of the country plays a vital role in the industries that contribute in the GDP of
the country. The contribution of the tourism economy to the Poland GDP was at the level of the
5-6%. Moreover, this sector in the Poland industry gives the maximum employment to the
citizen of the country which results in the rise in the GDP. Moreover, the government of Poland
is able to get the annual receipts from the arrivals of the foreign amount to EUR 8-9 billion
which is approx. of the half of the inbound receipts. This is the reason the government promotes
the tourism sector. The tourism department of Poland is more focused for the development of the
infrastructure of the country as this is the way through which they can attract the investors
towards the country.
According to the report of the European attractiveness presented by the E&Y, in the coming next
3 years, Poland will be the second in Europe who will be considered as the most attractive
country for the investment by the investors after Germany. Moreover, the government of the
country welcomes the investors who are looking to invest the amount in the hospitality industry
of the country. Poland government offer the wide range of the investment incentives. According
to the government, they invite the investors to locate their projects in more than 14 Special
Economic Zones (SEZ) that is special zones because the economic activities can run in the

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favorable conditions (Polish Investment & Trade Agency, 2018). This policy is initiated by the
government in which the investors get the benefit of the attractive tax exemptions, employment
incentives and the well-formed investment lots.
Government policy affects investors’ decisions and entrepreneurial initiatives
The policy and program that is introduced by the government to help the investors to make the
decisions as they evaluate the policies and programs. Poland tourism department is willing to
attract new investors because this is the effective way through which they can bring the
development in the country. The government of the country not only bring the development in
tourism sector but also put the effort to bring the rise in the number of tourists. The investors will
be able to make the investment when they will be able to find that there is a flow of the tourist
who visits the place. Moreover, the investors also consider the local people as the tourist because
they help the companies in generating the revenue. The entrepreneurial those are willing to start
the business in the hospitality industry in Poland (Kuratko, 2016). Though, there might be some
of the restrictions from the government side on the hospitality industry related to the tax due to
which they might not be willing to make the investment within the country.
The government of Poland welcome the entrepreneurial activities and make some initiatives so
that they can bring the new ideas that can support the economy of the country. In addition, the
government contributes to the development of the economy which is one of the factors due to
which the investors and entrepreneurs make the decisions for the business in the hospitality
industry of Poland.

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Conclusion
In the end, it can be concluded that Poland is the best place for the angel investors to make the
investment. The investors will be able to make the revenue and better returns because it has been
found that the hospitality industry in Poland is grooming which is possible because of the
positive economic aspects. The report includes the analysis of the major economic element
which reflects the positive aspect due to which the Poland hospitality industry can be improved.
The market analysis reflects that there are many more destinations are doing to develop which
the visitors like to visit. This is the main reason due to which the investors should invest in the
Poland market because this market can ensure the best returns due to a high number of visitors.
The report also includes the analysis of the policies of the government that can affect the
decisions taken by the investors and the new entrepreneurs who are willing to start the business.
The investors who are willing to invest in the industry of Poland ensure that they evaluate and
analyze all the economic aspects of their impact on the industry.

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References
Boella, M. and Goss-Turner, S. (2013) Human resource management in the hospitality industry:
A guide to best practice. New York: Routledge.
Cingoski, V. and Petrevska, B. (2018) Making hotels more energy efficient: the managerial
perception. Economic Research-Ekonomska Istraživanja, 31(1), pp.87-101.
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https://countryeconomy.com/countries-cpi/poland [Accessed on 13th June 2018]
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Cowing, T.G. and McFadden, D.L. (2015) Macroeconomic modeling and policy analysis:
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Gómez-Haro, S., Aragón-Correa, J.A. and Cordón-Pozo, E. (2011) Differentiating the effects of
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Herz, W. (2017) Hotel Industry In Poland Is Booming [Online]. Available from:
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2018]

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