Modules of the future

Łukasz Słomiński, managing director, Polcom Group: Polcom began with the production of furniture, first for apartments and then for hotels. Five years ago, we started producing modules for development companies. Nowadays we assemble the modules we produce in a lot of places in the world, from the Western Coast of the United States to Europe. We’re building in Los Angeles, San Francisco and Seattle. We also have projects in Calgary and St John’s in Canada as well as on the Eastern Coast of the USA in Manhattan as well as Brooklyn in New York. We operate in a number of cities in Europe but we are also preparing projects in Asia in Hong Kong and Singapore.

You say that modules are the future. Why is that?

For example, we are currently building a hotel in Seattle opposite Amazon’s headquarters, which is being developed by Dutch chain Citizen M. By using our modules produced in Poland the chain will save around 10-15 pct on its costs and will build the hotel half a year faster. Being accredited by chains such as: IGH, Marriott, Hilton and Citizen M, provides us with great possibilities. Because whenever they are approached by franchisees that want to build hotels, they give the recommendation to buy ready-made modules from a company in Poland and the franchisees are told that they will save time and money in this way. Labour costs are huge over there and everything is developed at cosmic speed with every developer looking at their costs. If they can build a hotel cheaper, to a higher quality, they do not spend time thinking about it, but order the modules from us.

The modules produced in Poland, which include all the equipment and furnishings are cheap for investors in the US but they are not for developers in Poland. Is this going to change?

It is just a matter of time. At this point the unemployment rate is decreasing there are fewer and fewer people available for work and salaries are growing, so there will come a time when modular construction will match traditional construction in terms of costs and then it will go on to become cheaper.

Polcom is not just a producer of modules and a contractor but has also recently become a developer and investor. In December, you opened your own Courtyard by Marriott in Edinburgh you are building another in Luton and you are also planning to build the tallest module hotel in the world in London’s Canary Wharf district.

Indeed. It will be a 47-storey hotel with 620 rooms, which we intend to build with the assistance of the BGK bank and the Foreign Expansion Fund. We expect it will be opened at the end of 2020.

So far, as an investor, you are developing three projects that you have already mentioned. Is there going to be anything else?

Definitely. However, everything depends on the funds we will be able to invest. We are investing 100 pct of our possible working capital in our first three hotels so we won’t develop anything further for another two years. However, we’re probably going to start preparing for our next project because the design work takes from a year to a year and a half.

Your working capital comes from your profits from furniture and module production for other developers. Have you not thought about speeding up your expansion by entering onto the stock exchange?

No, we have not. We want to keep full control of our company. We are not planning to give that up.

What architects do you use?

The hotels in Edinburgh and Luton were designed by James Walsh from Studio Anyo of London. As for developing the project in Canary Wharf, we will probably also work with a large architectural studio because the project is of a greater scale.

What about the hotel management?

We try to be a relatively passive investor. We sign franchises with the huge chains such as Marriott and Hilton but we leave the management to an independent company, BDL Redefine. It seems to be the best partner for us because it is familiar with the British market, has over 70 hotels over there and we are very happy with them so far.

Will you always build hotels?

We are also looking at student halls and residential construction but this is a further stage which we are not ready for right now.

Are you planning to sell the properties you build?

No, we are not. Our children might face the dilemma in the future of what to do with these assets. We want to build up our capital.