Foreign hotel brands want to expand to Bucharest, Colliers International announces

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Global hotel chains seek to widen their presence on the Romanian market too. Hoteliers representatives from countries like Austria, Germany and Poland have begun discussions with real estate developers in this regard, even proposing to co-finance projects, Colliers International consultants said.

Although in the past three years the hospitality industry in Bucharest has steadily increased both in terms of occupancy rate and average room price, according to market analyses by Colliers International, few new projects have been opened.

”This was due to the desire of strong hotel brands to extend exclusively through management contracts or franchise with developers,” by Colliers International notes.

The hotel market in Romania has the chance to diversify itself in 2018 through the opportunity to enter new brands. These companies are looking to conclude lease or partnership agreements with real estate developers. In the last five years, the number of tourists has increased by 63 percent and the hotel market in Bucharest has grown considerably.

These contracts are perceived by developers to be less predictable in terms of the generated cash-flow and therefore more risky.

“Currently, there is a gap between colliersthe brands’ desire to expand and the developers’ low appetite for hotel properties. Taking into account the new trends, we expect that this gap to gradually decrease, which will favor the entry of new players, the development of new projects and, consequently, the re-launch of the hotel market,” Raluca Buciuc, Associate Director Valuation Services and Hospitality Advisory Services within Colliers International said.

In Bucharest, the areas targeted for these projects are: Old Town, Floreasca-Barbu Vacarescu or Calea Victoriei. Thus, the Old Town has the advantage of the old buildings that can be adapted, Calea Victoriei is situated in a central area, has available but expensive properties, while the Floreasca-Barbu Vacarescu area is targeted because of its important office building in Bucharest.

The occupancy rate in the four and five-star hotels was, on average, around 75 percent.

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