CEE hotel markets continued to lead the Europe’s growth story in 2017. The majority of the hotel markets in this dynamic region achieved continued performance gains in 2017, as they had over the past three years, reads the CEE Hospitality Snapshot 2018 report, conducted by Cushman & Wakefield.
According to the report, central cities including Warsaw, Prague and Budapest recorded double digit Revenue per Available Room (RevPAR) growth, primarily driven by ADR increases and hotels in Sofia should also see better margins, thanks to the double digit growth in both ADR and RevPAR indicators. While Bratislava and Bucharest experienced softer improvements in hotel KPIs compared to 2016, the RevPAR growth was still very healthy relative to the majority of markets in western Europe.
Vienna continues to lead the region with the highest RevPAR. In 2017, the city reached a RevPAR of EUR 73.0, a marginal increase from 2016. Prague is catching up, seeing a significant increase in 2017 and achieving the second highest RevPAR at the level of EUR 70.1. Budapest followed behind at a level of EUR 65.3. Warsaw is in fourth position at the level of EUR 59.4, trailed by Bucharest with EUR 57.5. Sofia and Bratislava are smaller markets, and their performances are comparable. Sofia achieved a RevPAR of EUR 49.9 in 2017 shadowed by Bratislava with RevPAR of EUR 44.2.
The leading position in terms of the RevPAR growth is held by Sofia with 19.0%, followed by Budapest and Bucharest with 5.5% and 4.7% growth respectively. It might be challenging to maintain such high growth levels in the following months, given the capacity constrains during the peak season and some of the new supply starting to make impact. Nevertheless, 2018 is expected to be the record year in the last decade.
On the demand–overnight stays chapter however, Bucharest has reported the highest average increase of overnight stays (101%) during 2013-2017, the highest rise in the region.
Demand in Bucharest is dominated by the corporate segment and lacks stronger leisure demand. Despite this, the average market occupancy is relatively high (73.6% in 2017) with leading international hotels running at annual occupancy levels of over 80%, reaching full capacity 6 months of the year, the report also notes.
Yet, the Romanian Capital is still far behind other capitals in the region on overnight stays last year: Bucharest has registered 3.2 million overnight stays last year as against 18 million in Prague, 15 million in Vienna, 10 million in Budapest and 6 million in Warsaw, outranking only Bratislava (2.7 million) and Sofia (2 million).
Average prices of the hotels in Bucharest were in 2017 EUR 78/per night, higher than in Sofia (EUR 76), Warsaw (EUR 75.6%) and Bratislava (EUR 63.6%).
Several hotels affiliated to the international hotel chains are to open in Bucharest in the upcoming years, the report mentioning Courtyard by Marriott (Fabrica de Glucoză), Ibis Styles (Ştirbei Vodă), Hotel Indigo (George Enescu – Georges Clemenceau), Corinthia (Grand Hotel du Boulevard), Moxy by Marriott or Autograph Collection (Doamnei).