Transilvania Trek, the first hotel management company in Romania, has announced the launch of its operations countrywide in a press conference today.
The company is currently operating the Double Tree by Hilton – City Plaza hotel in Cluj-Napoca and its plans for 2020 are to take over the management of another hotel project in Cluj (currently under construction) and also to sign at least two management contracts till the end of the year.
Transilvania Trek is introducing in Romania the concept of hotel management for owners and investors, by covering all business departments of a hotel, from the implementation of the commercial strategy up to the maintenance plan of the buildings and facilities and the financial management.
By signing a management contract, the owner of the hotel is entitling Transilvania Trek to manage the activity of the hotel and to take responsibility over the financial results and over the legal provisions of the hotel’s operations. The owner is regularly informed about the development strategy and the financial results.
Such a management contract is concluded for a period of minimum ten years, with two expansion options every five years.
The long-term commitment aims to exploit the best real estate resources and to establish a sustainable relation with the stakeholders involved in the hospitality business. The contract can be signed both at the start of the investment or after that.
Which hotels are targeted? According to Andreea Bălaj, General Manager Transilvania Trek, the selection of the hotels depends on their location, and if it has at least 40-50 rooms. She added that more Romanians have showed interest in investing in hotels on the local market so far, but underlined the foreigners’ interest is on the rise as well.
„There is a significant potential on medium and long term in the hospitality industry because Romania is becoming attractive for the institutional investors in Europe. Signing a management contract with a company that has expertise in this field, which is covering all operational areas of a hotel will be a significant advantage in a potential transaction. Moreover, if we compare the hospitality market with the real estate office buildings we notice that there are such management takeover contracts signed before the opening. That’s why we consider that it’s normal for the hotel investments to head to the same direction,” said Andreea Bălaj, General Manager Transilvania Trek.
She also pointed out that at the present moment the hospitality industry in Romania presents some opportunities for investors, considering the low lending cost of the necessary capital, the declining level of risk perceived for the investments in Romania and the existence of a relatively higher output compared to the rest of Europe.
For instance, the GM said that such cities like Timisoara, Iasi or Cluj have potential in terms of business tourism, while hotels on the Romanian seaside are less attractive as the seasonality is low.
However, there are also some cons, mostly being related to the lack of central and local infrastructure that is affecting the tourism industry, the pressure on the workforce and the lack of vocational schools in the hospitality.
Transilvania Trek will collect a basic tax of around 1.5-3.5% of the another incentive tax, with their fee mounting to EUR 50,000-EUR 100,000 per year in the case of the management takeover of a hotel with 40-50 rooms, EUR 80/per room and an occupancy rate of 65%. The GM pointed out that their advantage compared to the big hotel chains and investors who operate in franchise on the local hospitality market is that Transilvania Trek has a wider expertise precisely for the Romanian market and they are more available, as big hotel chains have more and higher fees.