The Romanian hotel market could diversify over the next year through the entry of new brands aiming to conclude lease or partnership agreements with real estate developers as an alternative to management or franchise contracts.
Such a business model will lead to the relaunch of the hotel market and will simultaneously offer real estate developers the opportunity to diversify their portfolios, stated consultants from Colliers International.
Although the hospitality industry in the capital has grown steadily over the last 3 years in terms of both occupancy rates and the average daily rate per room, according to market analyses, few new projects have been opened.
This was caused by the desire of strong brands to expand exclusively through management or franchise contracts with developers. However, these contracts are perceived by developers as being less predictable in terms of generated cash flow and, therefore, riskier. Recently, however, young German, Austrian, and Polish brands that have already covered the hotel market in their home countries have begun looking for expansion opportunities in emerging markets in South-Eastern Europe.
In the Romanian market, such brands have initiated discussions with real estate developers, even proposing project co-financing. These are particularly developers who already have experience in the hotel industry or who own enough land to want to diversify their portfolios through development partnership or lease contracts.
In Bucharest, favorable areas for such projects are the Old Town, Floreasca-Barbu Vacarescu, or Calea Victoriei.
Source: Profit
Frequently Asked Questions
What new hotel business models are entering Romania?
New brands are offering lease and partnership agreements as alternatives to traditional management or franchise contracts.
Why have few new hotels opened in Bucharest recently?
Developers found traditional management contracts risky due to unpredictable cash flow, despite rising occupancy rates.
Which areas in Bucharest are most attractive for new hotels?
The most favorable locations include the Old Town, Floreasca-Barbu Vacarescu, and Calea Victoriei.