Southeast Europe is attracting more and more capital into the hotel industry
The hotel industry in Southeast Europe is attracting increasingly sophisticated investment capital, moving toward complex development models that integrate hybrid financial structures and “branded residences” concepts. During the second edition of the Hospitality Business Forum, held on Thursday in Bucharest, sector leaders emphasized the need to modernize Romania’s hotel stock in the context of increased interest from institutional investors and major international chains.
Alexandru Manea, CEO of Monarc Development, explained that the sustainability of new projects depends on the complementarity between operating income and residential sales revenue. This hybrid model facilitates access to bank financing through rapid pre-sales and diversifies investment risk. At the same time, specialists advocate for the expansion of the premium segment by developing suites and presidential apartments that contribute to increasing asset value over the long term.
Regarding the local market, Călin Ile, Senior Partner at Horwath HTL Romania, warned that the current accommodation supply requires a radical renewal. Out of approximately 2,000 hotels in Romania, between 1,500 and 1,600 are units inherited from the communist era which, despite subsequent investments, no longer meet the expectations of modern tourists. This disparity between demand and outdated supply is seen as a major opportunity for new, well-structured projects that have managed to attract millions of euros in financing even in recent years.
Adam Konieczny, Director of Asset Management and Hospitality Investments at ISWM Group, says that the city of Bucharest is attractive for business.
“In Bucharest, in the business area, it makes sense to invest in a hotel, but size matters because there are hotels with 100 rooms. Ideally, it is a hotel where ‘volume’ can be added. In Poland, we bought an office building in the center of Warsaw, which we will transform into a hotel. This is also an option, but I think the question is always about location and, of course, the asking price of the asset,” Konieczny explained.
Financial, fiscal, and strategic management consultant Cora Stolz believes that a well-structured business plan can attract investment in the hotel and residential areas.
“We must discipline ourselves, but discipline has to do with professionals. If you want to attract investment, you must have a very well-developed business plan because it sells very well. Even in recent years, financings of millions of euros have been made, provided there were very well-executed business plans,” the consultant said.
Additionally, Iulian Sava, Managing Director of Horwath HTL Romania, stated that hotel chains and international brands are suitable for investment because “they have the experience that an investor must use.” “Otherwise, you make mistakes that others have made before you and you lose a lot of time,” Sava remarked.
Andrii Davydenko, Vice President of Operations for Ukraine and Romania, Europe and North Africa at ACCOR, said, in turn, that a successful business in the hotel industry is based on investment, involved hotel operators, an adequate distribution chain, and cost reductions of about 20-30% starting from the development stage.
“When it comes to a premium project, which involves more complex operations, other operators and a different management model are needed,” Davydenko stated.
The forum brought together major players such as IHG, Wyndham, Corinthia, and Radisson Blu, confirming the trend of transforming hospitality from a simple hotel operation into a complex real estate asset.
Frequently Asked Questions
What are “branded residences” in the hotel industry?
Branded residences are residential properties associated with a renowned hotel brand, offering luxury services to owners and diversifying revenue streams for developers through direct sales.
Why is modernizing Romania’s hotel stock necessary?
Approximately 75-80% of hotels in Romania are communist-era legacy units that, despite subsequent investments, no longer meet modern tourists’ expectations for comfort, technology, and sustainability.
What are the advantages of affiliating with an international brand?
Affiliation with international brands can reduce development costs by 20-30% and facilitates access to global reservation systems, operational expertise, and institutional financing.