Major international hotel groups, such as Radisson, Accor and Marriott, are reorienting their expansion strategy on the Romanian market, favoring the conversion of existing buildings to the detriment of greenfield projects. The paradigm shift is driven by the need for speed to penetrate the market, construction costs up by 30-40% compared to the pre-pandemic period and lower Capex (capital expenditure) required for renovations.
Over the past two decades, hotel development has been dominated by building from scratch, with 54 hotels being added because the stringent standards of international brands made it difficult and expensive to affiliate old buildings. Now, with the desire for accelerated development, hotel chains have become more flexible. A greenfield project can take three to five years from permitting to opening and generating revenue, while a hotel taken over and renovated can become profitable even after a year, according to David Jenkins, vice president of development for Eastern Europe at Radisson Hotel Group.
Accor, the group with the most extensive local presence, considers conversions “the star of expansion”, according to Philippe Bijaoui, chief development officer for Europe & North Africa. He points to the benefits of sustainability, speed and lower costs, noting that a converted hotel immediately benefits from access to the group’s global distribution network and loyalty programs. However, Bijaoui points out that greenfield projects remain essential for destinations that require a flagship hotel or where there are no suitable buildings. In parallel, the Marriott group is already planning four new hotels in Timișoara, Arad, Sibiu and Călimănești, but is also counting on the conversion model to expand its portfolio. Significant opportunities for such projects exist nationwide, especially in Bucharest, which has a large stock of old buildings that can be converted into hotels.