Bucharest JW Marriott to invest in rooms' renovation

JW Marriott Bucharest Grand Hotel is getting ready to renovate all of its 402 rooms from next year, Igael Porecki the hotel’s general manager, told BR. At the same time, the Marriott group is looking to expand its local footprint by opening several Courtyard units over the next years, BR heard.

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Simona Bazavan

How did the market for four- and five-star hotels in Bucharest evolve in the first half of the year and what is your forecast for the next period?

What we’re seeing in 2014 is that the Bucharest market is growing. I am talking about a 2, 3 percent growth which is not a lot, but it is a good sign. I came here in 2009 in the middle of the economic crisis, which I cannot say is over – it is still not over – but we can see that 2014 is an improvement on what we forecasted. And this is a good sign that the economy is somehow starting to get better. What we haven’t seen yet is rates going up. Occupancy is going up but not rates.

We expect the growth to continue in 2015 as well – 1 or 2 percent above this year.

Where is this growth coming from?

The leisure segment has been going up a little bit. We are a business hotel – I would say 90 percent of our guests are businesspeople – but what we can see this year is that more cruise lines are entering the market, coming mainly from the US and other Anglo-Saxon countries. The Israeli market is also one of our strongest markets. Israeli tourists come here for a couple of reasons. First of all, there is the casino at the weekend. And when I say the weekend, this it is exactly the time when the city needs business. They also come to shop. You can see more ElAl, Tarom and Wizz Air flights and recently I have also seen Blue Air entering the market with a charter flight to Israel.
But overall, the growth is coming equally from leisure and business. And the ratio between the two has been relatively stable.

Is Bucharest a city-break destination for foreign tourists?

The only tourists that I can really say come for the weekend are Israeli tourists. They come to shop because Bucharest has a wide variety of big shopping malls with a lot of international brands and the prices are competitive, and they come to use the casino. This is what I see from the Israeli market. I don’t see German or British or French tourists taking a plane on Friday to come here for the weekend. I don’t see this happening yet, but it will happen. I think the city and the mayor have done a lot. The old city looks amazing. It is packed every evening and even earlier.

However, the city needs a little bit more advertising, more promotion. I know that there are five-year plans from the municipality to develop more tourist attractions. Also, international artists that come to Bucharest need a bit more promotion. For example, Leonard Cohen. He was in Tel Aviv and in Bucharest as part of the same tour. In Israel tickets were expensive and hard to come by. A couple of hundred Israelis came for the weekend in Bucharest just for his concert.

What local destinations would you recommend to a foreign tourist staying in Bucharest?

First of all, I would recommend the Parliament Palace. It is a landmark for Europe, not only for Romania, and it is just across the street from us. I’ve been there many times with friends visiting me. Secondly, in the evening during the summertime I would tell them to go to the old city, and there is also the open-air Village Museum. Because the capital is close to Sinaia and Peles Castle and a bit further there is Bran Castle, I would also advise them to go and see these places. They could go in the morning and return in the evening. Especially if they are staying over the weekend, I would advise them to rent a car and go Sinaia, Brasov and Bran.

What about the contribution of business travel?

The corporate segment is growing. Not by very much, but it is growing. More companies are now based in Bucharest or are opening local offices and recruiting people.

Another market that was popular in Romania before the crisis and is now returning is film productions. Local studios are well equipped and cheaper. There is new demand coming from film production companies and in this regard Romania is competing with Budapest and I think also with Prague.

Are things improving on the MICE (meetings, incentives, conferences and events) segment?

The potential is definitely huge. I said this from the very first time I arrived in Bucharest – why doesn’t the city have a world conference center? There is no reason why Bucharest should not host conferences for 2,000 people. I’m not talking about conferences for 5,000-10,000 participants like in Las Vegas; we will never be able to do that. But conferences of 1,000 people and above, 2,000 people – that could happen. I think that the city has enough rooms in three-, four- and five-star hotels to accommodate such conferences, but we don’t have the venues. The only one for 1,000 people is the Parliament Palace but it is not enough. So, infrastructure is a problem. This is where the authorities, the municipality, should work. It takes three to five years to build such a conference center and it could change Bucharest’s occupancy dramatically. Two, three big conferences per year and several smaller ones of fewer than 500 people would change the city dramatically and I’m not referring only to hotels. From taxi drivers to restaurants and retail, everyone would benefit. People would come to Bucharest for such events.

You’ve mentioned rates not picking up. When could this happen?

The moment the occupancy rates in the entire city exceed 70-73 percent, the hotels will be more confident in raising rates. Until we reach that range, the supply will continue to be higher than the demand. Last year the average yearly occupancy for Bucharest was around 65-66 percent. This year it will be one or two percent higher. In order to bring up the rates we need the average yearly occupancy to reach 73-75 percent. Of course, there are peaks as was the case in May, and June was a very good month as well. But if you take 365 days, there aren’t that many days in a year when everything in the city is sold out. There are 20-30 days per year when we are sold out but this is not much. There should be a minimum 100 such days per year and then we will feel more comfortable about raising rates.

What are your objectives this year and have you planned any investments?

First of all, we have an obligation to our brand and that is why we invest in maintenance. We are a JW Marriott and we need to make sure that the hotel always looks sharp. And this is a very big hotel. Last year we invested EUR 1.2 million in renovating the lobby and the reception. This has always been our philosophy. Even when the economy is not at its best we will look ahead and always invest in our product. Two years ago we did the meeting rooms, and before that we did the grand ballroom.

We have a big plan for 2015 – we want to renovate all of our 402 rooms and the executive lounge. It will start in January next year and it will take approximately two and a half years because we will not be displacing business. We will do it floor by floor, area by area, and in out-of-season periods so that we don’t displace business.

I can’t tell you the actual investment yet because we first need to do two mock-up rooms, with the two options presented by the designer, choose one and then multiply everything by 402. We will have the actual figure over the next period.

What was the hotel’s turnover and revenue structure last year?

I can’t tell you the actual figure, but it was stable.

We are a very big hotel with a lot of food and beverage (F&B) facilities which is unusual compared to the rest of the market. Just to give you an idea, in most of the hotels in the world there is a 70:30 ratio between the revenue generated by rooms and the revenue from F&B. Because we are a big hotel and have six restaurants, revenues from F&B have a larger share for us. It can reach between 40 and 45 percent. And the rest comes from the rooms. It is a healthy ratio.

What we are focusing a lot on at present is organizing conferences, because they generate revenues both from accommodation and from F&B. We have excellent facilities for such events and we can also rent space in the Parliament Palace for larger conferences. We do this through our general sales offices all over Europe which are visiting companies and MICE organizers, and there is demand from abroad.

How important is the local business to Marriott International?

I can tell you that there are plans to develop more hotels in Romania. We have a developing department in Zurich and there are a couple of projects they are looking at. Nothing has been announced so far because they are in the stage of buying the land and so on. But Marriott is very keen to grow in Romania.

The next hotel would not be another JW Marriott. We are looking to expand with the Courtyard by Marriott brand which is very strong brand. We are looking at a Courtyard in Bucharest as well in secondary cities like Timisoara, Arad or Sibiu. I can’t tell you with certainty when they will be opened, but there is interest at group level. I think in a couple of years. From the moment one decides to build a hotel to the moment it opens its doors, it takes between four and five years. Investors are looking long term.

In the five years you’ve been managing the hotel, what were the greatest challenges you’ve faced and what was the greatest achievement?

I don’t think that there have been many challenges. A few years back the infrastructure was a problem, but things have improved a lot. Following all the road infrastructure works in recent years our guests can now leave for the airport one hour in advance and not two hours as they had to before.

The infrastructure used to be a challenge also because many of our guests had their offices in the north of the city. A lot of corporate business is coming back now because of the easier access and the time saved. Works done on the airport have also been a very good thing.
As for the achievement, it is when I’m satisfied with the results and the company, and the shareholders and my associates are as well.

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