More room at the inn on financing-hungry hotel market

In Romania some 30 hotel projects are in the pipeline, requiring total investments of about EUR 200 million. With the penetration of international hotel brands at only 7 percent, there is plenty of room for similar such projects on the market, say commentators.

Simona Bazavan

The value of real estate transactions involving hotels is estimated to reach EUR 13 million in 2012, down from EUR 33.4 million the previous year, according to Trend Hospitality Consulting & Management. And this is not because of lack of growth for the tourism industry as a whole.

The number of arrivals in Romania as well as in the entire Central and Eastern European region has gone up in 2012, said Lucian Marinescu, senior associate at Trend Hospitality, who organized the fifth Hospitality Trends Bucharest conference this week. Since 2009, the number of arrivals to Bucharest has grown by 19 percent, he said.

Revenue per available room also continued to increase, growing by 7.7 percent in Bucharest this year compared to the previous one. “In terms of real money that would mean that every hotel room generated an additional EUR 2.7 this year. But this is not true as what we see in reality is a polarization of hotels when it comes to revenues. Some are doing well; others are not,” he explained. Location, the hotel brand and its management are the main factors that made the difference, said Marinescu.

Overall, there is room on the market for more hotels but lack of financing continues to be the main obstacle, say players. In the region, banks are reluctant to finance hotel projects in Romania and Bulgaria in particular, said Gabor Tobias, manager for real estate, leisure and tourism advisory services at KPMG. As a consequence, the cost of credit is also higher in these countries, he added. In Romania, hotel projects are the second least attractive real estate sector for banks, right behind residential projects, said the manager.

Read more in next week’s print edition.