Three-Star Hotels Better Prepared To Withstand Financial Crisis

Romania"s hotel market is set for moderate growth in 2008 and a mild slowdown in 2009, when the occupancy rate will decrease and the aftermath of the ongoing financial crisis will become more evident, according to representatives of the hotel industry, who attended the Hospitality Trends Conference."2007 was the best year for the hotel industry. The market will grow in 2008 and 2009, but slower. Surely, the impact of the financial crisis will become obvious, especially for expensive hotels, as companies have cut their budgets for conferences. However, brands will continue to sell. As for three-star hotels, they are the best prepared to withstand the financial crisis because they have the capacity to absorb shockwaves," said Tinu Sebesanu, CEO of Trend Hospitality, a hotel management company. In his opinion, the Romanian hotel market will continue to grow next year, but not so fast. Revenue per room will increase by an average of 3% in 2008 and by 5% in 2009.In turn, the major hotel chains believe that the Romanian market continues to have great potential. "Of course, the high-end hotels will be influenced by the crisis on short term. In Romania"s case, the exchange rate will also play a role, but the trend will remain positive. On the medium tier, three- and four-star hotels will continue to do well," said Peter Martin, General Manager of the Howard Johnson Grand Plaza Hotel, quoted by Agerpress. The major hotel chains are planning to take over some of the already existing hotels. They are currently focused on three-star hotels located in towns with a population of more than 150,000 inhabitants. "We need to consider that over five million hotel rooms in Europe are not branded, so there is plenty of room to grow on the medium tier. Romania will continue to do well on the medium-tier, especially in secondary cities such as Timisoara, Cluj, Brasov or Sibiu," said Adela Cristea, Development Manager of Hilton Hotels, Europe and Africa. Nevertheless, infrastructure and the lack of qualified labor remain a problem. "Revenues will remain fairly high in the near future for the Marriott, but we will have to be very careful about management efficiency. We also have a big problem with the lack of qualified staff," said Kurt Strohmayer, General Manager of the JW Marriott Bucharest Grand Hotel. "Infrastructure is a problem, but a think that Romania"s biggest problem is its image. Bucharest has a good potential not only for business tourism, but also for tourists interested in city break packages. However, that requires a strategy that would also involve local authorities as partners of the hotel industry," said Friederich Niemann, General Manager of Athenee Palace Hilton Bucharest. According to Trend Hospitality representatives, the occupancy rate reached 50% in August, which is the lowest in the last few years. The revenue per room was significantly affected, to minus 8.2%. However, 2007 was a much better year, with a 20.6% increase in occupancy. The number of five-star hotels increased from eight to ten last year, while the number of four-star hotels increased from 82 to 89. A 32% increase was logged in the number of three-star hotels, from 302 to 340, while the number of two-star hotels increased by more than 42% to 461 to 446. At the end of 2007, Romania had a total of 1,056 hotels, including 171 one-star hotels. The forecast for 2009 includes the expansion of the major chains to other Romanian cities, an increase in the cost of labor and utilities, as well as a stronger increase in the cost of financing and construction.