“Before the pandemic, the hospitality market was under-supplied, an aspect that will be highlighted again, with the end of the restrictions and the economic recovery. Significant opportunity remains and developers will align their delivery of new hotels with the return to some form of normality in terms of travel. We expect to see a steady return of business travel in the second half of 2021 and decent under-lying domestic demand around the country,” said Bogdan Gubandru, Director Investment Agency, Cushman & Wakefield Echinox.
The market’s evolution in Romania was in line with the general trend observed in Central and Southeast Europe.
Still, investor interest in Romania remains relatively strong due to a clear basis for future growth in the local hotel market, coupled with the flow of the expected new capital into the hospitality sector from 2021.
From the operators’ perspective, Bucharest was one of the most highly attractive markets in the CEE/SEE region, following closely behind the more developed markets of Warsaw, Prague and Budapest, according to Cushman & Wakefield Echinox’s Operator Beat survey.
Other cities in Romania mentioned by international operators as their target markets included Cluj-Napoca, Timisoara, Iasi, Constanta and Brasov – where brand penetration is significantly low.
“The Bucharest hotel market had been driven by international business demand; hoteliers had thus faced a difficult year in 2020, due to the market’s sharp decline of its main demand generator. Despite the current challenges in the market, however, the outlook for Bucharest hotel sector remains positive on the long-term perspective,” said Sevda Cadir, Hospitality Advisor CEE & SEE, Cushman & Wakefield.
Hotel occupancy reached the lowest level in May 2020 at 5.1%, due to governmental restrictions on hotel operations and travel. With the ease of restrictions, the occupancy level started rising in the summer period, reaching 17% in September, before it began to decline again due to the second wave of COVID-19.
Meanwhile, the average daily rate (ADR) for the Bucharest market reached EUR68 in 2020.
Despite the challenges, Bucharest registered new hotel openings in 2020, including the Moxy Old Town (July 2020) and Holiday Inn Bucharest Times (January 2021). In addition, the ongoing projects under construction, such as the Autograph Collection in the Old Town center, or the room extension and renovation of the Radisson Blu Complex, are due to open in 2021 and 2023, respectively.
“In the past years, Bucharest has recorded an impressive demand growth, which is reflected in the strong occupancy levels the market has achieved. Despite the short-term challenges for hotels in the city, investors and operators remain optimistic on its long-term prospects, with continued keen interest in the market and expectations of a relatively quick recovery. Accordingly, Bucharest is increasingly becoming a highly attractive market among local and international investors and operators,” said Frederic Le Fichoux, Head of Hotel Transactions, Continental Europe, Cushman & Wakefield.
According to the Operator Beat survey, the majority of operators are expecting major regional cities to recover earlier than capital cities, with 53% of respondents expecting these markets to recover by 2023. This is in line with Oxford Economics’ forecast, where tourism demand in Bucharest is similarly expected to fully recover by 2023.