SIF Transilvania is the largest owner of accommodation units in Romania’s hospitality industry, with 36 hotel companies including Orizont – Predeal, Aro Palace Brasov, THR Marea Neagra, Baile Felix and Turism Covasna.
The hospitality industry currently makes up for more than one third of the investment fund’s portfolio (35%), or RON361.7 million, although the face value of assets owned in this sector account for nearly half of SIF Transilvania’s portfolio calculated ta the end of last year.
Profits in the hospitality industry remain modest despite investments in recent years and companies owned by SIF had a total loss of RON5.6 million in 2013. SIF Transilvania’s 2014 profit declined to less than half of what it made in 2013, to RON55 million, and the contribution of its tourism portfolio was estimated at less than RON2 million.
In fall last year, SIF Transilvania executive vice-president Radu Toia, appointed mid-2014, recruited Bruno Negoita, specialized in business restructuring to select and coordinate a team to restructure the fund’s tourism portfolio. The action plan was to be implemented by Sigma Hotel Management SA (formerly Transilvania Travel), owned by SIF, and targeted raising the market value of THR Marea Neagra, Aro Palace, Orizont Turism, Turism Covasna, THR Prahova, Tusnad, Tratament Balnear Buzias and Turism Felix.
According to the managers’ lawyer, Bruno Negoita had his mandate revoked mid-March, “without just cause”, and the proposed business plan was rejected and the ten managers were fired.
The proposed business plan estimated additional revenues of RON54.5 million for the next three years (2015-2017) and profits higher by RON34.2 million for the eight hospitality industry companies in question. According to the restructuring plan, in the third year, 2017, the eight companies would have reached a total turnover of around RON200 million and a net profit of RON20 million, meaning a yield of 10%, while last year’s yield stood at 1.3% and current estimates point to yields of less than 1.7% for the three-year interval.