Small luxury hotels managers� approach on the trends of the hotel market

“By late 2009, at least 2,830 new rooms will be delivered, especially in boutique hotel - like lodging units that started to gain ground on the local market” reads an analysis made by Jones Lang LaSalle advisor for September, Bucharest City Report 2008, on real estate investments in regional market.

At this point, hotel market covers approximately 9,000 rooms, divided into 3 and 5 stars, being dominated by four-star hotels, as a response to business tourism demand. They absorb 80% of number of tourists accommodated in hotels, Bucharest being the industry’s flagship example.

What is the next move on the hotel industry and how many hotels in construction will be managed by international hotel chains? Is this a proper climate for boutique hotels and three-star middle class units development?

“I don’t know if there is a market four boutique hotels, but there is certainly one for hotels. We are certainly experiencing a deficit in lodging units. The next breakthrough is likely to be the hotels with few rooms but with personality. This will be the next trend: small hotels, but not necessarily boutiques or luxury hotels. This types of hotels require bigger investments,” said Toni Tatar, marketing director at Rembrandt Hotel in Bucharest.

If there is making room for 4-5 –star hotels (opening of Radisson SAS in Bucharest has brought 400 new luxury rooms), the number of “three-star units with four-star services” will make progresses at a faster pace, according to Tatar.

80% occupancy rate for small hotels

According to Jones Lang LaSalle analysis, the performance of hotel sector is steady at the moment, as the decline of occupancy rate is compensated by the raise of tariffs in 4-5 – star hotels, where the occupancy rate dropped since the beginning of this year down to 60-65% average rate.

However, small-luxury hotels or boutique hotels reported a 75-80% annual average occupancy rate, t percentage exceeding 90% in rush months, considering the low number of rooms available in these locations.

“Occupancy rate at Opera Hotel in 2007 was 79%, and this year we forecast 78% occupancy rate considering the number of hotel rooms delivered in 2008,” said Diana Coca-Cozma, marketing manager at TH Top Hotel, group that administrates boutique hotels Venezia and Opera in Bucharest. In Capital, the group holds two more hotels, Central and Palas where the company is carrying renovation works, and a new hotel in Oradea, Black Eagle (Vulturul Negru).

“Boutique hotels have certainly raised the interest in Romania, given the occupancy rates in these units and the soaring number of locations,“ he pointed out.

Opera Hotel, located in historic center of Bucharest has been reopened after renovation works in December 2002, “the overall value of investment being 5 billion euros”. The hotel , with 33 rooms and 22 staff posted 405,000 incomes in first half 2008 and 78% occupancy rate.

“Turnover estimated for 2008 is approximately 820,000 euros, namely 5% growth compared to 2007. We hope to keep the number of clients compared to last year, as this year, we charged bigger tariffs”, Cozma added, saying that 80% of the clients are corporate tourists who pay 130 euros per night for single room, or 150 euros for double room”.

Translated and adapted by Camelia Oancea.

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