Best Western: Romanian hotel managers need to wake up and seek feasible business strategies

In the past few years, Romanian hotel performance fared well due to the high market potential and not to the management skills, but once the crisis engulfed the entire industry, they need to wake up to reality and draft feasible business strategies, said Malin Malineanu, development coordinator at Best Western Romania.

“If hotel managers will still wait for the crisis to solve itself, instead of understanding that they are the ones who have to seek solutions, the crisis will last longer than estimated. This easy-to-use tool to chop prices will turn out to be misleading and the way back to the normal tariffs would be long and winding”, said Malineanu, in an interview to Wall-Street, adding that the prices have already slumped by roughly 30%, the biggest price cuts operated in four/five star locations.

Although he finds Bucharest as an overpriced destination, the representative of Best Western says the drastic cost-cutting approach is not always the best solution. “I don’t think the prices charged in Romania are fairly calibrated for each hotel. Until now, the price policy of hotel managers rested on the competitors’ “inspiration”. This is why I think each hotel is in the position to make an evaluation, to use quality expertise and to draft a tariff policy adjusted to product and market position,” Malineanu added.

There are still players who can see profits in this crisis. “Independent hotel managers will be the first casualties, as the competition will get even fiercer. As there is no end in sight for sales slowdown, the affiliation to a chain is the best solution, and Best Western will take advantage of this situation”, said Malineanu.

The 13 hotels affiliated to Best Western were estimated to return 16 million euros in turnover, but the final quarter results pulled down drew the final line lower. “The first three quarters had seen a good performance, but since October, things started to take a dramatic U turn, hence the 12 mln euro turnover, 25% below forecasts”, Malineanu added.

The peak of the crisis in Romanian hospitality industry has not yet been reached, Malineanu expecting a market rebound in 2010. “This year will be extremely difficult, with a minimum 10-12% decline. We expect the same faulty performance next year as well, especially for four/five star units”, said the representative of Best Western.

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