However, the recovery of international tourism in Romania has not been as fast as that of domestic tourism, with the number of foreign tourists arriving in Romania remaining around 25% below pre-pandemic levels. Looking specifically at the nearly 2,000 rooms that could be delivered between 2024 and 2026, Colliers consultants point out that the market is gearing up for both quantitative and qualitative expansion.

“This significant revitalisation of leisure tourism is becoming increasingly attractive to a growing number of institutional investors. This stability in the face of recent challenges in the tourism sector is a key factor for attracting an increasing number of investors to various projects, despite the inflationary context generated by COVID-19. We are also seeing an increase in the number of projects entering the market, mainly announced for the period 2025-2026, as some investors have been cautious about new developments in other commercial property sectors, particularly office, and have sought to diversify their portfolios”, explains Raluca Buciuc, Director and Partner of  Valuation360 and Advisory Services at Colliers.

Meanwhile, Colliers specialists observe a significant increase in the number and variety of hotel brands looking to enter the local market, from luxury to budget. Many of these operators are offering more flexibility and incentives to encourage developers to initiate projects, and when a building receives the support of an international brand, bank financing becomes more accessible. Also contributing to the growth of the market is the emergence of professional international or local operators who lease buildings from owners and manage them as hotels. This is relevant to the market as they act as intermediaries between developers and brands, reducing the risks for some investors.

Taking a closer look at the hospitality industry in Bucharest, 4 and 5 star hotels remained the most active segment in 2023. The average daily revenue per available room (ADR) grew by 15% - 20% throughout the year, in addition to the 57% increase recorded in 2022, reaching 126 euro/room/night in central areas and €82/room/night in the north of Bucharest. Occupancy rates in competitive hotels in Bucharest increased by around 10% during the summer months, but on an annual basis remain slightly below pre-pandemic levels.

In terms of hospitality construction and development plans, although only one significant new hotel, the 84-room Ibis Styles Airport in northern Bucharest, was added in 2023 and the former Hilton Athenee Palace was rebranded as Intercontinental, more than 20 significant openings in Romania totalling almost 2,000 rooms are expected over the next two years. These include One United's project to bring a 100-room luxury brand to Rue Clemanceau - Ennismore, while another developer has signed an agreement with another Ascott luxury brand, The Crest Collection, to open a 170-room project near the Palace of Parliament in Bucharest. A new collaboration with Accor on Novotel Living will bring a 150-room aparthotel scheduled for completion in 2025, and the 30-room Corinthia Grand Hotel Boulevard will also be completed in the near future.

“At the beginning of 2023, only seven projects were in discussion, but by the end of 2023, based on public announcements and general speculation, the number exceeded 20 projects, most of them in the Capital. Accor, Marriott and Radisson are some of the most active brands looking for new projects. Currently, Bucharest has 26 international hotels with approximately 5,000 rooms, which is almost half of the total number of hotels in the capital with potential for affiliation. Outside Bucharest, Cluj-Napoca, Brasov, Oradea and Arad are among the most active markets”, says Raluca Buciuc, Director and Partner of  Valuation360 and Advisory Services at Colliers.

Although the new projects will increase the room stock, and the existing ones should continue to grow the market, albeit at different rates, Colliers consultants consider that the medium-term outlook remains challenging. Even without taking into account the economic uncertainties, local hotels are facing growing obstacles, ranging from a lack of labor ((more than 10% of employees in central hotels in Bucharest are from abroad, mostly from South Asia) to significant shifts in operating costs, such as those in 2022 amid higher energy prices. But overall, the long-term future looks bright, which explains the robust influx of new projects.