Romanian Hotel Industry - Latest Developments
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Septembrie 2008 |
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EFG EUROBANK FINANCE |
Adresa
Bulevardul Nicolae Titulescu, Nr. 4-8
Cladirea America House, Etaj 4
Bucureşti, Sector 1
Telefon
+40-21-206.23.01
+40-21-206.23.00
Fax
+40-21-206.23.10
Website
www.efgfinance.ro
In 2007, growth of over 4% was achieved by the travel and tourism world economy although below 2006’ growth rates. According to the World Travel and Tourism Council growth is forecasted to 3% in 2008, but the sector’s contribution to the world economic activity and employment will continue to increase over the next ten years.
The World Travel and Tourism Council estimates that the contribution of the tourism industry to total employment is expected to rise from 8.4% of total employment or 1 in every 11.9 jobs to 296,252,000 jobs, 9.2% of total employment or 1 in every 10.8 jobs by 2018. The organization also revised its previous real GDP growth forecast for the next ten years from 4.2% to 4.0% yearly in real terms.
Regional overview
In 2007, Eurostat, the Statistical Office of the European Communities, reports that 1,578 million nights, whether for business or leisure, were spent in hotels and similar establishments throughout the European Union 27, representing an increase of 3.1% compared with 2006. However, this is a slower growth rate than previously recorded in 2005 (4.6%) and 2006 (4.3%). The biggest contribution to this figure was made by Spain (273 mn), Italy (250 mn in 2006), Germany (215 mn), France (204 mn) and United Kingdom (178 mn) which amounted to more than 70% to this number. Throughout EU27, the number of nights spent grew except Cyprus where a decrease by -4.5% was recorded. The fastest growth was recorded in Poland (+11.5%), Romania (+9.1%), Latvia (+9.0), Malta (+8.5%) and the Netherlands (+8.3%).
Referring to the Central and Eastern Europe region, World Travel & Tourism Council considers that the tourism and travel industry weight in the GDP will rise from 8.1% (USD 260.3 bn) expected in 2008 to 8.7% or USD 607.1 bn by 2018. In terms of employment the CEE T&T industry is expected to grow from 10,389,000 jobs in 2008 (6.9% of total employment or 1 in every 14.5 jobs) to 11,263,000 jobs or 7.5%, while the real GDP growth is expected to be 5.3% in 2008 and to average 6.0% annually over the next 10 years. The exports earnings generated by the foreign visitors are expected to produce 9.8% of total exports (USD 139.4 bn) in 2008 and to reach USD 284.4 bn (9.4% of total) in 2018.
Among the 13 regions monitored by the WTTC, Central and Eastern Europe Travel and Tourism economy is ranked number 4 in absolute size worldwide, 10 in relative contribution to national economies and number 4 in long-term (10 year) growth.
Being part of a thriving emerging market, not primarily affected by the Credit Crunch wracking havoc in the United States’ financial markets, the hotel industries in Central and Eastern Europe capitals and major cities in the region witnessed an increasing interest from investors and developers. Many brands and industry analysts are also focusing their attention on Eastern Europe, as it is seen as a mixed and interesting market, consisting of emerging (Moscow and Bucharest), established (Bratislava and Warsaw) and mature (Budapest, Prague and Vienna) markets. It is not surprising that leading European hotel companies such as Accor and Rezidor see the emerging markets in Central and Eastern Europe having a great potential for growth. Currently there is an intense focus on Eastern Europe, starting with Czech Republic and continuing with Poland and Romania. To the main reasons for investors, developers and brands to come to the region count the strengthening economic climate along with a low unemployment rate, a hike in disposable income and a forecasted 6.6% GDP growth for the CEE EU members. Besides, the presence in the region of low cost carriers such as BlueAir of Romania, Centralwings of Poland, MyAir of Italy, SkyEurope of Austria/Slovakia, GermanWings of Germany, Rynair of Ireland, Wizzair of Hungary and others brought the option to travel in CEE region at very affordable prices toward several destinations. All these facts, coupled with a shortage of international hotel chains in many emerging markets, represent a strong incentive for investors and developers to tackle the region. The potential for branding is immense throughout Europe and it is a matter of time until the most important hotel chains will try to change the current hotel ratio of 30/70 branded versus non-branded to a more favorable 40/60 or even 50/50 in the short- to mid-time horizon.
The Rezidor Hotel Group announced at the end of 2007 to open two new hotels, the Radisson Resort Poiana Brasov in Romania with 186 rooms to be ready by Q4 2009. Likewise, Accor plans to work with the local partners to develop new low cost hotels (Ibis and Etap) in Russia, Romania and Hungary. Thru its All Seasons brand (a franchise created to affiliate a big chunk of the 2-star hotels across Europe) the company also increased holding of the Orbis network of some 70 hotels in Poland. American hotel chains like Marriott and Hilton developed their European brands and are entering the CEE market. Marriott has already opened a number of Courtyards in Czech Republic and a top-notch JW Marriott hotel in Bucharest, Romania; Hilton plans to introduce its Hilton Garden Inn to Poland, Russia and Turkey.
The most important lagging factors that keep the tourism in the region from achieving the real potential is the lack of infrastructure and lodging capacities. But as the countries in the area started to invest heavily in roads, highways and other transport related facilities, the region is suitable to absorb hospitality directed investments and to become a valid holiday destination.
Romanian hotel market at a glance
In recent years, Romania registered a constant increase in number of visitors and nights spent, following the sector’s growth trend in Central and Eastern Europe. Based on a study by World Travel & Tourism Council, Romania ranks 58 in absolute size out of 176 countries in the world, 149 based on its relative contribution to the national economy and number 6 on 10-year annualized real growth. The contribution of the travel and tourism industry to the Gross Domestic Product (GDP) is expected to increase from 5.8% in 2008 (RON 23.5 bn or USD 9,352.5 mn) to 7.0% until 2018 (RON 23.5 bn or USD 21,004.8 mn). The employment in travel and tourism industry is forecasted to reach 705,000 jobs or 8.4% of total employment by 2018, from a current figure of 600,000 jobs or 6.9% of total employment. Real GDP growth for the travel and tourism economy is expected to be 9.3% in 2008, and to stabilize at a lower annual pace of 6.7% over the next ten years, until 2018. In terms of exports, earnings from foreign visitors and tourism goods are expected to amount 5.0% of total exports (RON 9.1 bn or USD 3,629.4 mn) in 2008, with an expected growth rate in nominal terms of 4.3% in 2018 (RON 29.9 bn or USD 10,632.4 mn).
In terms of hotel nights spent in 2007 Eurostat reports that Romania registered one of the greatest growth rates in the region, ranked second in the entire EU 27 with a sound 9.1% increase from 18.1 mn in 2006 to 19.74 mn in 2007, being surpassed only by Poland, recording an increase of 11.5%, from 21.8 mn in 2006 to 24.3 mn in 2007. When it comes to the foreign visitors nights spent, even though a rising star in the region with an increase of 10.2%, Romania have only 18% market share of non- resident spending nights.
In terms of accommodation facilities, Romania posted a solid 11.36% increase in the total number of tourism accommodation facilities for 2006 from 4,226 establishments registered in 2005 to 4,710 in 2006. This represents a 37% growth from the previous year growth rate, when the increase of total number of lodging facilities was 8.36%, from 3,900 in 2004 to 4,226 establishments in 2005.
For 2006, while hotels accounted for only 22.63% in the total number of lodging facilities, the rest being made up by the motels, inns, tourist villas and other establishments, in terms of the number of beds hotels represented 58.42% of the total number of beds.
