Hotel occupancy rate in Bucharest up 33pct in Quarter 1 of 2023 (analysis).
The occupancy rate of hotels in Bucharest was 62pct in Quarter 1, up 33pct compared to the same period last year, and only 5pct below the level of 2019, the year before the pandemic, according to data issued by a real estate consulting company.
Relative to the region, Bucharest had the second highest hotel occupancy rate, just behind Warsaw, but above Budapest, Bratislava, Prague and Sofia.
According to Bucharest hoteliers, this year's performance is driven by a strong recovery in demand on the individual tourism segment, as well as an improvement on the group and business tourism segment.
Moreover, the positive development of the indicators was supported by the increase in the quality of the hotel offer in Bucharest through the opening of Marmorosch Bucharest, Autograph Collection and the renovation of the Intercontinental Athenee Palace, according to the Cushman & Wakefield analysis.
Data of STR Global research company, which specializes in the hotel industry, reports that the average hotel rate in Bucharest was 92 EUR in the first quarter, almost 12pct above 2019 levels and 35pct higher than in the first quarter of last year, as the VAT rate for the hospitality industry (HoReCa) was increased this year from 5pct to 9pct.
Bucharest, together with the Central and Eastern Europe (CEE) market, has seen a healthy recovery in performance indicators since 2022. Thus, last year hotels in the Romanian capital reached the second highest occupancy rate among CEE capitals. Investment activity in CEE hotel assets was limited during 2022, with transaction volume amounting to 409 million EUR, reflecting a 70pct decrease compared to 2019.
Numerous factors (including the Russian invasion of Ukraine, energy costs, Hungary's positioning regarding the European Commission, rising inflation and interest rates in the banking sector, a shortage of skilled labour force, concerns about a recession and the upcoming presidential elections in the Czech Republic) have contributed to a climate of uncertainty in CEE and prompted investors to adopt a wait-and-see approach, the source points out.
Consultants Cushman & Wakefield estimate that in 2023 trading volumes should pick up, a development supported by the need for owners to spend available funds, as well as the pressure on some owners to sell non-core assets to meet liquidity needs.
In 2022, Romania recorded a total transaction volume of around 75 million EUR, of which Bucharest recorded around 44 million eur. The volume of transactions registered an increase by 56pct at the country level, i.e. 91pct in Bucharest compared to 2021.
The Cushman & Wakefield Echinox, the exclusive affiliate of Cushman & Wakefield in Romania, independently owned and operated, includes a team of over 80 professionals who provide a full range of real estate consulting services to investors, developers, owners and tenants.
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