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Trade association head: 'Prices in hospitality industry expected to rise at least 5 pct'

crestere economica, UE

Prices in the hospitality industry will increase by at least 5 percent in 2019, mainly due to labor costs, president of the Romanian Hotels and Restaurants' Employers Association (HORA) Dragos Petrescu told a specialist conference on Monday.

"A 5 percent growth in an economy like Romania's in the hospitality industry is not driven by the segment's desire to increase revenues, but is directly related to workforce. And workforce is directly related to the minimum national wage. As the minimum wage increases by law, the costs of the company increase automatically and revenues have to adjust. Then follow rises from raw material price hikes and then we have the increases caused by higher utility prices. All this cost growth cascade must adequately reflect in the price of the services," Dragos Petrescu said.

He pointed out that there are mechanisms in the market to regulate these prices, but also some reservations prompted by market realities.

"One cannot increase the prices by higher percentages because the market doesn't accept such a rise. At this moment, we do not contemplate a drop in the number of foreign customers. Ours are among the lowest prices in Europe. It's us and Bulgaria. Romania as a tourist destination is and will stay in the next five to ten years one of Europe's cheap destinations and also a safe one, on top of that. All foreign tourists from the Middle East and emerging areas will want to come to Romania, and so will those from more developed areas who will wish to explore this part of Europe," Dragos Petrescu argued.

Read also: At FAC meeting, ForMin Melescanu presents major themes in Romania's attention during its tenure of EU Presidency

The HORA president added that the hospitality industry faces a workforce shortage of some 50,000 and seasonal work is a real necessity.



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