A strong pole has formed on the hotel market in Bucharest: Calea Victoriei (Victory Avenue). As of next spring, this area will accommodate more than 1,650 rooms, which equals one third of Bucharest's total hotel capacity.
Once the Radisson SAS, the largest hotel in Bucharest opens, the area will number nine hotels. According to information on the market, hotel chains like Sheraton, Hyatt and Kempinski "are scouting" the area in search of an investor or an already existent hotel to affiliate with.
Names like Hilton, Ramada, Radisson SAS, Golden Tulip and Accor are entering the market in the area, which will force the small players to change their strategy soon, or else risk being put out of business by the "giants".
"The Romanian hotel market is growing and so is the share of every player," stated Yaron Ashkenazi, general manager of Centre Ville, the complex that owns the Radisson SAS, Elite Apartments and Aparthotel. When it opens at full capacity, which is expected to happen in the first half of next year, Centre Ville will be the largest hotel complex in Romania, with a total of 729 rooms. Accor in turn is getting ready to throw a four-star Novotel hotel on the market.
The opening of Bucuresti Radisson SAS, however, could create a "quake" in Bucharest.
"We will have more competition once Radisson SAS opens. We are not that worried about Novotel, because it will be absorbed by the market; Radisson will make a significant impact, though," says Friedrich Niemann, general manager of the five-star Athen?e Palace Hilton. He explains the interest in Calea Victoriei by saying that since it is a central area, most clients prefer coming here, which is very interesting for hotel owners.
"Demand is great and things depend on which direction it will go. If it continues to rise, then there will be room for other players, too," Niemann explains. He adds that small hotels will have to be as careful as they have been until now about the rules set by the big players in the area.
"Small hotels must protect their niches. The current status quo already entails that, however," Niemann concluded.
The first shock on the market will occur once the Novotel opens, a direct hotel investment by the Accor hotel chain, which will provide a further 259 rooms on the market next month.
"The market is not saturated yet, there is still room for more hotels. It's good there is an interest in Bucharest, but we must be careful and avoid ending up like other markets in Europe, such as Prague, where there are too many hotels," says Frederik Deman, Novotel's marketing manager. The French at Accor have invested over 30 million euros in the four-star hotel. Accor is currently operational on the market, as the chain also has management contracts with the Ibis and Sofitel hotels in Romania.
Novotel is expected to generate a 5-7% drop in the occupancy rate of the hotels in the area, some players on the market say.
Not every official agrees with this, though, feeling the market is large enough to absorb the effect of Novotel.
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