The hotel sector continued its recovery in 2023, with a sustained increase in leisure tourism. The number of Romanian tourists staying in hotel facilities in the country reached almost 7 million in 2023, very close to record highs and also above the pre-pandemic years' average, according to the annual report published by Colliers.

At the same time, in the summer of 2023, the level of passenger air traffic surpassed that of 2019, setting new records both in Bucharest and in other large cities in the country. However, the recovery of international tourism in Romania was not as rapid as that of domestic tourism, with the number of foreign tourists arriving in the country remaining about 25% below pre-pandemic levels.

Considering especially the nearly 2,000 rooms that could be delivered in the period 2024-2026, Colliers consultants underline that the market is preparing for an expansion both quantitatively and qualitatively.

Simultaneously, Colliers specialists observe a significant increase in the number and variety of hotel brands seeking to enter the local market, from luxury to more affordable ones. Many of these operators offer 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.

Additionally, the growth of the market is also contributed by the emergence of professional operators, both international and local, who lease buildings from owners and manage them as hotels. This aspect is relevant in the market because they act as intermediaries between developers and brands, reducing risks for some investors.

Looking specifically at the hospitality industry in Bucharest, 4 and 5-star hotels remained the most active segment in 2023. The average daily rate per available room (ADR) increased by 15%-20% throughout the year, in addition to the 57% growth recorded in 2022, reaching 126 euros/room/night in central areas and 82 euros/room/night in northern Bucharest.

Occupancy rates in competitive hotels in Bucharest increased by approximately 10% in the summer months, but on an annual basis, they remain slightly below pre-pandemic levels.

In terms of construction and development plans in the hospitality sector, although only one significant new hotel was inaugurated in 2023, the Ibis Styles Airport, with 84 rooms, in northern Bucharest, and the former Hilton Athenee Palace was rebranded as Intercontinental, over the next two years, over 20 major openings are expected in Romania, totaling nearly 2,000 rooms.

These include the project developed by One United, which will bring a luxury brand with 100 rooms on Clemanceau Street - Ennismore, while another developer has struck a deal with another luxury brand Ascott, The Crest Collection, which will open a 170-room project near the Palace of Parliament in Bucharest.

The new partnership with Accor for Novotel Living will generate an aparthotel with 150 rooms, scheduled to be completed in 2025, and the Corinthia Grand Hotel Boulevard, with 30 rooms, will also be completed in the near future.

Although the new projects will allow the room supply to grow, and the existing ones should continue their growth in the market, albeit at different rates, Colliers consultants believe that medium-term prospects remain a challenge.

Even without considering economic uncertainties, local hotels face increasingly significant obstacles, from labor shortages (over 10% of employees in central hotels in Bucharest are from abroad, especially from South Asia) to significant changes in operating costs, such as those in 2022, against the backdrop of rising energy prices.