Impact of the economic crisis over the Romanian hotel industry.
Sztruten Lefter, Gina Gilet ; Dridea Stanescu, Catrinel Raluca ; Murgoci, Cristiana Stefania 等
Abstract: Starting from the world financial crisis, there has been
noticed a deep negative impact on the Romanian hotel industry over the
years 2009-2010. Therefore, the Romanian tourism confronts itself with a
great challenge in diminishing its impact at macroeconomic and
microeconomic level This paper tries to realise an empirical analysis of
the Romanian hotel market following a series of economic indicator, like
turnover, occupancy rate, market rate; relevant indicators for providing
the proper strategies for economic recovery
Key words: tourism, crisis, hotel industry, Romanian market, trends
1. INTRODUCTION
The management models applied in the hotel industry worldwide have
represented a real example for the local firms. The trends regarding the
global industry, the performing and environment friendly hotel units,
the employees and the local communities, have determined the necessity
of Romanian tourism to correspond to these. More than that, the
association with integrated hotel chains, involves the alignment to new
international standards, including the environment ones.
2. INTERNATIONAL TRENDS
It is easy to understand that the international development of
hotel industry represents a consequence of the tourism growth, to
international trade and services. It is expected that tourism in the
Asia-Pacific continues to obtain the same dynamics as it has in the last
years. Some resorts are planning for development in Indonesia, Malaysia,
Thailand and Vietnam. More than that, there are important opportunities
for of the hotel industry in Eastern Europe, Russia and other countries
from the former Soviet Union, were important hotel groups are planning
the reorientation of the growth strategies, by new constructions or by
new acquisitions. In Asia, the increase of Hung Kong's popularity
has been encouraged by the economic boom of South East and also by the
taxation system.
Important hotel corporations have established their headquarters in
Honk Kong due to the friendly regime of taxation, among these been the
group: Mandarin Oriental, Peninsula, Shangri-La etc. In the countries in
development, the hotel industry has important increasing perspectives
based on political stability, as a component of social and economic
progress; such an example was Romania, among other countries from the
former communist block that offer expansion strategies for hotel
corporations.
The tourism industry is a perspective segment, for which is
necessary to attract important investment, for the infrastructure
development, and for generating new opportunities for the tourism
industry. In other words through unified efforts, tourism can remain one
of the main segments of national economies and, at the same time, the
most powerful motor of action for all its components.
3. THE IMPACT ON ROMANIAN HOTEL MARKET
The Romanian hotel industry efforts, to be in harmony with the
modern tendencies of the hotel management are sustained, first by the
implementation of modern management techniques (strategic, by
objectives, by budgets, leadership, etc.), but also by adopting the
newest concepts of hotels like boutique, green hotels, ice hotels, etc.
Unfortunately, at national level, the classic, traditional hotel
management techniques are dominant. The modern organization have
materialized only in the large cities of Romania, especially in
Bucharest, as the classical exploitation is active in an overwhelming
proportion (over 90%) on the spa resorts and on the Romanian sea side
resorts (with the exception of the Mamaia resort).
The concentration of tourism circulation in different periods of
time (weekend, summer season) or in different touristic areas (like
Valea Prahovei) generates the overcrowding, creating negative pressure
over natural and anthropic resources, therefore determining the attempt
to adapt the modern management methods to a more responsible policy.
Attracting the well known hotel brands, especially in Bucharest,
but also in the urban centres of the country, has influenced in a
positive way the top positioning of cities regarding the tourism
accommodation capacity.
It can be appreciated that, in general, Romania joins the European
trends and evolutions, specific for adequate infrastructure, for a
general trend of enlarging the tourism accommodation capacity, for
improving the comfort and territorial distribution.
The recovery of business tourism, the increase of budget and small
hotels (there aren't probabilities to open huge hotel units), the
accent on tailor made services, the world capitals--the most favourites
markets in 2011 in the matter of the development of the hotel industry,
large marketing expenses, rebrands, strong methods to reduce the
expenses, with the great challenge of not affecting the quality of
services are just a few of the industry trends for 2011. The main
challenge for the hotel management also represents in 2011, the
investors' lack of confidence in the hotel industry, more cautious
attitudes from bank. The innovation represents another important aspect
in the hospitality industry.
The economic crisis has taken the toll on the activity of Romanian
hotel companies. Business of top 50 hotel companies in Romania fell by
over 17% in 2009. Thus, there was declines from 3.56 billion to 2.95
billionlei, after many hotels had to close whole floors. Also, there are
companies that have registered grow thin 2009, such as Sind Romania
Hotel Company which grew by 4.3% in reaching almost 109 million lei.
Grand Hotels Corporations Society which manages the Marriott Hotel
in Bucharest that recorded a turnover of 109.3 million lei, decreasing
by 21.7%. In 2009, Ana Hotels had sales of 107.4 million lei, which is
15.6% higher than in 2008. Bucharest Tourism, the company that owns the
Radisson hotel in Bucharest, registered growth of 73%, from 57 million
to 99 million. Continental Hotels in 2009 had a turnover of 81.4 million
lei, 16% lower than in 2009.
Sales of World Trade Centre Bucharest, which manages the Hotel
Pullman, fell from 55.5 million to 46 million lei (17.1%). Turnover of
the Intercontinental Romania hotel company, which manages the hotel with
the same name in Bucharest, fell 22% last year, from 50.7 million to
39.5 million lei. Average revenue per room of hotels in Bucharest fell
by 38% to about 40 euros/night, once in 2008 reached over 60 euros. The
average accommodation fee also fell by 27%, from 120 euros to just over
80 euros. Employment and the number of arrivals and overnight stays in
hotels in Bucharest fell from the level of 2008. Hotel market was
severely impaired on the operational efficiency. Strong competition
between hotels was reflected by lower rates, special packages to attract
more customers, increase occupancy and profitability threshold [CBRE report, 2010]. Hotel market in Romania has decreased by 15-20% in 2010
and 2011 will not bring are cover, hotels fees are becoming lower and
lower.
More over, largely negotiated rates with Romanian hotels by tour
operators for travel packages in 2011 are similar to those of 2010, and
in some case seven a decreases was recorded.
Hoteliers have been forced to reduce prices because of low
purchasing power due to the economic crisis.
Travel agencies often state that discounts and special offers saved
domestic tourism in 2010 and have decided to keep the offers also in
2011, a year that promises to be even harder than 2010 in terms of sales
packages due to decreases of salaries in public sector. 2010 decreased
less than the market average for hostels and spas, while tourist
accommodation structures of Bucharest market declined more than the
market average, exceeding 20%.
In Bucharest, 4 and 5 star hotels developed good business during
this period. There were units that had a very good occupancy rate, high
rate even for a boom period, of over 70%. However, hotel market in the
capital was pulled down by cheaper housing units. Hotel businesses that
declined particularly were built with out professional landmarks by
people who do not have experience in this area.
Tourism business grow thon the Bucharest market would be
sustainable only if the local economic environment stabilizes.
Regarding new investments in hotels, they are stalled. While major
brands such as Marriott and Hilton International have announced several
times over the past two years plans to expand the local market, the new
units linked to these brands still wait to be seen.
In the capital hotel market there are just a few hotel sunder construction, so by mid-2011 there will be fewer projects to join
international chains. Most projects announced in 2007 and 2008 are now
frozen, so the big hotel companies do not have too many options on the
market today. [www.dailybusiness.com].
Hotel business requires a considerable infusion of capital, which
so far as come largely from bank loans. Niche projects are most
appropriate at this time. Two and threes tar hotels would be a safe
investment, because in times of crisis, are the most popular for
business tourists, and those of leisure. Regarding the four and five
stares establishments, Bucharest is not deficient, but in the province
these two segments are only in the beginning. For the next few years,
Brasov, Bacau and Timisoara offer many opportunities. The fact that
occupancy of housing units fell sharply is indeed a problem that
investors take into account when designing a hotel. To remain
profitable, a four-star accommodation must maintain a minimum occupancy
rate of 42%-45% [www.adevarul.ro].
In two-star facilities, this index may fall to 35%. 80,000 euro is
the investment in a four star hotel room and 35% is the minimum
occupancy rate to maintain profitability.
Starting from the idea that Bucharest tis not a holiday
destination, all Bucharest hotels records have huge differences between
weekdays and weekends occupancy. Demand for holidays in Bucharest is
still very limited, and short-term perspectives do not expect a huge
change [www.dailybusiness.com].
The development and modernization of Romanian tourism, has been
accompanied, as it should be, by important hotel transformations; it is
about the increase of the number of hotel units, in the present being
over 5000, by the typological diversification of those, the space
distribution, the services offered.
In regard to the number of units, it has grown, in 2010, with
approximately 35%, and the number of existing places with 12%, compared
to the year 2004, as shown (Tab.1). This spectacular development (1/3
from the total), has been influenced by the development of the business
hotel segment, the Eastern Europe becoming an important market for large
hotel chains; therefore, in connection with the investment fund, the
number of units has grown constantly, in spite of the difficulties
generates by the economic crisis.
4. CONCLUSIONS
Regardless of the form of tourism, tourist destination, chosen
hotel, product consumed, the services provided by the reception
structures are closely related to natural resources and how the yare exploited. In conclusion, the Romanian tourism potential is great thanks
to many natural recovery alternatives and cheap labor. The initiatives
undertaken by local hotel chains and the governmental legislative
support and the promotional one and a good collaboration with the local
authorities will represent a real help to the Romanian hotel business
field.
5. REFERENCES
Holden A., In Need of New environmental Ethics for Tourism, Annals of Tourism Research 30, Elsevier Ltd.UK., (ISI Journal),
2003Lefter(Sztruten) G.G
Oprescu A.E., Gheorghe C.M. Sebea M., Regional Cooperation and its
role in declining the impact of world crisis over tourism activity in
Romania, Annals of DAAAM for 2009&ISI Proceedings of the 20th
International DAAAM Symposium, 2009
Minho Cho, Key factors for a successful cooperation between
SME's and global players in hotel industry, International Journal
of Contemporary Hospitality Management, vol.9, no.5/6, Emerald Group
Publishing Limited, 2005
CBRE report, quoted by Financial
*** (2011) www.dailybusiness.ro Accessed on 15/08/2011
*** (2011) www.regim-hotelier.com/ Accessed on 15/08/2011
*** (2011) www. adevarul.ro Accessed on 15/08/2011
Tab. 1. Indicators of tourist accommodation infrastructure in
Romania
Years Number of units Number of existing places
(yn) (yn/[y.sub.0]) (yn) (yn [y.sub.0]/)
2004 3900 100,0 275941 100,0
2005 4226 108,3 282661 102,4
2006 4710 120,7 287158 104,0
2007 4694 120,3 283701 102,8
2008 4840 124,1 294210 106,6
2009 5095 130,6 303486 109,9
2010 5279 135,3 311.698 112,9
