Europe -  Bucharest

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Bucharest, Romania’s capital and the seat of its government, is undoubtedly the country’s main communications and industrial centre, with many multinational companies represented in the city. Key sectors within the city are oil, cars, IT and banking and finance. Over the last couple of years, the city has enjoyed a construction and infrastructure boom, with numerous new residential and retail developments taking place. The expansion of the IT sector has helped Bucharest develop into a high-tech and telecommunications services hotspot, underpinning Romania’s position as one of the fastest-growing IT markets in central and eastern Europe. Among the main IT employers in the capital are companies such as Oracle, Microsoft, IBM, Luxoft, Endava, Vodafone, Ericsson and Hewlett Packard.

Bucharest experienced an increase in visitation of around 5% CAGR from 2015 to 2019. The growth was driven by both domestic and international visitation, with domestic tourism accounting for around 65% of total visitation. The most important international markets for Bucharest are Germany, Italy, Israel, the UK and the USA. While the corporate segment remains dominant, leisure tourism is rising, supported by Danube River cruises. Over the last decade, this market has seen a gradual but relentless improvement in occupancy levels which reached the mid-70s over the last couple of years prior to the pandemic. The decline in average rate, in euro terms, experienced during the global financial crisis, had also started to reverse. These movements translated into a solid year-on-year RevPAR growth for this market since 2014. In 2020, visitation to the city contracted significantly as a result of the pandemic. The unprecedented downturn in trading led to the closure of most of the city’s hotels in mid-March, with few reopening over the summer. New cross-border restrictions in the second half of the year further subdued hotel trading. 2021 was off to a slow start but the second part of the year showed promising signs with solid volume levels  across the city. The Omicron variant did slow down the recovery in December but nevertheless, the city achieved good RevPAR growth of above 50.0% year-on-year.

Over the next few years Bucharest is expecting to see an increase in supply of around 1,800 rooms, with around 50.0% of the rooms in the pipeline falling into the midscale and upper midscale categories. Notable new openings include the 218-room Swissotel Bucharest (June 2022) and the 158-room DoubleTree by Hilton Bucharest Parliament, which is in the final planning stage and expected to open in 2025.

In 2021, Bucharest saw an increase in the number of transactions with a similar level of volume in terms of euro prices. The most relevant transactions include the 111-room Ramada Bucharest Majestic (undisclosed transaction price) and the 148-room portfolio of three independent hotels (undisclosed transaction price).

Hotel values in Bucharest increased by around 2.0% in 2021 (around 4.0% in local currency). The dependence on business demand, coupled with moderate (albeit increasing) investment appetite for Bucharest, have been the main reason for the slower recovery. However, the limited exposure to international travel and the economic dynamism of this market bode well in terms of continued performance improvement going forward.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Senior Director
[email protected]
  • +44 20 7878 7722 (w)
  • +44 0 7725781037 (m)
Nikola Miljković
Associate
[email protected]
  • +44 0 2078787724 (w)
  • +44 0 7593572865 (m)