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Sofia is the capital and largest city of Bulgaria, located in the western part of the country and having a population for 1.2 million people, making it the most populous city in Bulgaria. The city is home to the National Opera and Ballet of Bulgaria, the National Palace of Culture, the Vasil Levski National Stadium, the Ivan Vazov National Theatre, the National Archaeological Museum and the Serdica Amphitheatre, all of which have cultural importance in southeast Europe. The Globalization and World Cities Research Network has ranked Sofia as a Beta global city; it is also ranked 98^th in the world's financial centres. Sofia is Bulgaria's economic centre and is home to the Bulgarian National Bank and the Bulgarian Stock Exchange, as well as most of the country's major Bulgarian and foreign companies. Sofia Airport is Bulgaria's only international airport, and in 2019 it exceeded 7 million passengers for the first time, experiencing a compound annual growth rate (CAGR) of 9.0% over the preceding decade. Following the impact of the pandemic, in 2022 Sofia Airport served 6 million passengers, a significant increase on 2021 figures, though still 1 million below 2019 figures. BH Air, Bulgaria Air and Bulgarian Air Charter have their home bases at the airport, and Ryanair and Wizz Air both use it as a regional base. Sofia is also home to a diverse range of cultural enterprises as well as a thriving film-related service market. Over the last 26 years, The Sofia Film Festival has grown to become the largest and most important film festival in the Balkans. The National Film Archive, which focuses on Bulgaria's film history, is also located in the capital.

Hotel RevPAR in Sofia increased at a CAGR of 7.5% from 2014 to 2019, thanks to upward trends for both volume and average rate. Marketwide occupancy increased from the mid-50s mark in 2014 to the low 60s in 2019. Average rate rallied at a 5.0% CAGR over the same period. The Sofia market has not been susceptible to fluctuations in local currency, as seen in other markets such as Istanbul, as the Bulgarian lev has been pegged to the euro (at a rate of BGN1:€0.511) since 1999. The country is expected to move to using euro from 1 January 2025.

RevPAR in Sofia collapsed by more than 67% in 2020, followed by a recovery of around 35% in 2021. Whilst the market continued to recover in 2022, thanks to its strong domestic corporate base, demand volumes were still around 80% of pre-pandemic levels, and modest rate growth means that RevPAR remained below that of 2019, even in nominal terms. Around 35% of annual arrivals in Sofia are business-related.

The hotel market in Sofia is composed of 130 properties, or around 8,000 rooms. With an extensive pipeline of seven new developments that may impact occupancy in the short term, the Sofia market will see 851 rooms come to market over the next five years, which equates to around 10% of the existing supply. The majority of the proposed hotels fall into the midscale and upscale categories. The most relevant new supply includes the 99-room Hampton by Hilton Sofia City Centre (expected to enter the market in July 2024), the 232-room Marriott Sofia (June 2025) and the 117-room Mövenpick Sofia, which is in the planning stages and is expected to enter the market in late January 2025 but is likely to be delayed. Other brands due to enter the market include Holiday Inn Express, ibis and ibis Styles.

After a few years with no transactions to report in the hotel space, 2020 saw the 130-room Holiday Inn Sofia and the 185-room Sofia Hotel Balkan purchased by Videolux Holding and Potamiro Limited, respectively. Both transaction prices were undisclosed. After 2021 saw no transactions within the market, trade volume remained low in 2022, with only the 122-room Suite Hotel transacting in February for €10 million.

As indicated in our 2023 European Hotel Valuation Index, Sofia hotel values rose by around 4% in both euro and lev. This is still around 17% below 2019 levels. Sofia’s continued recovery prospects lie with its solid corporate domestic market. However, the lack of a leisure base and a strong pipeline are expected to result in a somewhat more protracted RevPAR recovery in the years ahead.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

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Market Supply Growth

Change In Value For Market: (€Euro)

Sofia RevPAR Change (€Euro)

Sofia RevPAR (€Euro)

For more information, please contact:

Sophie Perret, MRICS, MBA Managing Director [email protected] +44 0 2078787722 (w) +44 0 7725781037 (m)