Romania’s hotel market undergoes rapid transformation amid growing demand

Romania’s hotel industry is experiencing a significant transformation, with the market rapidly shifting towards higher quality standards. Despite ongoing challenges such as labor shortages, limited international demand, and short stay durations, the sector shows strong potential for growth, according to Crosspoint Real Estate’s latest Hotel Market Report.

In 2023, the Romanian hotel market nearly returned to pre-pandemic demand levels, and the first half of 2024 has maintained that momentum. The average occupancy rate across all types of accommodation reached 25 percent in the first six months of 2024, with hotels achieving a 33 percent occupancy rate. A total of 11.3 million overnight stays were recorded during this period, 7.6 million of which were in hotels. The upscale segment outperformed the market average, with a national occupancy rate of 59.6 percent and a Revenue Per Available Room (RevPAR) of EUR 53. In Bucharest, these figures were even higher, with a 67 percent occupancy rate and a RevPAR of EUR 69.

However, despite stable demand, the financial performance of Romania’s tourism industry has faced challenges. The gap between inbound and outbound tourism expenditure widened in the first half of 2024, resulting in a negative balance of EUR 2.2 billion, up from EUR 1.7 billion in the same period in 2023. This trend has been attributed, in part, to Romania’s entry into the Schengen Area, which has facilitated increased external tourism.

Looking ahead, 2024 is set to see the addition of 13 key hotels to the Romanian market, including five five-star and six four-star properties. The country is also attracting interest from high-end hotel operators, with renowned brands such as Kempinski, Mondrian, The Crest Collection, and Hyatt expected to enter the market within the next five years. This influx of luxury hotels is anticipated to raise hospitality standards in Romania and draw more international tourists.

The ongoing upgrade in accommodation quality is likely to stimulate further investment in the sector. Across Europe, hotel transactions exceeded EUR 15 billion in the first half of 2024, with a particular focus on 4-star, 5-star, and luxury properties. In Romania, the past 18 months have seen an increase in smaller transactions, particularly those under EUR 5 million, with a focus on assets slated for refurbishments and rebrandings rather than prime properties. This cautious approach from investors highlights a scarcity of high-end assets available for sale, as well as a preference for value-added opportunities.

Despite this cautious approach, hotel investment volume in Romania during the first half of 2024 has already surpassed the total investment for the entire year of 2023, reaching an estimated EUR 29 million. This represents 7 percent of the total investment volume in Romania for the first half of 2024.

As the Romanian hotel market continues to evolve, it is expected that these trends will further solidify the country’s position as a growing destination for both tourists and investors alike.