While the average hotel occupancy level across the CEE-6 capitals – including Bucharest, Bratislava, Budapest, Prague, Sofia, and Warsaw – in 2023 lagged 2019 by 9%, the ADR surpassed it by 23%, resulting in a 12% RevPAR growth, according to data from the real estate consulting company Cushman & Wakefield. The strongest increase was recorded in Warsaw and Budapest. Moreover, despite the lingering impact of the pandemic, the hotel market in Bucharest is showing resilience as well.
In 2023, Bucharest’s hoteliers managed to catch up with 2019 RevPAR values, primarily due to the boost in ADR. The positive trajectory of key performance indicators (KPIs) and the promising investment announcements for the coming years are poised to encourage both Romanian and foreign investors to consider Bucharest’s hotel market for capital placement.
While the occupancy rate in Bucharest increased by 5% compared to last year, it remains 10% below the 2019 level. This can be partly attributed to the fact that the volume of overnight stays by foreign tourists has not fully recovered to pre-pandemic levels. Notably, the months of January and February saw the highest increases in occupancy rates compared to the same period in 2022. The George Enescu Festival in September significantly contributed to hotel occupancy, while the increases recorded in June and October are attributed to the high season months. For the remaining period, hotels experienced lower occupancy compared to 2022.
Oxford Economics estimates that the demand for hotels in Bucharest will surpass 2019 levels by approximately 6% by 2025. This trend driven by the recovery in the number of overnight stays by local tourists, which has already reached pre-pandemic 2019 levels during 2023
Simultaneously, the ADR of hotels in Bucharest was up 12% compared to 2022 and 2019 level. Notably, this growth occurred despite the VAT rate increase for the HORECA industry from 5% to 9% last year, highlighting the market’s resilience to fiscal changes as well as the strategic focus of hoteliers on rates.
The combined effect of rising ADR and improved occupancy rates resulted in an impressive 18% enhancement in RevPAR for Bucharest, surpassing the 2022 figures and reaching the pre-pandemic 2019 levels. This dynamic aligns with the broader recovery trend observed across all capitals of the CEE-6 region.
Sevda Cadir, Senior Hospitality Consultant in CEE & SEE, Cushman & Wakefield: “The Bucharest hotel market has demonstrated resilience despite geopolitical challenges. The limited supply, as well as the anti-inflationary nature of the hotel industry and the improvement of the supply - both through the development of superior class hotels (midscale - luxury) and through the renovation of existing ones - has contributed to achieving 2019 RevPAR levels in 2023. Looking ahead, while ADR growth may moderate, occupancy rates are expected to continue their upward trajectory.”
The hotel investment activity witnessed a 18% decline in volume across the CEE-6 (Romania, Slovakia, Hungary, Czech Republic, Bulgaria, Poland) in 2023, driven by rising financing costs and economic/geopolitical challenges. International buyers have significantly increased their investment volume, rising by 197% compared to 2022. This trend underscores the growing attractiveness of the region for foreign capital. Looking ahead to 2024, expectations are optimistic as several transactions are already in negotiation.
The increase in financing costs during 2023, exerted pressure on hotel property values throughout the CEE region. However, this impact was partially offset by the growth in operational revenues. Notably, yield decompression is ranging from +25 bps in Warsaw to +75 bps in Bratislava and Sofia, compared to 2022. The anticipated moderation of interest rates in 2024 is expected to contribute to the yield stabilization.
In 2023, Romania recorded a total transaction volume of €28.2 million, marking a 67% decrease compared to the record-breaking year of 2022 (influenced by two pan-European portfolio transactions). Notably, all buyers in 2023 were local investors.
The yields in the capital city climbed by 50 percentage points in 2023 compared to last year, reaching 8.25%.
David Nath, Head of Hospitality CEE & SEE, Cushman & Wakefield “As performance in the hotel sector improves, both domestic and regional investors are showing renewed interest in Romanian hotels. However, they are approaching with caution due to the high level of uncertainty and the associated high cost of capital. Our market analysis suggests that several historical buildings in the central area of Bucharest are likely to be transacted in the upcoming year.”
In 2023, 20 hotels with a total of 2,658 rooms opened in CEE-6 capitals, including 732 rooms reopening after rebranding or refurbishment. Additional supply includes Ibis, Tribe, Dorothea Autograph Collection in Budapest, and Zleep Hotel in Prague. While Intercontinental Palace Athenee Bucharest and Almanac X in Prague reopened after renovations. In 2024, 22 hotels with 2,570 rooms are expected to open, revealing only 2.1% supply increase across entire CEE-6 capitals (vs. 2023).
Over the past few years, the hotel market in Bucharest has experienced a moderate annual average growth in new offerings, at 0.9% between 2019 and 2023. This modest trend was primarily influenced by the cancellation of PUZ (Urban Zoning Plans).
In 2024, two new hotels with a total 90 rooms will be opened, including the Corinthia Grand Hotel Boulevard. Between 2024 and 2025, an estimated average annual growth rate of 4.1% in the number of rooms is expected.
Cushman & Wakefield Echinox is a leading real estate company on the local market and the exclusive affiliate of Cushman & Wakefield in Romania, owned and operated independently, with a team of over 80 professionals and collaborators offering a full range of services to investors, developers, owners and tenants. For more information, visit www.cwechinox.com
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.
