Intercontinental Hotel, the five-star located in the heart of Bucharest, has been appraised at 70.7 million euros by DTZ Echinox. The land alone on which the hotel sits is worth 30 million euros, reveals the annual report of Compania Hoteliera Intercontinental Romania.
This is the first direct evaluation of a five-star hotel in the capital city - the value set by DTZ Echinox is almost twice as high as the market capitalisation of the Intercontinental hotel company (RCHI), 36.7 million euros.
The shares of the company closed at 0.16 RON on Wednesday, down 4.14% against the previous day.
The price per square metre of the land (which totals 6,000 square metres) on which Intercontinental sits therefore stands at more than 5,000 euros. As a result, the Universitate area, Bucharest's most central point, is maybe the most expensive area in the city. However, no relevant deals have been concluded yet that would indicate the exact level of the market.
Hilton Hotel (located on Calea Victoriei) was recently valued at more than 100 million euros by its owner, George Copos, which places the value of one room at around 370,000 euros. The Intercontinental Hotel now has 238 rooms, which means one room could be worth 250,000 euros.
The company will expand its capacity by 380 rooms by the end of 2009, in the wake of a 20 million-euro investment. A number of deals that involved hotels were closed last year, mostly for four-star hotels. The most important transactions included the sale of Golden Tulip Sky Gate in Otopeni for some 20 million euros, and of Golden Tulip on Calea Victoriei for 12 million euros.
Unlike the other five-star hotels on the market, such as Marriott, Crowne Plaza and Howard Johnson, which operate with 50% profit margins, Intercontinental Hotel has ended the last few years in the red. Although it did post more than 6 million euros in operating income, and 15.2 million euros in turnover in 2007, according to the report of the Board of Directors, the balance sheet reveals that the company posted 6 million-euro losses last year.
At the same time, the occupancy rate was 60.3% lower than the budgeted 65% and also lower than the average occupancy of the other five-star hotels on the market, which exceeded 70%. The increase in revenues in RON by 11% was helped by the increase in the revenue per room from 78 euros to 94 euros.
According to the latest available information, the main shareholder of the hotel company is RHIC Holding, registered in Luxembourg (49.12%), which is run by Swiss businessmen. The other shareholders are Lido, 11.8% and Finmacht, 5.1%. Businessman Viorel Paunescu, Anvio International Consulting and Anvio International Company, which held 12.4%, sold their share in deals on the RASDAQ market in June. Intercontinental moved from a management contract to a franchise contract in 2007, which practically excludes owner interference in the running of the hotel.
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