Bucharest five-star hotel Crowne Plaza, controlled by businessman George Copos, expects a 48% gross profit margin this year, although seven-month figures show the hotel is not on schedule to reach the 5% growth target in terms of this year's forecast revenues. Crowne Plaza aims to reach turnover worth around 11m euros in 2008.
"In the first seven months, turnover amounted to 21.8m RON (around 6m euros), below this year's estimates. The market has been slower this year, rising oil prices also hurt us, people travelled less and holiday periods were shorter. However, the budgeted profit margin can be kept until yearend mainly through efficient expense management," said Mioara Gheorghe, marketing manager at Crowne Plaza.
In the first half, the hotel's occupancy rate reached 63%, slightly below last year's level, with the decline being also triggered by the shrinking number of tourists. "The leisure segment was slightly down from last year despite the extremely competitive rates," Gheorghe added. According to her, this year the hotel raised its rates by 5-10%, but does not plan any more hikes.
In general, most five-star hotels in Bucharest are affected by the low level of leisure traffic, which yields a lower occupancy rate at weekends and in the summer. Over 80% of hotel owners' revenues come from business travel.
Crowne Plaza is located in the northern area of Bucharest, where the four-star Ramada Plaza hotel, owned by businessman Gabriel Popoviciu, also opened this year.
At the same time, Radisson SAS on Calea Victoriei also entered the five-star hotel segment this year. According to Crowne Plaza representatives, the lower-than-expected figures were not due to competition.
At the same time, amid tightening competition, hotel owners do not foresee lower rates for the coming period.
"I don't believe rates will fall in the coming period as a general strategy, but each hotel will certainly have more flexibility in setting rates for high business potential customers," said Gheorghe, who added that the domestic hotel market would settle and register more modest growth rates.
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