Businessman Alin Burcea, owner of Paralela 45, the biggest Romanian-held travel agency on the market, has put out for sale Bucharest's Stil four-star hotel, with a capacity of 30 rooms, for 3.8m euros, close to the price it was acquired for in 2007.
"We need cash both for the travel agency and to finalise the apartment project in Snagov, this is why we decided to sell the hotel," stated Alin Burcea.
Stil hotel, affiliated to Best Western chain in early November 2008, is built on a 2,000-square metre area and has a 30-room capacity, being located in the northern area of Bucharest.
Burcea bought the hotel for 3.5m euros from Romanian businesspeople in 2007; it has almost 300,000 euros in debt. "We subsequently operated investments of as much as 300,000 euros in renovation and fitting works in the wake of its affiliation," he specified.
Alin Burcea also said the hotel, with a 72% occupancy rate in 2007, generated revenues worth 700,000 euros, but in January its occupancy rate followed a downward trend, sliding to 58%. Cristian Manole, a business analyst at the M&A department of Capital Partners investment firm, stated that the main indicators in assessing a hotel are the number of rooms, revenue per room and the debt level.
"If a hotel has an occupancy rate of above 80% and no debts, it can be valued at a figure even five times higher than the level of overall generated revenues," he said.
However, Manole specified valuations differ from one hotel to another and one cannot say exactly what the price per room is. According to him, a room in a four-star hotel is valued at 100,000 euros and can go as high as 200,000 euros, depending on several criteria.
Alin Burcea is not at his first investment in the hotel sector. He also invested 2.3-2.4m euros in an extended-stay hotel in Neptun resort, finished in 2007. Moreover, he plans to build a 60-luxury apartment complex in Snagov and a 20-room villa in the wake of a 12-14m-euro investment.
"This project was suspended due to the lack of money and part of the money to be generated from the sale of Stil hotel will be earmarked for the continuation of the Snagov housing project," he said. Paralela 45 last year reached turnover worth around 52m euros and this year expects 45-48m euros, according to Burcea.
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