We are having a very difficult year when everything has turned dark on such a big display. We have posted decline on both the accommodation and food & beverage segments, everything has been hurt, compared with other years when only one business declined, says businessman Radu Enache, who controls the Continental hotel chain.
"The average occupancy rate of hotels in the Continental chain stood at 51% in the first half compared with 68% during the same time of last year. The volume of conferences, seminars or professional training events accounts for only 30-40% of last year’s levels. Very few such events have been organised even though prices are much lower," says Enache, whose revenues are now 13% lower than in 2008.
Enache’s hotels derive 65-70% from accommodation services, with the rest coming from organising business events and from the food & beverage segment.
Continental Hotels, which employs 960 people, was still in the red after the first six months, having posted 2.8 million-euro losses in 2008. Yet even the companies that own the five-star Radisson and Intercontinental in Bucharest posted 7.6 million–euro (32 million RON) cumulated losses in the first half, 3.7 times higher than in the same time of last year, according to Stock Exchange data.
The hotel market in Bucharest was the most exposed to the drop in tourist traffic, compared with the rest of the country, the businessman believes. Demand for accommodation in hotels in the capital city fell by 10.5% in the first six months of this year compared with the same time of last year, putting a lot of pressure on room rates and on the occupancy rate, according to data from a survey conducted by CB Richard Ellis Eurisko (CBRE) advisory firm. The average rate per room, calculated in euros, fell by 22% in the first half compared with the corresponding period of last year, and occupancy fell by almost 23% the same source says.
"We are prepared with several scenarios entailing different measures. The worst-case scenario, of a super-crisis, takes into account the closing of a hotel as soon as it becomes unprofitable. We will take action right away if need be. This does not mean that the people working there will be laid off, but instead they will be relocated to other hotels," Enache says.
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