InterContinental five-star hotel in Bucharest expects its occupancy rate to shrink this year due to the global crisis and tightening domestic competition, with the lower number of guests to be somewhat offset by revenues from event organisation.
"This year, we expect 30% higher revenues from event organisation compared to 2007, and until August we've been on schedule. The increase on the event segment is due to the changes we've operated," said Jonathan Soper, general manager of InterContinental Bucharest. Events contribute 13% to turnover, compared with 10.7% a year ago.
According to Soper, the switch from a franchise to a management contract was beneficial for the hotel. "There are a lot of improvements visible compared with the period when InterContinental was operated under franchise. Nevertheless, it's been very hard for us to change our image and we're still working at it," said Soper.
Moves made at the moment the hotel was transferred under a management contract include the recruitment of some expats in key positions. At the same time, the hotel has better access to the international booking system of the chain.
Practically, the system generates 40% of the hotel's number of customers, while corporate contracts sealed domestically contribute around 20% to the overall number of clients.
Competition has tightened on the five-star hotel segment in Bucharest with the launch of Radisson SAS, with a 424-room capacity.
"This year, the occupancy rate is estimated at 55-60%, slightly down from last year, when it stood at 60%. We're below last year's level because of fiercer competition and the global crisis," said Soper, who added that over 15% of customers are from the US, followed by the United Kingdom and Italy, with 10%. Soper still counts on US customers next year, particularly on the leisure segment.
At present, five-star hotel operators' turnover is largely generated by business travel.
For this year, InterContinental has budgeted turnover similar to last year's figure, of 51.1m RON (15.3m euros).
Renovation works will start next year and are due to end in late 2010. They will entail investments worth around 25m euros. The number of rooms will go up by around 100, to more than 380.
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