Neptun hotel, which Grand Plaza Hotel SA acquired last year from AVAS, is partially up for sale. The purpose is to raise capital for the renovation and development of 30,000 square metres of land in the seaside resort, reads BUSINESS Magazin.
In March 2007, only one bidder - Grand Plaza Hotel SA, controlled by businessman Gabriel Popoviciu, attended the auction organised by AVAS for the sale of Neptun hotel, which Grand Plaza won with a starting price bid of 7m euros. One year after the auction and following numerous plans to refurbish the 80-room hotel and 30,000 square metres, the company has decided to sell part of the hotel in order to finance the refurbishment of the property.
"We want to raise money from the capital market to finance between 50% and 70% of the hotel's refurbishment," says Tinu Sebesanu, manager of Trend Hospitality consultancy and of Grand Plaza Hotel SA.
Securing this investment would imply the sale of a minority stake in the hotel or a lease back solution.
At least half means a minimum of 10.5m euros, given that refurbishment works are estimated at 21m euros. Out of this amount, 12m are needed to retrofit and renovate the existing structure and then expand it.
The plans entail 200 accommodation units for the future hotel, which means the capacity will more than double.
Another 9m euros are earmarked for the construction and development of the resort. The 30,000 square metres of land the hotel owns were in fact the reason why Tinu Sebesanu and his business partners decided to acquire the hotel.
"The bulk of the hotel's value is its land, due to the fact that it's one of the few locations at the seaside where a resort can be developed," says Tinu Sebesanu.
Hence, Neptun's refurbishment will entail a total sum of almost 30m euros, almost equal to the investments needed to build a hotel of a similar capacity in Bucharest.
How high a yield would a seaside investment generate given that the season only lasts for around four months?
Sebesanu believes the rate at which the investment is recouped will be much slower.
"This is a long-term investment, but considering we'll open the hotel in 2010, maybe the market will be more mature and prepared to pay for quality".
When the hotel is almost finished, Sebesanu intends to find a hotel brand that suits the property. "This will be a 5-star resort brand, specific to seaside properties, but not necessarily part of Wyndham's portfolio (the US hotel chain, officially represented in Romania by Tinu Sebesanu and Trend Hospitality)," says Sebesanu.
Most properties that are launched with Trend Hospitality's assistance are affiliated with Wyndham brands, whilst Ramada has the strongest presence in Romania. However, Sebesanu has also persuaded other hotel groups to associate themselves with hotels in Romania.
Neptun hotel
The hotel, which Grand Plaza Hotel SA acquired last year from AVAS, is partially up for sale in order to raise capital for the renovation and development of 30,000 square metres of land
Money will be raised from the capital market to finance between 50% and 70% of the hotel's refurbishment, put at 21m euro
When the hotel is almost finished, Sebesanu intends to find a hotel brand that suits the property
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