Hospitality Industry between Dream and Profitability

3. Romania in the hotel investment market

In the first two articles related to the hospitality industry and hotel investments, we would try to introduce you to this specific and interesting field in the panoply of structural investors (generally investment funds) or individuals (private individuals). In this article, we will deal specifically with Romania’s position up to the presidential elections in the hotel investment market.

As we see every day, humanity is in an extremely complex and dangerous situation. Some even say that the situation today, in the world, resembles more and more the one in 1920. Romania has been on an upward slope for about ten years and continues to develop, despite global economic difficulties. Let’s hope that this time we will not have the.. misfortune that this rise is suddenly interrupted by another global crisis, in order to still have the time necessary to align ourselves with a more decent standard of living.

In this difficult context, we are, however, witnessing a significant development of investments in the hotel sector. Many have hoped for more than 30 years that tourism would be the industry that would grow the most. However, tourism “grows with the country”. You cannot have a sustainable development of tourism without a development of infrastructure, as well as of the socio-economic environment. Investments in the hotel industry are directly linked to the development of tourism. Improving the tourism infrastructure is essential for increasing the level of competitiveness of the Romanian tourism industry on the international tourism map, and a diversified portfolio of investment projects will increase Romania’s chance to perform within such a competitive sector at a global level.

The development of tourism infrastructure and the promotion of heritage led to approximately 2.8 million foreign tourists arriving in tourist reception structures in 2018, 2.7 million in 2019, over 454 thousand in 2020 (pandemic year), 879 thousand in 2021, 1.7 million in 2022 and 2.1 million foreign tourists in 2023 (National Institute of Statistics (INS), “Tourist arrivals in tourist reception structures”, TEMPO-Online data series, accessed in April 2024, .- figures probably incomplete, as the total capture of data on all tourist infrastructures is still deficient).

At the same time, over 10 million Romanian tourists arrived in tourist reception facilities in 2018, 10.7 million in 2019, 5.9 million in 2020, 9.3 million in 2021, 10.9 million in 2022 and 11.8 million Romanian tourists in 2023.

The Ministry of Economy, Entrepreneurship and Tourism (META) is implementing a program of financial support for local public administration authorities (at county, municipality, city, commune level), in addition to their own resources, for the financing of investment projects in tourism infrastructure (MEATA: “Report on the evolution of tourism in Romania during 2018–2023”). The establishment (so far timid and delayed) of destination management organizations (DMOs) will give a new impetus to a better organization of resources, and the sustained activity of the FIHR profile federation represents a new asset of this significant journey.

The development of tourism infrastructure has attracted increased public and private investments in the field of tourism, through the development of tourist reception structures. If we look at the late but welcome start of the rehabilitation of some infrastructures and the creation of new facilities, such as gondolas and ski slopes (such as in Borșa, Câmpulung Moldovenesc, Voineasa), as well as by the start of the rehabilitation of basic structures in spa and health tourism (Borsec, Felix Oradea, Covasna, etc.), we can have a more optimistic vision that something is finally happening. This development of infrastructure contributes greatly to the increase in the number of Romanian and foreign tourists. By county, the number of tourist arrivals recorded higher values, especially in Constanța, Bucharest and Brașov. More tourists came from countries such as Germany, Italy and Israel. The arrivals of foreign visitors to Romania, registered at border points in the first eight months, were 9.396 million people, 3.005 million of them coming from European Union countries (according to MEATA).

Regarding investment projects in the hotel industry, we have been witnessing for several years a significant increase in the interest of global hotel groups in taking over management or franchise of hotel properties in Romania. The Accor group has increased its expansion with over ten new properties in the last two years through brands such as Mercure, Ibis, Swissotel (in Bucharest, Sibiu, Pitești, Brașov, etc.), the Marriott group with brands such as Courtyard and Autograf (Cluj-Napoca, Sibiu, Arad, etc.) IHG with InterContinental and Indigo (Bucharest and Satu Mare), the Wyndham group which continues its expansion in Romania, especially with the Ramada brand, Hilton with the Hilton and Hampton brands (in Fântânele, Brașov, etc.) and the entry into the Romanian market of the American group Hyatt in Brașov (Aro Palace). These are just a few non-exhaustive examples of the interest of these groups in Romania.

What is generally not known by those who are not specialists is the fact that these groups do not invest. Investors are in most cases Romanian companies such as Transilvania Investment Alliance, Forty, One United, Monarc, Julius Meinl and many others with the important support of creditors such as Banca Transilvania. Despite all the efforts of the Institute of Statistics and the authorities, we cannot yet have a clear picture of this sustained development, because it is difficult to accumulate data from all operators in the field. However, we have data from the specialized press and from meetings between hoteliers, investors and brands at important conferences such as the recent Romanian Spa and Wellness Tourism Congress (https://despreSPA.ro/) or as we will continue at the international INVEST summit (www.inv-est.edu) from November 19-20 this year.

The closest possible collaboration between the private, public and professional associations, as well as better information for investors on the potential of the hotel market, are the foundations for the continued sustained development of the tourism infrastructure in Romania, whose market is still far from reaching its maximum potential. This is not bad news, however. On the contrary, it represents exciting new opportunities for real estate investors who can thus diversify their investment strategy.

In recent years, Romania has taken important steps towards developing its tourism infrastructure, marking a remarkable evolution in a sector essential for its international competitiveness. If in the past Romania was often perceived as a destination with untapped tourism potential, today it is starting to attract more and more attention in the region, both through public efforts and private initiatives. Each modernized hotel, each opened slope, each expanded airport contributes to the image of a destination that is transforming.

The number of foreign tourists is in a constant recovery trend after the critical period of the pandemic, and domestic tourism is reaching record figures. This growth demonstrates that the infrastructure and attractiveness of destinations are essential not only for foreign tourists, but also for Romanian citizens who choose to spend their holidays in the country. The case of resorts such as Borșa or Voineasa, which have experienced a veritable renaissance thanks to investments in leisure infrastructure, is illustrative of this phenomenon.

Infrastructure development is not just about physical buildings or facilities. It is about functioning ecosystems — about connectivity between airports and resorts, about easy access, about integrated services and about the coherence of the tourist offer. In this sense, strategic projects such as the modernization of the Brașov-Ghimbav International Airport, the development of the spa centers in Borsec, Felix or the modernization of cable transport in mountain resorts are investments that create added value in the chain for the entire sector.

One aspect worth highlighting is the increasingly active role of private investors in expanding and professionalizing the hotel network. The entry of renowned international brands – such as Marriott, Hilton, Radisson or Hyatt – into large cities and even secondary destinations in Romania indicates an increased confidence in the country’s tourism potential. These brands bring not only financial investments, but also operational know-how, international service standards and a global promotional force that contributes to increasing Romania’s visibility on the international tourism map. However, tourism development is not just about modern rooms and efficient gondola lifts. Hospitality is essentially based on people. Without real investments in professional education, in the development of skills and in the attractiveness of hospitality careers, Romania risks creating modern infrastructure, but offering services below tourists’ expectations. It is essential that professional training is treated with the same seriousness as infrastructure. Dual education programs, partnerships between hotel schools and private operators, specialization courses for hotel and restaurant staff – all of these must become national priorities.

Romania has a real chance to become one of the key destinations in Central and Eastern Europe. It has spectacular mountains, coastline, traditional spa resorts, authentic villages and a thriving culinary culture. But all of this must be supported by quality services, infrastructure adapted to modern requirements and an educated and motivated workforce. Without this balance, we risk losing the immense potential we have.

Investments in tourism are not just investments in buildings, but in image, in communities and in trust. And the future of Romanian hospitality depends, more than ever, on how these investments are thought out in an integrated, sustainable and people-centered way.