Romanian branded hotels: are they worth the effort?

The presence of branded hotels in Romania remains relatively modest after two decades since the first Sofitel (Accor Hotels) entered the market. Thus, the number of branded hotels increased since 2005 when they were first investigated. The present study investigates the RevPAR of the Romanian hotels that have joined an international brand, either hard (franchising and management contracts) or soft (affiliation), and the hotel operators’ net financial results over a five year period 2012-2016. The results of this exploratory study reveal that the most notorious brands operating in Romania are also those generating the highest RevPAR. Further, the results show that operating a brand outside Bucharest (mainly a hard brand) proves to generate constantly net profit for most of the respective hotel operators, despite a RevPAR below the European average. This finding suggests that the brand notoriety generates an increased occupancy rate. The results indirectly point out that most of the branded hotels’ operators seem to struggle on the crowded Bucharest hotel market enhancing the idea of internal inefficiencies. Given the structure of the Romanian hotel industry, the partnership with an international brand seems to be worth the effort mainly if the brand is appropriately chosen taking into consideration the hotel location and size.