Cushman & Wakefield: The Bucharest hotel market is experiencing the highest supply growth among the CEE capitals between 2024 and 2026

The demand on the Bucharest hotel market in the first half of the year compared to the same period of 2023 had experience an increase of 3 percent, however, it remained below the 2019 level, according to data from the real estate consulting company Cushman & Wakefield.

Moving forward, according to Oxford Economics, Bucharest is projected to fully recover and exceed 2019 levels of overnight stays in paid accommodations by 3 percent by 2025. This growth will be primarily driven by an increase in domestic overnight stays.

Meanwhile, the CEE-6 capitals experienced a 0.6 percent increase in demand in the first half of 2024 compared to the first half of 2019, while supply grew by 7.7 percent over the same period. This positive trend is driven by the impressive recovery of demand in Warsaw, which saw an approximate 17 percent increase.

Between 2024 and 2026, Bucharest will experience (Bucharest, Warsaw, Prague, Bratislava, Budapest and Sofia) with an approximate 5.8 percent increase, adding around 2,400 rooms. This growth outpaces the CEE-6 capitals’ average growth of 3.2 percent.

Several exciting new brands are entering the Bucharest market, including Corinthia, Swissotel, Mondrian, Adagio, Handwritten Collection, and The Crest Collection. Additionally, existing players like Radisson Blu Bucharest will reintroduce renovated rooms in the coming years.

This influx of new supply will help diversify and enhance the hotel offerings in Bucharest’s city center. However, it is expected that the increased competitiveness may temporarily hinder the market performance recovery.

As for the hotel market performance, Bucharest’s RevPAR grew by 9.2 percent in H1 2024 compared to H1 2023, surpassing both the European and CEE-6 capitals average. This growth was primarily driven by a 5.6 percent increase in ADR compared to the first half of 2023, despite the VAT increase in January 2023.

Although Bucharest’s ADR in H1 2024 has increased by 15.7 percent compared to H1 2019, this growth is still below the rate of inflation. This is due to the slow recovery of demand combined with an increase in room supply during the same period.

Occupancy in Bucharest grew by 3.4 percent in H1 2024 compared to H1 2023, partly driven by various events, such as the Coldplay concert in June. Further occupancy recovery is expected going forward, supported by Romania joining the Air Schengen Area in March 2024.

“Bucharest has faced numerous challenges in recent years; however, the city’s hotel performance has shown a healthy recovery, with RevPAR growth in H1 2024 surpassing the European average. While the significant 5.8 percent increase in supply may temper this growth, the influx of several prestigious brands is set to enhance Bucharest’s hospitality offerings, positioning the city for a bright future in the hotel industry,” explains Sevda Cadir, Associate Director Cushman & Wakefield.