Romanian Branded Hotels: Are They Worth The Effort?

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Theoretical and Applied EconomicseVolume XXV (2018), No. 4(617), Winter, pp. 39-50Romanian branded hotels:are they worth the effort?Cornelia POPBabes-Bolyai University Cluj-Napoca, [email protected] COROSBabes-Bolyai University Cluj-Napoca, [email protected] GEORGESCUNational University of Political Studies and Public Administration, Bucharest, a.euMaria BONEABabes-Bolyai University Cluj-Napoca, [email protected] The presence of branded hotels in Romania remains relatively modest after two decadessince the first Sofitel (Accor Hotels) entered the market. Thus, the number of branded hotelsincreased since 2005 when they were first investigated. The present study investigates the RevPARof the Romanian hotels that have joined an international brand, either hard (franchising andmanagement contracts) or soft (affiliation), and the hotel operators’ net financial results over a fiveyear period 2012-2016. The results of this exploratory study reveal that the most notorious brandsoperating in Romania are also those generating the highest RevPAR. Further, the results show thatoperating a brand outside Bucharest (mainly a hard brand) proves to generate constantly net profitfor most of the respective hotel operators, despite a RevPAR below the European average. Thisfinding suggests that the brand notoriety generates an increased occupancy rate. The resultsindirectly point out that most of the branded hotels’ operators seem to struggle on the crowdedBucharest hotel market enhancing the idea of internal inefficiencies. Given the structure of theRomanian hotel industry, the partnership with an international brand seems to be worth the effortmainly if the brand is appropriately chosen taking into consideration the hotel location and size.Keywords: hotel, international brand, affiliation, RevPAR, financial results.JEL Classification: C46, L83, Z32.

40Cornelia Pop, Monica-Maria Coros, Maria-Andrada Georgescu, Maria Bonea1. Introduction and literature reviewIndividually and/or family owned hotel properties or groups are increasingly facing thefierce competition of established hotel groups’ brands (Holverson and Revaz, 2006) andalso the threat of alternative forms of accommodation like (Ivanova and Ivanov, 2015). Hence, the necessity for these hotels toestablish networks, set up alliances and/or to join the international (hard and soft) hotelbrands through franchising, management contract or affiliation have been suggested asways to overcome the current challenges of the hotel market (Holverson and Revaz, 2006;Ivanova and Ivanov, 2015). Academic studies have proven better performance (e.g. higherrevenue, occupancy rate) for the hotels operating under an international hotel brand due tothe international hotel groups’ increased capacity to adjust to and to comply with the rapidchanges of the economic environment (Hanson et al., 2009; O’Neill and Carlbaeck, 2011;Enz et al., 2014; Silva et al., 2017). Recent studies revealed also the positive influence ofinternational hotel brands on destination attractiveness and competitiveness (Tsai et al.,2009; Assaf and Josiassen, 2012; Ivanov and Ivanova, 2016).Romania has a similar hotel market to the European fragmented structure, dominated byindividually and/or family owned hotels or hotel groups, documented by Pop (2014) alsoshowing the relatively low profile of the Romanian hotel industry. The penetration ofinternational hotel brands on the Romanian market was first investigated by Pop et al.(2007) and further confirmed by Coros and Negrusa (2014). Few studies on the presenceof international hotel brands in Romania focused on these chains’ strategic options topenetrate the Romanian market (Cosma et al., 2014). Only one study could be found (Doduand Patrichi, 2014) showing the RevPAR (revenue per available room) for all Bucharesthotels in 2008, 2012 and 2013.The present study investigates the RevPAR of the Romanian hotels that have joined aninternational brand, either hard or soft, and the hotel operators’ net financial results over afive year period 2012-2016. This information might help to understand one of the reasonsof the Romanian hotels’ potential lack of interest towards the partnership with aninternational brand. It also creates a starting point for a further comparative study regardingthe performance of affiliated and independent domestic hotels.2. International brands on the Romanian hotel marketThe first international hotel brand penetrating the Romanian hotel market was Sofitel(Accor) in 1995 (Pop et al. 2007). It was followed by Holiday Inn (InterContinental HotelGroup) in 1998 with a hotel on Prahova Valley, which exited the market in 2003 due to theoperator’s bankruptcy, leading to the hotel’s closure (Neagu, 2003). As of 2005, twelveinternational brands penetrated the Romanian market, affiliating 22 hotels (Table 1). Adecade later, the number of affiliated hotels doubled as well as the number of rooms. Table1 includes the hard (franchising and management contract) and the soft (affiliation) brandspresent on the Romanian hotel market. Thus, Table 1 does not capture the changes and

Romanian branded hotels: are they worth the effort?41exits which took place between 2006 and 2015 (e.g. Tulip Inn brand which between 2006and 2012 included two hotels: one near Cluj-Napoca and one in Bucharest). Also, Table 1does not include the branded hotels that could not be found in the official database foraccommodation facilities offered by the Romanian Ministry of Tourism. This approach waschosen in order to follow the same methodology of Pop et al. (2007) and to perform thecalculations for the international brand penetration rate.The international brand penetration rate on the Romanian hotel market registered aninsignificant growth when the number of hotels is considered: from 2.22% in 2005 (Pop etal., 2007) to 2.88% in 2016. When the number of rooms is taken into account, the samerate shows an increase from 4.19% in 2005 (Pop et al., 2007) to 7.64% in 2016, confirmedby the data presented in Table 1 and suggesting that mainly the large hotels preferred to beoperated under an international brand umbrella. Bucharest, Romania’s capital, continues toconcentrate the majority of the branded hotels, thus its importance decreased from 59.1%in 2005 to 51.0% of the number of branded hotels in 2016 and from 74.3% in 2005 to62.6% in 2016, when the number of rooms is considered. The dominant position ofBucharest is reflected also by the penetration rate evolution from 15.12% of the hotels and36.78% of the rooms in 2005 (Pop et al., 2007) to 17.73%, respectively 45.20% in 2016showing the preference of international brands for the Romanian capital and also theenhanced openness of Bucharest hotel operators towards brand affiliation. Theconcentration of international brands in Bucharest confirms the importance of the hotel’slocation for these brands as documented by Holverson and Revaz (2006) and Ivanova andInavnov (2015).Table 1. International hotel groups in RomaniaGroup/2005BrandsHotelsRoomsAmerican hotel groups and voluntary hotel chains/consortiaWyndham Hotel2396(Howard Johnson & Ramada)Hilton Hotels & Resorts11272(Hilton & DoubleTree byHiltonMarriott Hotels1402(JW Marriott)Starwood Hotels & Resorts(Sheraton)Best Western27731Total American111,801European hotel groups and voluntary hotel chains/consortiaInterContinental Hotels Group2351(InterContinental & CrownePlaza)Accor4770(Sofitel, Pullman, Novotel,Mercure & Ibis)Louvre Hotel Group2153(Golden Tulip)NH Hotels178(NH Bucharest)Danubius Hotels1160(Sovata and 2706243493,484242171,33543431762261Howard Johnson exited in 2013 and wasreplaced by Sheraton in August 2015Sofitel was replaced by Pullman since2010/2011

42Group/BrandsHunguest Hotels(Fenyo Hotel)K K Hotels(K K Elisabeta Hotel)Europa Group Hotels(Europa Royale)Vienna House(Angelo Airport)The Rezidor Hotel GroupRadisson BluPark Inn by RadissonTop International Hotels(Top CountryLineZenith Hotel)Aqualis Hotels(Premier Palace)Minotel(Floris)Total European3TotalCornelia Pop, Monica-Maria Coros, Maria-Andrada Georgescu, Maria ions--166--192A voluntary hotel chain with no otherbrandsInitially an Austrian hotel group; it movedits headquarters to LondonA hotel group based in Lithuania--1177Formerly Golden Tulip Sky 4,0067,490A German hotel group; the hotel is theformer Golden Tulip Mamaia (previouslyFantasy Beach)Aqualis Hotels is part of Hotusa Hotels(Spain)A formerly voluntary hotel chain, currentlya consortium, with no other brandsNotes: (1) Hampton by Hilton entered the Romanian market in 2014 at Cluj-Napoca, thus the Cluj hotel is notincluded in the official database; therefore, it was not taken into consideration for this study. (2) According tothe Best Western official website, 8 hotels are affiliated in Romania. However, the main reservation websitedoes not list the Best Western Ambasador in Timisoara while Best Western Plus Briston Bucharest is notincluded in the official database. (3) Another hotel, from Cluj-Napoca, is integrated in the Italian Select HotelCollection, a family owned group. There is no clear reason why the hotel is not registered in the official databaseas it was open and receives guests since 2011.Sources: For 2005, Pop et al. (2007). For 2016 cross information was used between the hotels on the groups’websites as of December 31, 2016 and the hotels registered in the Authority of Tourism official database.3. Data and methodologyThe present study is an exploratory one, calculating the RevPAR of Romanian brandedhotels and comparing it with the European average in order to determine one of the causesthat might influence the low brand penetration rate on the Romanian hotel market.Data used in the present study come from the Romanian Ministry of Tourism/Nationalauthority for Tourism (MT/NAT) databases (2012-2016), the information available on theidentified international brands’ websites as of December 2016 and the dedicated sectionfor enterprises of the Romanian Ministry of Public Finance (MPF) for the 2012-2016 timespan. The interval 2012-2016 covers the current post global crisis period and reveals thebranded hotels operators’ performance in a recovering economic environment.Of the 49 identified hotels, included in the official database, 9 were eliminated for thefollowing reasons:i) they started operating under the international brand umbrella between 2014 and 2016(Sheraton Bucharest, Ramada Craiova, DoubleTree by Hilton Sighisoara, MercureBucharest, Best Western Parc Sf. Gheorghe, Danubius Heath & Spa Resort Bradet inSovata, Park Inn by Radisson Bucharest, and Top Country Line Zenith Hotel Mamaia);ii) unavailable financial information for Best Western Silva Hotel Sibiu.

Romanian branded hotels: are they worth the effort?43The present study uses an indirect method to determine the RevPAR utilizing the totalincome of the branded hotels’ operators as reported by the Romanian Ministry of Finance.This calculation method is adapted to the limited set of information provided by themajority of the Romanian hotel operators (except for those listed at the Bucharest StockExchange for which higher standards of transparency are required) which make almostimpossible to determine how much of the operator’s total income is provided byaccommodation and respectively by food & beverage. Nonetheless, the quality of ahotel’s restaurant(s) and bar(s) can enhance the RevPAR by inciting hotel guests to spendtheir money within the hotel grounds. The financial income, a component of the totalincome, offsets some of the losses incurred by the operator and, therefore, indirectlycontributes to the hotel’s RevPAR. An annual average RevPAR was calculated for everybranded hotel. Further, a 5 year simple average was calculated for each branded hotel andafterwards an average for each brand, where more than one hotel is operated under aninternational brand umbrella. At operator level, a 5 year simple average was calculatedfor the net profit/loss and further an average per brand was calculated based on thenumber of operators.Given the announced business portfolio of the hotel operators, the total income wasadjusted in the cases of JW Marriott Hotel and Pullman Hotel operators where only 65%and respectively 70% of the total income was taken into consideration for the hotelactivity. Both operators (Societatea Companiilor Hoteliere Grand SRL and World TradeCenter Bucuresti SA) declare their main activity as hotel business (NACE: 5510), whileboth offer for rent offices and other facilities and provide related services. Thepercentages used for the calculations were confirmed by informal discussions. A similaradjustment was made in the case of the Golden Tulip hotels in Cluj-Napoca and Sibiu,the hotels’ operator (Pritax Invest SRL) declaring another activity than hotels as mainincome generator, therefore the percentage applied in this case was of 49% of the totalincome, also confirmed by informal discussions. Further, in the cases where the brandedhotels were part of a hotel group, the total income was adjusted with the importance ofthe respective hotel in the group’s room portfolio (Ramada Parc and Ramada Plaza ofParc Hotels SA, Athenee Palace Hilton and Crowne Plaza of Ana Hotels SA, Ibis hotelsof Continental Hotels SA, Radisson Blu of Bucuresti Turism SA for 2016, Golden Tuliphotels in Cluj-Napoca and Sibiu of Pritax Invest SRL, DoubleTree by Hilton Oradea ofSIF Hoteluri SA for 2016, and Danubius Health & Spa Sovata of Danubius).The classic method of RevPAR calculation which multiplies the ADR (average daily rate)with the occupancy rate was not applied. This choice was based on the available data, theimpossibility to redo past ADRs for 2012-2015, the unavailability of occupancy rates athotel level and the reluctance of the investigated hotels to reveal such data.

44Cornelia Pop, Monica-Maria Coros, Maria-Andrada Georgescu, Maria Bonea4. Findings and discussionsThe study includes 40 hotels operated by 34 enterprises. The brands under which thesehotels are operated are luxury and upper upscale brands (JW Marriott, InterContinental,Radisson Blu), upscale (Hilton, DoubleTree by Hilton, Crowne Plaza, Pullman, GoldenTulip, K K), upper midscale (Ramada, Novotel, Danubius, Vienna House, NH Hotels,Europa Group, Aqualis) and economy (Hunguest, Minotel, Ibis and Best Western). Thefollowing can be considered soft brands given the background of their providers: BestWestern, Vienna House, Aqualis (Hotusa), Hunguest and Minotel.All 40 hotels are ranked according to the Romanian classification system at 3 stars (3*)or higher; thus, 7 hotels are classified at 3* (branded under Ibis, Hunguest, Minotel andRamada), 28 hotels classified at 4*, and 5 hotels classified at 5* (branded underInterContinental, JW Marriott, Radisson, Hilton, DoubleTree by Hilton). Using the scaleproposed by Bohdanowicz (2005), only three hotels of the 40 under scrutiny are smallhotels of less than 50 rooms and they are operated under Best Western (2) and Minotel.Most of the hotels, 21, are medium-sized (having 50 to 149 rooms) and are operatedmainly under Ramada, Hilton, DoubleTree by Hilton and Golden Tulip. The remaining16 hotels are large (over 150 rooms), are mainly operated under the luxury brands andsome under the upper midscale.Of the 20 brands under which the 40 hotels are operated, only 9 include hotels outsideBucharest (Table 5). Of these, three brands (Danubius, Hunguest and Minotel) operateonly outside Bucharest.The highest RevPAR is generated by the luxury and upper upscale brands, overpassingthe European average (Table 2). Within this category, except for Aqualis (Hotusa), theremainders are all hard brands. Three of the upscale brands and two of the upper midscalebrans also show a RevPAR higher than the average at European level. The branded hotelswith a RevPAR above the European average include four hotels classified at 5* and fivehotels classified at 4*. Excepting two medium size hotels affiliated to Hilton, respectivelyAqualis, the remaining above average RevPAR hotels are large, between 200 and 490rooms. The remaining mix of 12 upscale, upper midscale and economy brands exhibit aRevPAR below the average, including four of the five soft brands. This last groupincludes one hotel classified at 5* (DoubleTree Oradea), all the 3* hotels and theremaining 23 hotels classified at 4*. The size of the hotels within this category is mixed,including all three small size hotels, the majority of the medium size hotels and theremaining large hotels.This situation points towards two educated deductions: a relatively low occupancy ratefor the hotels operated under the respective brands and low room prices, which mightgenerate low ADRs given the dominating domestic tourist profile. The average lack ofprofitability in 11 cases of the 20 under scrutiny and the low profitability (less than 1million RON) in other 4 cases also suggests inefficiencies of the enterprises operatingthe respective hotels.

Romanian branded hotels: are they worth the effort?45Table 2. Ranking by RevPAR of hotel brands operating in RomaniaHotel brandRevPAR (RON)(2012-2016 average)Radisson BluJW MarriottInterContinentalNovotelHiltonCrowne PlazaAqualisPullmanEuropa GroupRamadaDanubiusVienna HouseDoubleTree by Hilton752650527450428399367356307247230229217No. of hotels,classification andaverage rooms/hotel1, 5*, 4861, 5*, 4021, 5*, 2571, 4*, 2582, 5*(1); 4*(1), 1931, 4*, 1641, 4*, 821, 4*, 2031, 4*, 9210, 4* (9); 3*(1), 1591, 4*, 1681, 4*, 1772, 5*(1); 4*(1), 118NHGolden Tulip2042031, 4*, 764, 4* (all), 86K KHunguestIbisBest WesternMinotelEuropean RevPARaverage3201178162148753291, 4*, 661, 3*, 654, 3* (all), 1904, 4* (all), 671, 3*, 36Number of operatorsand NACE ofoperators11, 55101, 55101, 55101, 55102, 55101, 551021, 55101, 55101, 55109, 55101, 55101, 55102; 5510 (1); 5510&5630(1)1, 55103, 5510 (2);4730 (1)1, 55101, 55101, 55104, 55101, 5510Operators’ netfinancial result 20122016 average 944(43,212)874,174(13,678,572)149,435180,644Notes: (1) In Romania, the large majority of the hotel operators are also the respective hotels’ owners eitherdirectly or through another enterprise which is under the operator’s full control. (2) Crowne Plaza has the sameoperator as Athenee Palace Hilton. (3) The European average RevPAR was calculated for the period 2012-2016based on: Winkle (2013) for 2012 and 2013; Horwath HTL (2015) for 2014 and Rossmann (2016) for 2015and 2016. An average of 74 resulted, further converted into RON using an average EUR/RON conversion rateof 4.4516, calculated based on Eurostat (2017) data.Sources: authors' calculations based on MT/NAT (2012-2016) and MPF (2017) dataOf the 34 identified operators, 94.12% reported on the MPF dedicated pages their mainactivity as being: hotels and similar accommodations (NACE code 5510). Only one hoteloperator for the two Golden Tulip hotels outside Bucharest declared another main activity(NACE code 4730), while the operator of DoubleTree in Oradea declared mixed activities:hotels and similar accommodations in one year and for 4 years beverage serving activities(NACE code 5630).The majority of the 34 enterprises, 88.24%, operate one branded hotel each. OnlyContinental Hotels SA, one of the few Romanian hotel groups identified by Pop (2014),operates the four Ibis hotels. Another hotel group, Ana Hotels SA (Pop, 2014), operatesother 2 branded hotels: Athenee Palace Hilton and Crowne Plaza, both in Bucharest. Twomore enterprises operate two branded hotels each, Pritax Invest SRL with Golden Tuliphotels in Sibiu and Cluj-Napoca, and Parc Hotels SA with two Ramada hotels (RamadaParc and Ramada Plaza) in Bucharest.

46Cornelia Pop, Monica-Maria Coros, Maria-Andrada Georgescu, Maria BoneaContinental Hotels SA is the only operator which has hotels both in and outside Bucharest.Of the remaining 33 operators, 14 operate branded hotels outside Bucharest, while 19operate branded hotels in Bucharest or nearby (Otopeni), assimilated to Bucharest.Nonetheless, the averages used in Table 2 hide a lot of diversity among the Romanianoperators of branded hotels showing 11 cases with average negative financial results. Infact, the 34 operators of branded Romanian hotels obtained mixed financial results, as itfollows: 9 constantly reported net profit during the five years under scrutiny (Table 3), 8constantly reported losses for the same period (Table 4), while 17 reported mixed results,net profit alternating losses for the years between 2012 and 2016.Table 3. Hotel operators, constantly registering net profit between 2012 and 2016Operator's namePritax Invest SRLAverage net profit(RON mil.)5.9Hotel’(s’) RevPAR (RON)0.1The operated hotel’s(s’)classification & roomsGolden Tulip AnaDome Cluj-Napoca, 4*,109; Golden Tulip AnaTower Sibiu, 4*, 81Danubius Health Spa Resort Sovata, 4*,168Novotel Bucharest City Center, 4*, 258Ramada Sibiu, 4*, 127Ramada Iasi, 3*, 76NH Bucharest, 4*, 76Best Western Bucovina, Gura Humorului,4*, 130Best Western Stil Bucharest, 4*, 30Balneoclimaterica SA5.6Accor Hotels Romania SRLAtlassib Hotels SRLHotel Orizont SRLCantabria Impex SRL;Casa de Bucovina-Club deMunte SAM&T Market & TradeProfessionals SRLHP Tower One SRL5. Sacele, 4*, 113197163230450377311204146148Sources: authors' calculations based on MT/NAT (2012-2016) and MPF (2017) dataOf these 17 enterprises with mixed results, 8 ended the five year period with the net profitoverbalancing the losses, while for the remaining 9 losses overbalance the net profit years.The majority of the profitable enterprises (6 out of 9) operate hard branded hotels outsideBucharest with a RevPAR lower than the European average (Table 3). Further, 6 out of 8enterprises constantly reporting losses operate hotels located in Bucharest, one operates ahotel located in Otopeni, nearby Bucharest, and one operates 2 hotels outside Bucharest(Table 4). Most of the operated hotels exhibit a RevPAR below the European average andthe majority of the brands are hard. The 17 enterprises with mixed financial results aredominated, in both sub categories, by the operators of branded hotels located in Bucharest.Overall, including the entities with profitable mixed results, 8 of the 13 companies(61.54%) operating branded hotels outside Bucharest reported a positive average result for2012-2016 versus 9 out of the 19 operators (47.37%) controlling the branded Bucharesthotels. This situation seems to support the idea that the branded hotels can generate betterfinancial results outside Bucharest than on the crowded and more competitive market ofthe Romanian capital. The high losses registered by Continental Hotels SA with brandedhotels both in and outside Bucharest might have other causes than the four branded hotelsand their location. The operator of the Golden Tulip hotels generates its profits from otheractivities.

Romanian branded hotels: are they worth the effort?47Table 4. Hotel operators, constantly registering loss between 2012 and 2016Operator's nameContinental Hotels SAAverage loss(RON mil.)(13.7)Premier Palace SRLComtel Focus SA(9.0)(5.4)World Trade CenterBucuresti SAABA Turism SRLSocietatea HotelieraTimes SRLMajestic Tourism SAMari Vila Turism SRL(5.3)The operated hotel’(s’)classification & roomsIbis (Gara de Nord) Bucharest, 3*, 250Ibis (Izvor) Bucharest, 3*, 161; Ibis Constanta, 3*, 154;Ibis Sibiu, 3*, 195Premier Palace Hotel Bucharest, 4*, 82 (Aqualis-Hotusa)Angelo Airport Hotel Otopeni, 4*, 177(Vienna House)Pullman Bucharest, 4*, 203Hotel’(s’) RevPAR(RON)162(2.6)(1.3)Ramada Oradea, 4*, 121Golden Tulip Times Bucharest, 4*, 70223278(0.6)(0.2)Ramada Majestic Bucharest, 4*, 111Best Western (Plus) Mari Vila Bucharest, 4*, 6519122367229356Sources: authors' calculations based on MT/NAT (2012-2016) and MPF (2017) dataTable 5 shows only the brands and hotels operating outside Bucharest. Except for Hilton,all the other branded hotels generate a RevPAR under the European average and theyseem to generate, in average, net profit for their operators. Moreover, when comparingwith the data in Table 2, the brands Hilton, Ramada and Best Western (soft brand)generate higher RevPAR outside Bucharest, while Golden Tulip and DoubleTree byHilton perform worse.Table 5, RevPAR ranking of hotel brands operating outside BucharestHotel brandHiltonRamadaDanubiusBest WesternHunguestGolden TulipIbisDoubleTree by HiltonMinotelEuropean RevPAR average1RevPAR(RON)average ls,classificationandaverage no. of rooms perhotel1, 4*, 1146, 4*(5), 3*(1), 1121, 4*, 1682, 3*(all), 1751, 3*, 652, 4*(all), 952, 3*(all), 1751, 5*, 1141, 3*, 36Operators’ no. andNACE codes1, 55106, 55101, 55102, 55101, 55101, 47301, 55101, 5510, 56301, 5510Operators’netfinancialresult2012-2016 1745,859,136(13,678,572)(3,156,032)180,644Note 1: see Note 3 of Table 2.Sources: authors' calculations based on MT/NAT (2012-2016) and MPF (2017) dataThese results reinforce the idea that at least some of the brands can generate better resultsoutside Bucharest: an increase in the occupancy rates combined with a relatively low ADR(adapted mainly for the dominant domestic tourists), incrementing the operators’ grossincome.5. ConclusionsThe results of this exploratory study reveal that the most notorious brands operating inRomania are also those generating the highest RevPAR. This group includes mainly hardbrands and only one soft brand (Aqualis-Hotusa). More interesting are the results

48Cornelia Pop, Monica-Maria Coros, Maria-Andrada Georgescu, Maria Boneasuggesting that Hilton, Ramada and Best Western (soft brand) generate better RevPARvalues outside Bucharest, while Golden Tulip and DoubleTree by Hilton perform worseoutside the Romanian capital city. The relative novelty of DoubleTree in Romania mightexplain the poor performance in Oradea or it might be just related to the poor choice ofhotel location. The case of the two Golden Tulip hotels in Sibiu and Cluj-Napoca might beconsidered with care since an estimate was made regarding the percentage of the operator’stotal income generated by hotel activity. The reality might be different and the RevPARmight be higher.The data regarding the operators’ net financial results are mixed and, at a first glance, theyindicate that the internal inefficiencies of hotel operators rather than the cost related tobrand affiliation and hotel size seem to be the cause of incurred losses. At a closer look, theresults show that operating a brand outside Bucharest (mainly a hard brand) proves togenerate constantly net profit for most of the respective hotel operators, despite a RevPARbelow the European average. This finding suggests that the brand notoriety generates anincreased occupancy rate as shown by other studies (O’Neill and Carlbaeck, 2011; Enz etal., 2014). Thus, some hotels outside Bucharest, mainly those formerly affiliated to BestWestern, chose to exit the partnership and continue without an international brandumbrella.The results indirectly point out that most of the branded hotels’ operators seem to struggleon the crowded Bucharest hotel market enhancing the idea of internal inefficiencies(1). Forthe Bucharest hotels that experienced the affiliation to an international brand, it seems tobe important to continue to operate under such a brand (e.g. the former Best Western Parcbecame Ramada Parc, the former Golden Tulip Sky Gate became Angelo Airport, theformer Tulip Inn Bucharest became DoubleTree by Hilton). More inquiries are needed tounderstand what generated the losses case by case.Given the structure of the Romanian hotel industry, the partnership with an internationalbrand seems to be worth the effort mainly if the brand is appropriately chosen taking intoconsideration the hotel location and size. This finding is in concordance with the findingsof Holverston and Revaz (2006) and Ivanova and Ivanov (2015). Nonetheless, furtherinvestigations are needed in order to understand the Romanian hoteliers’ perspective onchoosing and joining an international brand.Note(1)Recent media news also revealed that JW Marriott operator is under investigation for hiding thereal income of the company and fiscal fraud (C.I., 2016).

Romanian branded hotels: are they worth the effort?49ReferencesAssaf, A. and Josiassen, A., 2012. Identifying and ranking the determinants of tourism performance:A global investigation. Journal of Travel Research, 51(4), pp. 388-399.Best Western Hotels & Resorts, 2017. Romania [online]. Available at: Bohdanowicz, P., 2005. European Hoteliers’ Environmental Attitude. Cornell Hotel and RestaurantAdministration Qarterly, 46(2), pp. 188-204.C. I., 2016. Percheziții la Hotelul Marriott din București. [online]. Available at: hezitii-hotelul-marriott-dinbucuresti.htm Coros, M.M. and Negrusa, A.L., 2014. Analysis of Romania’s and Transilvania’s tourist supplydevelopment and performance. Amfiteatru Economic, XVI(8), pp. 1312-1326.Cosma, S., Fleseriu, C. and Bota, M., 2014. Hotel chain’s strategic operations to penetrate theRomanian market. Amfiteatru Economic, XVI(8), pp. 1352-1365.Dodu, S.P. and Patrichi, I.C., 2014. Bucharest hotel market in the European context. The USV Annalsof Economics and Public Administration, 14(2(20)), pp. 48-57.Enz, C., Peiro-Signes, A. and Segarra-Ona, M., 2014. How fast do new hotels ramp upperformance?. Cornell

Marriott Hotels (JW Marriott) 1 402 1 402 Starwood Hotels & Resorts (Sheraton) - - 1 270 Best Western2 7 731 6 349 Total American 11 1,801 24 3,484 European hotel groups and voluntary hotel chains/consortia InterContinental Hotels Group (InterContinental & Crowne Plaza) 2 351 2 421 Accor (Sofitel, Pullman, Novotel, Mercure & Ibis)