THE BUCHAREST UNIVERSITY OF ECONOMIC STUDIES

Faculty of International Business and Economics

THE ANALYSIS AND THE EVOLUTION OF

HOTEL SERVICES IN ROMANIA

Student:
Mihai Corneliu PENCULESCU
3rd Year

Bucharest 2017
CONTENTS

Introduction………………………………………………………………………………………2

Chapter 1. The dynamics analysis of the hotels supply and demand…………………………3

1.1 The dynamics analysis of the hotels supply…………………………………………………...3
1.2 The dynamics analysis of the hotels demand………………………………………………….5

Chapter 2 – The correlation between the demand and the supply of the hotels …………….7

Chapter 3 – The forecast of the future hotels demand ………………………………………10

References ………………………………………………………………………………………13

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Introduction

The importance of hotels is to provide travelers with shelter, refreshment, and similar services
and goods, offering on a commercial basis things that are customarily furnished within
households but unavailable to people on a journey away from home.

Historically hotels have also taken on many other functions, serving as business exchanges,
centers of sociability, places of public assembly and deliberation, decorative showcases, political
headquarters, and permanent residences.

Hotel development also involved diversification. Most early hotels had been large urban
luxury establishments, but newer variants quickly emerged.

Resort hotels, designed to accommodate the rising tide of tourists, were built in scenic rural
landscapes far from the cities where the hotel form had been born.

Commercial hotels, more simply furnished and less expensive than the luxury variant, served
the growing ranks of traveling salesmen and other commercial workers set in motion by the
burgeoning economy.

Railroad hotels were built at regular intervals along track lines to provide passengers and
crews with places to eat and rest in the decades before the introduction of sleeping cars.

Residential hotels, dedicated to the housing needs of families increasingly unable to afford
private houses in expensive urban real estate markets, served as the prototypes for apartment
buildings.

The frontier hotel form, characterized by wood construction, whitewash, and tiered porches,
was built in hundreds of new settlements where travelers and lumber were common but capital
was scarce.

The role in accommodating travelers made hotels into a frontier between individual
communities and the world beyond, with hotel guests acting as cultural emissaries who carried
new ideas about aesthetics and technology along the routes of their journeys.

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Chapter 1. The dynamics analysis of the hotels supply and demand

1.1 The dynamics analysis of the hotels supply

Hotels industry is essential for the Romanian economy as well as for consumers of tourism products and
services. Regarding the economy hotels (tourism) contribute to GDP but also provides jobs and reduces
unemployment. At the same time development of tourism ensures the development of intersecting sectors.
For the supply analysis we have a data series of 5 years (2010- 2014)

Table 1. Number of hotels in Romania

Types of Types years
accommodatio
n units
Year Year Year Year Year
2010 2011 2012 2013 2014

UM: Number
Number Number Number Number Number

Hotels Total 1233 1308 1384 1429 1456

Source: www.insse.ro

The supply is growing from year to year, from 1233 units in 2010 to 1456 in 2014.
Even if the last years were quite difficult, the number of hotels grew in the last period (2010-
2014) a rate even higher than during the real estate boom (2006- 2008). In 2011, the National
Institute of Statistics counts 1,308 hotels, 75 more than in 2010.

The evolution of the total number of hotels in Romania

1500
1450
1400
1350
1300
1250
1200
1150
1100
Year 2010 Year 2011 Year 2012 Year 2013 Year 2014

4
 Source: develop by author, using data from www.insse.ro

The increase is mainly because the sector has benefited from the process of globalization and
from the constantly falling relative costs of travel. The sharp expansion of social media is
another factor which influenced this growth because the interaction between hotels and tourists
became more and more accentuated.
The hospitality industry, for which communication with clients is essential, currently follows the
directions imposed by the development of the information and communication technology, this
turning into the key element to achieving the highest possible performances. On the Romanian
market, a significantly growing number of hoteliers realize the importance of this aspect, thus
already taking into consideration the defining of an online marketing strategy, alongside the
allocation of an increasingly important budget for promoting offered services in the virtual
environment or even the development of dedicated mobile applications, in response to the latest
trends existing globally.
In addition, it becomes more and more obvious that achieving the highest possible level of
performance in this area is almost impossible without a careful customer relationship
management, which can be done more efficiently by using the tools provided by the information
technology.
Today on the Romanian market, 17 international hotel groups and chains are present, with one or
more brands: Accor Hotels (6 hotels, with the brands Ibis, Novotel and Pullman), Best Western
(11 hotels), Danubius Hotels (3 hotels), Europa Group Hotels (1 hotel, with the brand Europa
Royale), Golden Tulip Hotels, Inns & Resorts (5 hotels, with the brand Golden Tulip), Hilton
Hotels & Resorts (6 hotels, with the brands Double Tree, Hampton and Hilton), Hunguest Hotels
Hungary (1 hotel, with the brand Hunguest Hotels), IHG – InterContinental Hotels Group (2
hotels, with the brands Crowne Plaza Hotels & Resorts and Intercontinental), K+K Hotels Group
(1 hotel), Marriott International (1 hotel, with the brand JW Marriott), Minotel (1 hotel), NH
Hoteles (2 hotels), Rezidor Hotel Group (1 hotel, with the brand Radisson Blu), Select Hotels
Group (1 hotel, with the brand Select Hotels Collection), Vienna International Hotels & Resorts
(1 hotel, with the brand Vienna) and Wyndham Worldwide (11 hotels, with the brands Howard
Johnson and Ramada); there are a total of 54 internationally affiliated hotels; (according to
MDRT, Unităţi clasificate, decembrie 2012 and based on the websites of the international hotel
groups and chains (11)).
The presentation of hotel supply is as close to reality as possible, accommodation services
represent the component with the greatest share in the manner how visitors perceive a
destination; tourists seem to be more interested in the quality of the services provided, than in the
quality and attractiveness of the destination itself (Tăchiciu, 2009, pp.26-34).

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1.2 The dynamics analysis of the hotels demand

For the demand analysis we have a data series of 5 years (2010- 2014)
Table 2. Number of tourists in Romania
Types of Types Years
accommodatio of Year Year Year Year Year
n hotels 2010 2011 2012 2013 2014

UM: Number of persons

Number Number Number Number Number
of of of of of
persons persons persons persons persons
Hotels Total
4,585,211 5,357,763 5,740,30 5,908,649 6,314,865
4
Source: www.insse.ro

Analyzing the data from the National Institute of Statistics, we can notice that there are more and
more tourists who choose hotels as accommodation units. In 2014 reaching the number of 6, 314,
865 persons. It is obvious that there is a highly demand in this sector.

Total Numbers of Hotels

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

-
Year 2010 Year 2011 Year 2012 Year 2013 Year 2014

Source: develop by author, using data from www.insse.ro

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There is a big difference between 2010 (based year) with 4,585,211 persons and 2014 with
6,314,865 person. From 2012 to 2014 the growth of demand is not smooth.
The analysis shows that the touristic demand in Romania has followed a trend parallel with the
GDP curve as the touristic demand is strongly correlated with the level of population disposable
income (according to many articles).
As a result of the elasticity of the consumption needs of the population, the emergency order
meeting the needs for goods and for tourism services and it manifests itself differently from one
population category to another. With some exceptions (for example, in the case of an application
for medical treatment), tourism demand is less related to the living conditions of the population
but demand for commodities, being generally more sensitive influenced by income level
population and level of charges for arrangements (the package) travel. By analogy with demand
for commodities, tourism demand elasticity is expressed through coefficients elasticity.
Analyzed aspects that influence the sensitive volume, structure and intensity over time and space
of current travel trends converged inviting tourists to certain areas, fully reflects great diversity
and complexity of tourism demand research issues.

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Chapter 2 – The correlation between the demand and the supply of the hotels
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of a market economy.
Demand refers to how much (quantity) of service is desired by buyers. The quantity demanded is
the amount of a product people are willing to buy at a certain price; the relationship between
price and quantity demanded is known as the demand relationship.
Supply represents how much the market can offer. The quantity supplied refers to the amount of
a certain service producers are willing to supply when receiving a certain price. The correlation
between price and how much of a good or service is supplied to the market is known as the
supply relationship.
Regarding the hotel industry, I present series data for 5 years (2010- 2014). In this particular
case, the supply is represented by number of units accommodation and the demand is represented
by the number of persons (tourists).

The demand for hotels in Romania in the last 5 years (2010-2014)

Types Years
of Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 Mean
hotels
UM: Number of persons
Number of Number of Number of Number of Number of
persons persons persons persons persons
Total
4,585,211 5,357,763 5,740,304 5,908,649 6,314,865 5,581,358

The supply for hotels in Romania in the last 5 years (2010-2014)

Types of Types years %
accomm
odation Year Year Year Year Year mea the the the
units 2010 2011 2012 2013 2014 n averag avera averag
e ge e
annual index decrea
decrese se rate
UM: Number
Numb Numb Numb Numb Numb 1.086
er er er er er 674
Hotels Total 1233 1308 1384 1429 1456 1362 55.75 1.04 4

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Chapter 3 – The forecast for the future hotels demand

I aimed to forecast demand fluctuations in the hotel business.

The hotels industry, because of the structure of the business, is sensitive to fluctuations in
demand. It often has crises because of unexpected reduced demand. Demand forecasting in the
hotels industry has become relatively important because of the nature of the industry and its
operational characteristics and difficulties. It is important to forecast demand, not only because
of the wide fluctuations that may occur, but also because it is hard to track the success of efforts
being engaged in to increase the occupancy rate.

Forecasting the future evolutin of the demand for hotels

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

-
Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 Year 2015 Year 2016 Year 2017

Series1 Series2

Source: develop by author, using data from www.insse.ro

We can notice from the graph that the hospitality sector is increasingly considering the number
of persons in a year. In 2017 it will be close to 8 million.
Forecasting future demand growth is imperative in hotel appraisal and feasibility as it is the
foundation of market analysis. The performance of individual new hotels has a direct effect upon
the aggregate performance of the market, and consequently upon the calculated penetration
factor for each hotel in each market segment. Segmenting a market allows us to analyze where
demand is emanating from within a market and the direction in which the market is headed.
Nevertheless, the government’s decision to decrease VAT on tourism to 9% has had and will
have a positive impact on hotel activity especially in relation to leisure segments. A series of
important openings are already announced for 2018: ParkInn Bucharest*** (210 rooms), Best
Western Premier Bucharest**** (80 rooms) and Ramada Plaza Craiova**** (162 rooms). Hotel
investment activity is not expected to pick up in the following months, as most hoteliers see the

9
next period more as an opportunity for business consolidation and development and less for sale
of properties.
References

1. Firoiu D., Croitoru A.G. – Tourism and Tourism Infrastructure from the Perspective of
Technological Changes, Romanian Economic and Business Review, vol. 8, nr. 2,
București, 2013
2. Pantano E., Di Pietro L. – From E-tourism to F-tourism: Emerging Issues from Negative
Tourists' Online Reviews, Journal of Hospitality and Tourism Technology, vol. 4, nr. 3,
2013
3. Tăchiciu, L., Dinu, V. (2009) Tourism Policy in Romania: A Necessary Change of
Direction, Revista de turism – studii și cercetări în turism, no.7, Ştefan cel Mare
University, Suceava, pp.26-34

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