Cushman & Wakefield: Bucharest hotel market to see highest supply growth among CEE capitals in 2024-2026

Between 2024 and 2026, the Bucharest hotel will experience the highest supply growth among Central and Eastern Europe capitals (Bucharest, Warsaw, Prague, Bratislava, Budapest, and Sofia) with an approximate 5.8% increase, adding around 2,400 rooms, according to an analysis by Cushman & Wakefield. This growth outpaces the CEE-6 capitals’ average growth of 3.2%.

Several 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,” the real estate consulting company said.

The demand in the Bucharest hotel market registered an increase of 3% in the first half of the year compared to the same period of 2023. However, it remained below the 2019 level, the same source revealed.

Moving forward, according to Oxford Economics, Bucharest is projected to fully recover and exceed 2019 levels of overnight stays in paid accommodations by 3% by 2025. An increase in domestic overnight stays will primarily drive this growth.

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

As for the hotel market performance, Bucharest’s RevPAR grew by 9.2% 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% 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% compared to H1 2019, this growth is still below the inflation rate. This is due to the slow recovery of demand combined with an increase in room supply during the same period,” reads the Cushman & Wakefield analysis.

Occupancy in Bucharest grew by 3.4% 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.

Sevda Cadir, Associate Director of Cushman & Wakefield, stated: “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% 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.”