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Hercesa presses ahead with development

789 afisari
By Cristian Cojanu
Following investments in excess of 100 million euros in residential and hospitality projects, Hercesa continues to increase its exposure on the Romanian market. In an interview with Business Arena, Investment and Asset Management Director Alejandro Solano Gallego has expressed confidence that Romania's real estate market has good prospects for growth in 2017. He has also emphasized the importance of hiring well-trained and committed people for the success of the company's hotel business in Romania.
What were Hercesa’s main achievements in Romania last year? What aspects of business did not yield the expected results?
Last year was very productive for Hercesa. It was the year in which we consolidated our business in Hotel Cismigiu after only five years since its opening. The occupation rate, went over 74 per cent and we opened Ici-et-la restaurant on the sixth floor. Hotel Cismigiu has become a landmark of Bucharest city center.
On the real estate development side, we pre-contracted 97 per cent of the first residential building from the third phase of development of Vivenda Residencias project and we signed reservation agreements for more than 40 per cent of the second building of apartments from this phase of development. Both commercialization results have exceeded our expectations, since Hercesa is one of the few real estate developers on the Romanian market that sell off-plan. There was no area of business that did not yield the expected results.

How would you describe the general development prospects of the Romanian real estate sector? Which business segments could attract increased investments in 2017?
The Romanian real estate market has all the prospects to continue to grow in 2017, given the estimates of economic growth for the Romanian economy as a whole and the current stability of the entire real estate European market. The interest of purchasing an apartment, as well as the number of delivered apartments will continue to increase, according to all estimates. And so will the prices of the apartments, due to a higher acquisition capacity of Romanian people. Just in 2016, the average price of the apartments offered for sale at national level has increased by 10.7 per cent.
In 2017, we also expect an increase of the office segment, given the high number of office square meters that will be delivered this year. In Bucharest there are several projects expected to be finalized in 2017 in Orhideea area, in Timpuri Noi area and in Pipera. Moreover, the demand of industrial spaces will increase in 2017 as well, due to the dynamics of sectors such as broad consumer, e-commerce and IT.


How much has the company invested in its Romanian projects so far? What new projects are in the pipeline?
Up to date, Hercesa has invested in Romania more than 100 million euros including our projects in the hospitality and residential sectors.
In 2017, we will continue the development of Vivenda Residencias project. In the first half of the year, we will deliver the first apartment building from the third phase of development. We have already started the construction of the second building, which will be finalized in July 2018. Moreover, in a couple of months we will initiate the commercialization of the third building of apartments, whose construction may also start before the end of this year.
Additionally, we are planning to start the development of our second residential project, Estellas Residencias, located on Orhideelor Street, close to Carrefour Orhideea.


What is your view regarding the level of competition in your sector?
The level of competition in the hospitality sector will continue to increase in the next years together with the flow of business and tourist visitors. There is a good number of hotel projects in the pipeline which might bring lower rates and occupancy to the sector. In terms of
service quality there is still a lot of room for improvement.
The competition in the residential real estate sector has increased in the last years. There are much more residential projects on the market as compared to several years ago. Moreover, the location of the residential projects is currently significantly more diversified. The number of projects in the east part of Bucharest (where Vivenda Residencias is located), but also in the South and West parts of Bucharest has increased on the last few years.
The market is currently dominated by solid real estate companies, which have survived the economic crisis and have long-term plans with regard to the Romanian market. Nevertheless there are also a number of smaller real estate developers which have also been very active in the last few years.


How would you characterize Bucharest’s hospitality industry? What are its opportunities and challenges?
The European hospitality industry currently sees an increase in all specific areas, which shows both the ability of this sector to overcome the economic and political turbulences of the last years, and the real perspectives for future growth.
Today’s hotel industry can no longer rely on the traditional growth methods, and needs to prepare for the major confrontation with the next-generation technological developments that generate modern marketing channels.
The Bucharest hotel market is in line with Central Europe trends. Last year, it has witnessed a significant upwards trend generated by the increase of demand in the business travel segment, backed up by a quite high increase in the leisure tourism area, while also facing the challenge of integration of modern technologies in the hotel business.
A special mention for the MICE industry (meetings, incentives, conferences and exhibitions), which represents a very good business for many countries.
The activities of the Meetings Industry are an increasingly significant element in the future growth of the global economy, an essential part of the spread of knowledge and professional practices, and a key factor in building better understanding and relations amongst different regions and cultures. There is a real need for a large conference center in Bucharest.


What are the strong points that Hotel Cismigiu can rely on in its competition with similar hotels?
Today, travelers see their accommodation provider as a “lifestyle curator”, who doesn’t just provide a place to sleep, but also offers a perfectly suitable itinerary of activities. We strive to move beyond being a facility and become a facilitator for our guests.
One of the strongest attraction points at Hotel Cismigiu is the building itself, whose original 1912 facade is complemented by its modern interiors.
The hotel has 60 large apartments, 40 to 55 sqm each, spread over four floors. Thirty-six of them are ideal for families, each including a living room, a bedroom and a fully equipped kitchen. The remaining 24 apartments are designated for top managers, who prefer having breakfast, lunch and dinner in the hotel’s restaurant. Some apartments provide an extendable sofa in the living room, and they can accommodate up to four guests. In addition, we are bringing the “neighborhood” into our hotel, offering locally crafted items to our loyal guests and selling traditional handmade souvenirs in the hotel’s lobby.


What new services and products have been introduced as part of the hotel’s efforts to attract more customers and guests?
Hotel Cismigiu is reflecting the energy, culture and the history of the city, and our activities are inspired by that vision. We make all the efforts to deliver our guests the best booking and hotel-stay experience. At our reception desk, we give all the information required as soon as possible and with a smile. In rooms, we surprise our guests with nice small gestures. In our conference rooms, we make sure everything is ready on time, with all the equipment in good order. In our restaurant, we cater for cosmopolitan world travellers from around the world, on a business trip or on vacation. The kitchen must be inspired by the local culture, it should be socially responsible and environmentally friendly, as guests are interested in the origin and health impact of the food they eat. In addition, innovation and digitalisation will be the key words in 2017.

What are the main economic developments that could lead to a boost in revenues in the hospitality industry?
Hotel industry is changing by the increasing power of online booking platforms, by the instant posting of positive or negative guest feedback and the emergence of new collaborative practices, so called “sharing economy”.
We have to “go digital” both the hotel and restaurants. The customers are becoming experts are more and more informed and demanding. Before choosing where to stay, eat or drink, consumers spend a lot of time consulting online ratings and opinions.
Another important point is hiring the right people. The best hardware is of no use if you’re hiring low paid, inexperienced staff, which results in a lack of professionalism and poor customer service. Teaming up with the right people can position an establishment for the maximum prospect of success. Developing and implementing an effective recruitment strategy is just half the battle; retaining skilled employees is also difficult. The hotel industry has some of the highest turnover rates of any industry. While many factors can account for the high turnover - seasonality and the young employees being among them - the perception that hotels do not offer abundant long-term career prospects contributes to the problem.

How would you characterize Romania’s business environment?
The real estate market has been more dynamic in the last few years in Romania. In the residential area the demand has remained strong and the offer has been increased. There are more residential projects on the market, as compared to some years ago, both from reputable solid developers and from smaller real estate companies.­­
The Romanian market continues to be attractive for investors. Some of the strong points of the Romanian market are the relative large size of the domestic market and the inexpensive and still well trained labor force, whereas among its weak points are the low budget revenues, the undeveloped infrastructure and the continuing problems with corruption.


What are your company’s main targets in 2017?
On the real estate side, our main professional objective for 2017 is to continue the development of Vivenda Residencias residential project. Our main target is to deliver until the end of this year all 66 apartments and two commercial spaces in the first apartment building, as well as to pre-contract all the apartments in the second building of this phase of development. Moreover, we aim to start the constructions also of a third building of apartments in Vivendda Residencias, as well as to and to initiate the commercialization of a second residential project, Estellas Residencias.
Regarding Hotel Cismigiu, we are hoping to increase our occupancy and GOP, while we continue to offer to our clients a good experience at a very competitive price.


The editorial is also available in our print edition.

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