Romania as a Tourist Destination and the Romanian Hotel Industry [1 ed.] 9781443802895, 9781847182685

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Romania as a Tourist Destination and the Romanian Hotel Industry

Romania as a Tourist Destination and the Romanian Hotel Industry

By

Cornelia Pop, Smaranda Cosma, Adina Negrusa, Claudiu Ionescu and Nicolae Marinescu

CAMBRIDGE SCHOLARS PUBLISHING

Romania as a Tourist Destination and the Romanian Hotel Industry, by Cornelia Pop, Smaranda Cosma, Adina Negrusa, Claudiu Ionescu and Nicolae Marinescu This book first published 2007 by Cambridge Scholars Publishing 15 Angerton Gardens, Newcastle, NE5 2JA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2007 by Cornelia Pop, Smaranda Cosma, Adina Negrusa, Claudiu Ionescu and Nicolae Marinescu All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN 1-84718-268-2; ISBN 13: 9781847182685

To our families and friends

TABLE OF CONTENTS

Acknowledgements.............................................................................................ix Introduction..........................................................................................................x Chapter One: Romania as a tourist destination I II III

Romania – a short description ......................................................2 Romania’s strategy for tourism development...............................8 Branding Romania as a tourist destination .................................22

Chapter Two: The Romanian hotel industry I II III IV V VI

Types of accommodation establishments in Romania................66 The evolution of the accommodation establishments.................71 The Romanian hotel market .......................................................88 Hotel ownership .......................................................................101 Romanian hotel groups.............................................................108 The actual stage of development of Romanian hotel industry..121

Chapter Three: Hotel market in the cities of Brasov, Cluj-Napoca and Timisoara I II III IV V VI VII VIII

General facts.............................................................................134 The city of Brasov ....................................................................145 The hotel market in Brasov ......................................................150 The city of Timisoara ...............................................................165 The hotel market in Timisoara..................................................170 The city of Cluj-Napoca ...........................................................186 The hotel market in Cluj-Napoca .............................................191 Comparative aspects.................................................................208

Chapter Four: Romania’s future as a tourist destination ..........................215

viii

Annex 1 Annex 2a Annex 2b Annex 2c Annex 3 Annex 4 Annex 5 Annex 6 Annex 7

Table of Contents

Programs launched by the Ministry of Tourism between 2000 and 2003 ..........................................................................243 The list of officially declared Romania resorts.........................253 The list of tourist information centers ......................................258 The list of Romanian tourism bureaus abroad as the situation was in June 2006 ......................................................................260 The UNESCO heritage sites in Romania and in the countries considered as its main competitors on the tourist market .........261 Terms used for Romanian accommodation establishments......266 Romanian hotel groups identified at the level of 2005 .............267 The resorts of national and local interest in the analyzed regions ......................................................................................277 The lists of hotels analyzed in Brasov, Timisoara and Cluj-Napoca.......................................................................279

Contributors .....................................................................................................283

ACKNOWLEDGEMENTS

The present study is based on the results generated by two research grants financed by CNCSIS (Romanian National University Research Council): 1. 2.

The A grant between 2002 and 2004: The relationship between the hotel industry and the financial markets, director: Professor Cornelia Pop, PhD The At grant between 2006 and 2007: Research study regarding the tourism potential of Cluj-Napoca to enhance its identity in the context of Romania’s accession to the European Union, director: Associate Professor Smaranda Cosma, PhD

The authors would like to thanks Romanian National Authority for Tourism and Romanian National Institute for Statistics for their support.

INTRODUCTION

Part I: Unique features of the book This book addresses the primary concern of the state of tourism business in Romania. Many efforts from promoting Romania using different slogans to complying with the United Nations requirements for preserving historical sites have been done by the Romanian government as well as its business people to promote the country’s tourism potential to the international community. However, the results of all these efforts, to the date this book is written, show more like a run of the mill attempt. In terms of regulatory framework, business environment, and human, cultural and natural resources, Romania is still considered under developed in the World Economic Forum published the Travel and Tourism Competitiveness Report 2007. Staying in its current position in the world of tourism will waste Romania’s natural potential as a world class tourism destination. Thus, a way to achieve a better status will be to understand the problems faced by Romania, find the most appropriate remedy to address the problems, and implement the most practical solutions that fit the Romanian culture yet internationally acceptable. While the business community can benefit from information provided and policies implemented by the government or other tourism agencies, it is remarkably difficult to find an honest, informed, and comprehensive analysis of the subject. Moreover, information from those resources can be disorganized, flimsy, or contain erroneous facts. A good understanding of the Romanian tourism requires candor and practical examination of the current situation in Romania. It also requires comprehensive knowledge of the tourism world in the international setting, and creativity in applying various theoretical business strategies in the tourism subject area. All of these are addressed in this book. One will greatly benefit from this book’s most updated statistics, appropriate illustrations and pictures, and most importantly, unbiased and practical analysis.

Part II: Who should read this book This book is aimed at two broad categories of readers. The first is practitioners in the tourism business. This includes the Romanian government, and the local and international tourism business owners, managers, and workers.

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The second is financial market participants, which includes bankers, private investors, corporate financiers, and venture capitalists. The third is consultants, whose role is to advise investors and corporations on value creation, investor communications, and the risk of investing in the Romanian tourism business venture. The second broad category includes participants in the academic community. More specifically, students in the business and tourism subject related areas. This book should also be of particular interest to students preparing themselves for interviews and careers in the hotel, travel, and other tourism-related industry.

Part III: Structure and content of chapters Chapter 1 provides a comprehensive discussion on Romania as a tourist destination. The chapter contains a short description of Romania as a country that has the capacity to provide a world class tourism service, and various strategies that have been proposed and done by the Romanian government to turn this capacity into a reality, which unfortunately has not happened by the time this book is written. Thus, the final part of the chapter provides comprehensive analytical scrutiny on how to brand Romania as a tourist destination. Chapter 2 concentrates on the Romanian hotel industry. The types of accommodation establishments in Romania are discussed in detail, based on the categorization provided by the Romanian National Institute for Statistics (NIS). The evolution of these accommodations from 1970 to 2005 is then elaborated in the second part of the chapter, followed by thorough explanation on the Romanian hotel market, the types of ownership, the grouping of these hotels, and the actual stage of development until the end of 2006. In chapter 3, the three most prominent cities for tourist destination, Brasov, Cluj-Napoca, and Timisoara are presented in a colorful fact-packed writing style. Their tourism features are analyzed and their future potential development is explored and proposed from the academic and practitioner point of views. This chapter will provide a good harmony in the tourism literature, which tends to discuss the capital city Bucharest in great details, but nothing much in other equally interesting cities.

xii

Introduction

Finally chapter 4 closes the book by presenting the authors’ systematic and detailed analysis on Romania’s future as a tourist destination. And best of all, the most recent fact from 2007 is employed in the chapter to provide the latest and most updated perspective of tourism business for Romania, which is the aim of this book in the very first place. Elisa Rinastiti Muresan, Ph.D. Associate, Standard & Poor's May 2007

CHAPTER ONE: ROMANIA AS A TOURIST DESTINATION

PART I: ROMANIA – A SHORT DESCRIPTION

Covering 238,391 km2 (92,019 square miles) Romania is situated in the south-east of Europe, bordering with Hungary, Serbia, Bulgaria, the Black Sea, Republic of Moldova and Ukraine. Romanian climate is temperate continental. The official language is Romanian, a Latin origin language. Administratively, Romania has 40 counties. The capital, Bucharest, is situated in the south-eastern part of Romania and has over 1.9 million inhabitants. Romania became a NATO member in 2002 on January 1st, 2007 became a member of the European Union. The majority of Romanians are Christian orthodox (86.7%). The population is over 21.6 million inhabitants, with the following structure1: Romanians Hungarians Roma Germans Ukrainians Russians Turks Tartars, Serbs and Slovaks Other minorities

89.5% 6.6% 2.5% 0.3% 0.3% 0.2% 0.2% 0.3% 0.1%

Source: www.recensamant.ro/fisiere/Analiza%20date%20prelim.doc

The historical names of provinces: Wallachia, Oltenia, Dobruja, Moldova (including Basarabia and Bucovina), Transylvania (including Maramures) and Banat are still in use when referred to various Romanian regions. Romania has a harmonious and diverse landscape. From touristy point of view, it could be considered one of the most beautiful and resourceful places in Europe. Romania also has a rich tradition and culture. The combination of 1

This structure resulted from the 2002 Romanian population census.

Romania as a Tourist Destination and the Romanian Hotel Industry

3

both creates inspiring variety and ever-happening action. It is generally agreed that Romania has a huge potential for tourism. Despite all these attributes, until now the country has not become, as was intended, a well known tourist destination. However, Romania can become one. The following pages will try to analyze what has been done and what should be done for Romania to capitalize on its potential in order to become a popular tourist destination. Romanian tourism can be divided into 3 major segments: Ecotourism, including: ¾ cultural and religious tourism, ¾ rural and ethnographical tourism, ¾ mountain tourism, ¾ adventure tourism, ¾ urban tourism in medieval towns; Aqua tourism, which includes the Danube Delta, Black Sea Coast and spa tourism; Business tourism including meetings, incentives, conference and events (MICE), and urban tourism. Ecotourism The potential of ecotourism is shown by the fact that 8.5% of the country’s surface is protected in various ways through (NIS 2005): - 3 Biosphere Reservation: the Danube Delta; Retezat mountain area, and Rodna mountain area; - 26 national and natural parks; - 55 scientific reservations; - 851 other natural reservations and protected natural areas. Valuing these national treasures, Romania has subscribed to the main European and international conventions and programs in the field of environmental protection. A great variety of old Orthodox churches, monasteries and cathedrals reflects the importance these places have in preserving a part of the Romanian cultural heritage during the ages. This portfolio is even more diversified, mainly in Transylvania, by the Catholic, Calvinist, and Lutheran churches and cathedrals. All of these contribute to the area’s great potential for religious and heritage tourism. The Romanian potential for cultural tourism is represented by over 27,000 places of interest or locations grouped under different categories, and 151 monuments and archaeological sites of special value. Numerous

4

Chapter One Part I

architectural styles are present: Romanic, Gothic, Renaissance and Baroque, Rococo, and Art Nouveau. Romania has also a specific architectural style named Brancoveanu. It is present mainly in castles, palaces and houses belonging to the province of Wallachia. A Moldavian architectural style can be identified as specific to Romania. In a mixture of images and legends, the castles, palaces and houses from Romania tell the story of the period between the 12th and the 20th century inside the preserved medieval towns and in the modern towns which protected their historical heritage. Together with other symbols of Romanian culture, most of the architectural achievements are now included in the international UNESCO heritage list. For those searching for alternatives like rural, mountain and/ or adventure tourism, Romanian outdoor landscapes provide excellent opportunities. Secular woods, ozone rich air, mysterious caves, glacial lakes, waterfalls and peaceful countryside make the Carpathian Mountains a perfect place for relaxation. For restless spirits, hunting, fishing, mountaineering, sightseeing, alpine climbing, and skiing are available.

Aqua tourism The Danube Delta In 1971, the Danube Delta was declared a Biosphere Reserve by UNESCO and is one of the most important areas included in the Convention of Wetlands signed at Ramsar, Iran. Being the third largest Delta in Europe, the Danube Delta hosts 98% of the European aquatic fauna. The Danube Delta covers a territory of 3,446 km2 (1,610 square miles). Hosting more than 3,400 bird species, some of them unique in the world, the Danube Delta can be considered the European birds paradise.

The Romanian Black Sea Coast Located in the south-east of Romania, the Black Sea Coast has a length of 245 km (152 miles), between Chilia, in the Danube Delta, and Vama Veche, at the border with Bulgaria. The length of the beaches is 80 km (50 miles) and their breadth varies between 50 and 250 meters (between 55 and 273 yards). The Black Sea is a continental sea and the advantage of being tide less. Its salinity is much lower than other seas.

Romania as a Tourist Destination and the Romanian Hotel Industry

5

A range of summer resorts with names inspired by Roman mythology (Olimp, Neptun, Jupiter, Venus, Aurora, Saturn) was developed at the end of 1960s and early 1970s near the old resorts Mamaia, Eforie Nord, Eforie Sud and Mangalia. These were known since the early 1900s.

Spa and wellness tourism Romania is home to one-third of the thermal and mineral water supply of Europe. Romanian spas have been famous since 1860s. The water from various mineral springs was bottled and transported to Paris starting with 19th century. With underground thermal and mineral waters, salt mines, sulphurous thermal and mineral springs and a protective bio climate, Romanian spa resorts are an ideal place for health improvement, wellness or relaxation. The most important treatment centres, from over 160 existing spa resorts (NAT Strategy 2006), are: Baile Herculane, the oldest spa in Romania, dating from Roman times, recommended in the treatment of degenerative rheumatic pains, inflammatory diseases, diseases of the peripheral nervous system and other related diseases; Baile Felix offers warm baths with mud and paraffin, thermal water pools, electro and hydro-therapy. Sovata’s salt waters are recommended for the treatment of gynaecological and locomotors system diseases, cardiovascular, digestive and endocrine diseases, and post-traumatic conditions. The spas of the Black Sea Coast are known for the recreational possibilities combined with wellness treatment options. Techirghiol, a spa resort on the Black Sea, is known for its sapropelic mud. The treatments available cover a range of diseases from the central and peripheral nervous system problems to dermatological diseases. Calimanesti-Caciulata with its mineral waters is recommended for the treatment of digestive, urinary, and kidney diseases and also for gynaecologic, neurological and endocrine dysfunctions. Otopeni Clinic was formerly known as Ana Aslan Institute. Here geriatric therapy is offered based on Professor Ana Aslan line of products.

Business tourism Since 1995, when economic reforms accelerated, business tourism became an important segment of the tourism offerings. Bucharest and important cities like Timisoara, Cluj, and Iasi witnessed an important growth in the

Chapter One Part I

6

number of accommodations, mainly hotels. Meetings and conference facilities have multiplied and provide good services and modern equipments. The number of companies offering incentive trips to their employees has increased. Also the number of companies celebrating events, organising team building and workshops to specific destinations grew. Mountain and spa resorts have become the preferred destinations for this tourist segment. The number of conferences and other events also registered a growth, enhancing business and urban tourism. Romania organized and hosted the World Francophone Summit at the end of September 2006. It was an attempt to present itself as a new and dynamic destination for meetings, incentives, conferences and events. Despite the rich tourism potential presented above, Romania is not a well-known tourist destination. The evolution of total tourist arrivals in Romanian accommodations is presented in graph 1. It also highlights the number of foreign tourists out of the total. The trend has been a declining one until 2002. Since 2003, the situation slightly improved, but it is still far from the level of 1990. Graphs 2 and 3 present Romania in comparison with four of most popular tourist destination in Europe, respectively with the country’s main competitors in tourist market. Measuring Romania against destinations like France and United Kingdom seems unfair. Highlighting the discrepancy only intends to show the long road Romania faces. In comparison with the countries from Central and Eastern Europe, Romania lags behind four of them due to the declining trend in tourist arrivals. 14000

6146

5805 1430

5639 1359

5057 1105

4847 999

4875 915

4920 867

5109 795

5727

5552 810

762

766

856

848

833

6595

7070

7005

8015 1185

1294

1432

4000 2000

foreign tourists

source: NIS

7566

6000

total

9603

8000

Graphic no.1 Evolution of tourist arrivals in Romanian accommodation establishments

12297

10000

(thousans)

12000

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

Romania as a Tourist Destination and the Romanian Hotel Industry 160000

Romania

Graphic no.2 Total arrivals in accommodation establishments - comparative figures

France

140000

Spain Italy

source: NIS and EUROSTAT

UK

120000

7

80000 60000

(thousands)

100000

40000 20000

2003

2002

2001

2000

1999

1998

1997

1996

1995

2005

8000

2005

10000

source: NIS and EUROSTAT

(thousands)

14000

2004

16000

12000

Graphic no.3 Total arrivals in accommodation establishments - comparative figures 2

Romania Bulgaria Croatia Czech Republic Hungary Poland Slovakia

18000

2004

20000

1994

1993

0

6000 4000 2000

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

0

PART II ROMANIA’S STRATEGY FOR TOURISM DEVELOPMENT

Romania needs at least two things to become a well known tourist destination: a coherent strategy for tourism development, and a brand as a tourist destination. The strategy for Romanian tourism development was formulated during the summer of 2006 and made available to the public on the website of National Authority for Tourism (NAT) since August 2006. It is almost unknown and its existence ignored. The branding process is advancing slowly, being stalled to many times until now. The answer to these situations is given by the ambiguous politicians and decision-makers attitudes toward tourism, and by the lack of strong and determined professional tourism organizations. In order to understand the controversial attitude Romanian politicians and authorities had and still have toward tourism and toward branding Romania as a tourist destination, a brief presentation of the situation prior to 1989 is necessary. The communist period started for Romania in 1948; for almost 20 years, Romanian authorities followed the Soviet Union model and gave no special attention to tourism. The situation changed after Stalin’s death and after Romania’s refusal to participate in the military invasion of Czechoslovakia. The Western governments’ attitude toward Romania changed as did Romanian’s communist authorities’ attitude toward foreign tourists. Realizing that a flow of foreign tourists cold provide and incoming cash flow of hard currencies, Romania’s authorities, under Ceausescu’s ruling, decided that investments in hotels and other accommodation types would increase the expected outcome. In the first half of 1970s a large number of hotels were built and opened in Romania; the investments were concentrated on: i Romanian Black Sea Coast; i Prahova Valley where Predeal and Sinaia became main mountain resorts;

Romania as a Tourist Destination and the Romanian Hotel Industry

9

i Poiana Brasov, mountain resort near Brasov, i spa resorts i cities like Brasov, Cluj, Iasi, and Timisoara. The pace of hotel construction and openings decreased in the second half of the 1970s. The investment in hotels proved to be a good decision. During the second half of the 1970s, Romania was a popular destination for German, Scandinavian, Dutch, French, and Italian tourists. They were joined by Czech, Slovak and Hungarian tourists. The preferred destination was the Black Sea coast Domestic tourism was not neglected and Romanians traveled, mainly during the summer holidays, to the Black Sea coast, or spent time in spa and mountain resorts. By the end of the 1970s Romanian tourism was blooming and the hotel industry appeared to be strong and healthy, in the protected environment offered by communism, as all were state owned. The focus on tourism during that period was supported by promotional materials for every domestic destination. These materials were available for foreign and internal market alike. Romanian tourism also flourished due to reasonable price levels compared to other destinations of the period. That bright period is still vivid in the minds of several generations of Romanians including the present politicians, who believed that foreign tourist did not forget their time spent in Romania, experiencing its beautiful landscapes and Romanian ‘traditional hospitality’. Starting with 1980s, Ceausescu’s ruling became more dictatorial; the arrival of foreign tourists was not a priority anymore and Romania faced severe economic problems. Tourism lost momentum due to a sharp decrease in foreign tourists arrivals caused by Romania’s economic decline, generating the degradation of accommodation services and conditions. Internal tourism was decreasing too, but at a slower pace. The effects of numerous rationalizations limiting the supply of fuel for cars, the supply of energy and natural gas, and also the access to basic products had a serious influence not only on the quality of accommodations, but also on the decision to travel. However, despite the poor conditions offered in Romanian resorts of the 1980s, domestic tourism stayed afloat due to low room rates offered for the members of communist trade unions; and almost every working person had such a membership. Since the summer period was popular for holidays, the lodging conditions were easier to support. Spa resorts also were still receiving tourists with health problems, who needed to continue their treatments.

10

Chapter One Part II

Once again Romanian authorities paid little attention to tourism. As consequence, little or no investments were made in maintaining and modernizing hotels and other types of accommodations. Being nearly absent from the tourist market during the 1980s, Romania was forgotten as a tourist destination. At the beginning of the 1990s Romanian accommodations looked obsolete, stale, dusty, and sometime unfriendly. The fixtures and furniture had not been changed since the mid 1970s and despite minimal renovations, the materials and room designs remained at the same level. A night spent in a Romanian hotel, motel or villa during early 1990s was like traveling back in time 20 years. This situation created opportunities for the development of small lodging establishments during the second part of the 1990s. The poor situation of the accommodations was further complicated by an old road, railway, and airports infrastructure. With such drawbacks, Romania was not an appealing destination for any foreign or domestic tourist despite memories they may have had from the1970s. Choosing to either avoid or ignore the crude reality, the new democratic Romanian authorities deluded themselves that ‘the golden period of tourism’ of the 1970s had returned. They were waiting for foreign tourists to come back and rediscover Romania. The foreign tourists did not came back for good reasons: during the first half of the 1990s, beside the poor accommodation conditions, difficulties of traveling and almost no tourist package offer, Romania’s image abroad was a dark, tainted, and generally negative one. In the early 1990s, the political discourses always indicated the tourism as one of Romania’s competitive advantages (Gheorghe 2006a). Contrary to such declarations, the attitude of Romanian authorities and politicians toward tourism was passive. No important actions were initiated in order to transform Romanian travel and tourism into an important sector of the national economy. As The Diplomat (2006), Badulescu (2005), and Bufnila (2005) highlighted, the general idea still very present in the minds of Romanian decision-makers was that ‘everyone knows how beautiful Romania is and its hospitality is well-known’. Since Romania was barely present on the tourist market for almost 10 years, how does ‘everyone knows’? The authorities ignored that tourists’ memories are short, and the number of interesting and affordable destinations was growing every year. As direct consequence of those false ideas, years passed without an accurate and sincere evaluation of Romania’s tourist potential. The need for planning and strategy was ignored. The lack of funds dedicated to tourism development implied the cancellation of former tourist packages like Cruises on the Danube due to poor conditions. Other consequences triggered by the absence of money were represented by the scarcity of research studies on new

Romania as a Tourist Destination and the Romanian Hotel Industry

11

tourist products, the impossibility to implement them as required, and a small quantity of printed promotional materials. The existing prints still included photos from the 1970s. However, Romanian travel and tourism industry managed to remain afloat due to domestic tourism. It was intense during the first half of the 1990s due to visa requirements imposed for Romanian citizens, but also to external tourism package prices too high for an average Romanian income at that time. On the other hand, Romanians were eager to rediscover former popular resorts and to enjoy their vacations in better conditions. The disappointment soon followed generated by the inappropriate accommodation conditions and low quality of services. The decline in tourist arrivals presented in graph 1 confirms this situation. A political decision which deferred Romanian tourism development was the postponement of the privatization process, mainly in the hotel industry, despite the need for investment. Instead, individual persons or small companies started to manage the state owned hotels under the form hiring of management2. Due to the provisional situation of those contracts, almost no investments were made by the new managers. Also the amount of funds needed to modernize the accommodation establishments was important. The Romanian banks, during the 1990s, did not offer many credit alternatives and the credit lines for investments were almost absent. This situation contributed to a wide spread of ‘catch and kill’ behavior, with hotel and restaurant managers and owners concentrated only on short term profits. At least two studies, Moraru (2005) and Societatea Academica din Romania (2004), consider that the delay in privatization combined with the ‘hiring of management’ contracts served some individuals and group of interests. Accommodations in an advanced stage of degradation could be sold at a lower price than a modernized one. These opinions were supported by two facts: the International Monetary Fund managed to ‘convince’ the Romanian government between 1994 and 1995 to start the privatization process. However the tourism sector, mainly the hotel industry, was among those with a very slow pace of privatization; many privatizations were questionable and not transparent. One of the most frequently mentioned situation was the 2

The Romanian term was ‘locatie de gestiune’ translated from the French word ‘location de gestion’.

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Chapter One Part II

privatization case of the InterContinental Hotel building in Bucharest. The Marriott hotel group lost the competition to the Paunescu brothers, Romanian businessmen with important political connections (Societatea Academica din Romania 2004). After 2000 the privatization process accelerated, but its transparency did not increase despite attempts to show privatization auctions on Romanian TV channels, mainly for hotels. As result, the accommodations were sold to small size companies, sometime the same which managed the lodging under the ‘hiring of management’ contract. Even after privatization, those companies did not have the financial capacity to ensure the investment level needed to modernize the lodging facility or facilities. Romanian banks become more active in financing small companies’ investments only starting with 2003. Other accommodation establishments were bought by bigger companies, with the financial capacity to make investments. But in many cases the needed investments were never made or were done at a minimum level. It was stated that the privatization contracts included the owners’ obligation to invest in the accommodations they acquired. Until recently very little has been said about canceled privatization contracts because the re-investment obligation was not fulfilled. There were no true verifications regarding the privatization contracts, no one knows who should have done them. Perhaps the various group interests were more important and powerful than a legal obligation (Stefan 2006). However, another important reason exists to explain the situation: the majority shareholders regarded the lodging establishments they purchased as real estate investments and the hotel business was of secondary importance. Those shareholders have the strong belief that, after Romania’s accession to the European Union, foreign investors would come and buy the accommodations. They expected a large profit to be obtained through the difference between a high selling price and the low price paid through the earlier opaque privatizations. As in almost all economic sectors, private initiatives were not supported within the tourism and hotel industries. Thus, the rhythm of initiating small private companies in tour-operator, restaurant, pubs, and bars was more rapid. In the lodging sector this pace was slower due to the high level of funding required for such an investment. It was also induced by the indifferent attitude of the Romanian state owned banks toward financing the private sector. This attitude changed slightly only in the second half of the 1990s, after the start of privatization in banking sector.

Romania as a Tourist Destination and the Romanian Hotel Industry

13

4500 4000

Graphic no.4 Evolution of active companies in hotel & restaurant sector source: NIS

3500 3000 2500 2000 1500 1000 500 0 1994

number of private owned companies number of majoritary state owned companies 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Accommodation room rates represented, during the 1990s, another problem. The state ownership of Romanian lodgings allowed, mainly between 1990 and 1997, tourism authorities to establish room rates in a centralized manner. Also a differentiation between foreign tourists (higher room rates), and Romanian tourists (lower room rates) existed. Price negotiation at the reception desk was out of discussion. Even if the private accommodations were few, during the second half of the 1990s, the tourism authorities realized that there was a part of the sector where they could not establish the prices. Thus, they asked private lodgings to communicate, every year, at the Ministry of Tourism, what there should be a maximum level for their room rates. Such a request, combined with the above presented differentiation between room rates for foreign and domestic tourists, did not encourage a price policy based on flexibility and efficient management of Romanian accommodations. Romanian tourism existence was under the influence of ideas resulting from too many decades of centralized planning, rigid price practices, combined with the absence of investments and groups of interest pressure. These conditions could not represent a base for a real development of travel and tourism sector. Sometimes during 1994 or 1995, tourism was declared ‘a national priority’. When and by whom, no one remembers now (Business Magazine 2006). The declaration seemed to be related with the strategy for tourism development created by the Ministry of Tourism during 1994-1996 and completed with the Strategic Plan for Tourism Development in Romania (Societatea Academica din Romania 2004). Those documents remained, unfortunately, only on paper. No clear implementation attempt took place.

14

Chapter One Part II

However, those documents represented a first step in the right direction for the sector development. Another important step ahead was made in 1998. For the first time since 1989, a regulation dedicated to Romanian travel and tourism sector was issued and enforced through the Government Ordinance no.58/ 19983. It is also important to state the fact that, in the first paragraph of the regulation, tourism is declared to be a ‘priority domain of Romania’s economy’. After those promising advances, Romanian authorities did not get any further. No important attempts were made to implement a coherent development strategy for tourism. However, not many efforts seemed necessary in that direction as long as Romanian tourism still survived based on domestic tourism. Traveling and spending holidays abroad were out of reach for many Romanians during the late 1990s. Romanian tourism also benefited from the subsidies provided for spa tourism by Romanian decision-makers. The subsidies were given under the form of generous discounts for accommodation and for train tickets. The main beneficiaries were retired people, low income individuals and those with health problems4. Romanian authorities chose to keep spa tourism afloat through social actions. The modernization of existing resorts, the privatization, and the direct domestic or foreign investments were postponed invoking the same social reasons (Popescu 2006a). Subsidies were considered cheaper than the launch of a modern spa & wellness product and implicit promotional actions. Between 2000 and 2004 the Romanian politicians’ and authorities’ attitude toward tourism remained ambiguous. The situation arose also from the contradictory decision they took during 2003. During the first 6 months of 2003, tourism was, again, declared ‘a national priority’. However, by the end of June 2003, the Ministry of Tourism was integrated into the bigger and more complicated structure of Ministry of Transportation, Construction and Tourism (MTCT). The sectors of transportations and constructions were already important, with a complicated situation. Adding tourism to this structure only contributed to its future neglect. As a result of tourism integration in MTCT, between July 2003 and March 2004, it was not clear which authority will be in charge with the sector. By the end of March 2004, the National Authority for Tourism (NAT) was created and for its head the status of ‘president of NAT’ was established. 3

Since its enforcement, the Government Ordinance was modified three times through: the Law no.755/ 2001, Government Ordinance no.5/ 2003 and the Law no.299/ 2003. It should have been republished since its last alterations, but this thing never happened, making it difficult to read and to understand for any interested party. 4 Those subsidies were justified in the eyes of Romanian authorities by the high inflation rates, and the low level of pensions and medium wages.

Romania as a Tourist Destination and the Romanian Hotel Industry

15

Despite the contradictory decisions and actions, between 2000 and 2003, the privatization process of hotel industry came to an end and was officially declared closed. A lot of criticisms were made regarding the low level of privatization transparency and the manner of selecting accommodation owners. Those criticisms were real because the privatization process generated a highly fragmented hotel industry (which will be described in the next chapter). Also the new owners could not support the required level of investments, and had little or no experience in managing a hospitality unit. In other cases, they were relying upon the experiences of the 1970s and 1980s and made no effort to update the process and/ or their knowledge. During the same period, 2000-2003, numerous programs were proposed and launched by the Ministry of Tourism, under the guidance of minister D.M.Agathon. The positive output which resulted from the programs initiated by the Ministry of Tourism was represented by the good and creative ideas connected with those programs. It also showed that there were people who understood how Romania should explore its potential for tourism. All those interesting and modern ideas were, unfortunately, lost due several causes: - the large number of launched program and their diversity; - the time horizon established for implementing the programs (2-3 years) was unrealistic; - the sources of funding were not indicated and no special budgets were allocated; - no implementation guidelines were established. The absence of a strategy created the false belief that a good idea was enough; transpose it into practice would be easy. This proved not to be the case as for all the announced programs lacked the real communication between the central tourism authorities, local authorities, and local business communities which would have the most important role in the implementation of those programs. Further delays occurred when the Ministry of Tourism was included in the bigger structure of MTCT. A list of these programs is presented below. A short description of these programs exists in the annex no.1. 9 social programs, directed at Romanians with low incomes: ƒ May 1st at the Seaside and One week at the Seaside ƒ The Littoral for all ƒ Recover in spa resorts and One week of recovering in spa resorts ƒ Holiday in the countryside 9

programs for tourism development

Chapter One Part II

16

ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ 9

Superski in the Carpathian Mountains Salvamont Romania - Country of Wines Cruises on the Danube Blue Flag Q Mark (Seal) Program Romanian Casinos Infotourism

other program ideas ƒ Mamaia – Riviera of the East; ƒ Europa Resort ƒ National tourist parks ƒ The rehabilitation of burnt lodges ƒ Old trains ƒ Cultural and religious tourism

In November 2003 the Romanian National Institute for Research and Development in Tourism made available a new strategy for tourism development in Romania5. Its existence was ignored by many since it was not available either on institute website or on NAT official website. It was found, by chance, as a link on the website of the Agency for Regional Development, the North-West branch, in 2004 (Pop and Cosma 2005). For Romanian tourism development to occur, this strategy had the foresight to highlight that a true collaboration network must exist between NAT and other ministries which have any connection with tourism sector. A more coherent fiscal policy in tourism and hospitality was also considered a priority. Because was almost unknown, the strategy’s recommendations were ignored. The lack of direction for Romanian tourism development generated at least 3 other situations which had an impact on country’s image as a tourist destination: ¾ The controversial statements made by Miron Mitrea, minister of tourism between 2003 and 2004. He managed to contradict himself by first declaring that facilities for mass tourism would be developed in the Danube Delta, then latter announcing that the Danube Delta natural environment should be protected (Societatea Academica din Romania 2004).

5 Since the first strategy elaborated by the Ministry of Tourism for 1994-1996 was available only on paper, no comparison could be made.

Romania as a Tourist Destination and the Romanian Hotel Industry

¾

¾

17

The absence of an efficient communication between tourism authorities and those working at the Romanian borders generated an embarrassing incident in the summer of 2003. A tourist cruise ship from Turkey came into Sulina harbor in the Danube Delta. The tourists were treated as delinquents and they complained about border officers’ attitude. Romanian authorities’ response, mentioned by Financial Times (2003) was that those tourists should have used trains, airplanes or buses if they intended to visit Romania (Societatea Academica din Romania 2004). While cultural and religious tourism was included in the tourist program list, no true collaboration has being seen between NAT and the Ministry of Culture and Religious Affaires at least on two topics: museums visiting hours and common projects for promoting Romania’s cultural attractions. Several years were necessary for museums to agree on changing their visiting hours and stay open at least until 6.00 p.m. Even no, there are no flexible visiting hours for week days and longer hours during weekends (Business Magazin 2006). Only one common project regarding the monarchal tourism was identified and presented by HoReCa (2003) as collaboration between NAT and the Ministry of Culture and Religious Affaires. No other information exists on this respect.

General elections were held by the end of 2004. The newly elected government included, as the former governments did, tourism politics in its agenda. Once again the importance of tourism had been expressed, including emphasis upon infrastructure development supporting tourist destinations and better cooperation between NAT and the private sector (AnatMedia, February 2005). An optimist declaration was made in January 2005 by G.Copos, viceprime minister at that time. He stated that in two years Romanian tourism would compete directly with its western competitors (Business Magazin 2005a). A more realistic statement would have been appropriated. At the beginning of 2005 the declarative stage continued. The NAT president, M.Crivtonencu, promised a (new) strategy for tourism development by the end of that year (AnatMedia April 2005 and Budurca 2005). In November 2005, the newly appointed NAT president, O.Marian, declared that the WTTC report on Romania would be published. Only after this would the strategy for Romanian tourism will be written (Onaca Purdea 2005) Other much needed steps for further tourism development were made in 2006.

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The WTTC report on Romania was published in March 2006 and it represented the starting point for the long waited strategy for Romanian tourism development. At the end of the first quarter of 2006, the Romanian government declared and allocated, for the first time since 1990, the amount of 325 million EUR for tourism. These funds must be used by NAT, as Carmen Moraru, director for promotion within NAT declared, between 2006 and 2008 for the following destinations (Dionisio 2006a, Gheorghe 2006b, and Budin 2006): 9 Ski resorts – 130 million EUR (divided as follow: 2006 – 50 millions; 2007 – 50 millions and 2008 – 30 millions) 9 Spas (for an integrated and balanced development) – 90 million EUR 9 Danube Delta – 60 million EUR; some sources include the Black Sea Coast too; 9 Sibiu, 2007 Cultural Capital of Europe – 50 million EUR 9 Mountain resorts (for lodging capacities and other infrastructure in higher mountain region) – 30 million EUR Finally, at the beginning of August 2006, the official strategy for tourism development became available on www.mturism.ro. It was elaborated by NAT officials. It has two parts; the first one is dedicated to an inventory of Romanian tourist products and tourist destinations. It is realistic and points out all the problems which must be eliminated. However, it gives no information on the stage reached by the programs launched during 2004 by NAT. The second part attempts to draft a strategy for Romanian tourism development. SWOT analyses are available, while weaknesses and threats are mixed. The document also ignores several critical problems, including: - branding Romania as a tourist destination; - how the UNESCO heritage sites could be utilized to promote Romania; - what should be done to add more sites to the UNESCO list; - the use of the Dracula name for a tourism product promoting Romania; - establishment of a coherent fiscal policy for tourism industry; - collaboration with other ministries in order to ensure the network needed for tourism development; - collaboration with local authorities for strategy implementation. The absence, for years, of a coherent strategy can be understood if the list of ministers of tourism or in charge of tourism, since 1990, is analyzed (Dogaru 2006): January – February, 1990 – Mr. Mihai Lupoi February – June, 1990 – n/a

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June 1990 – November1992 – Mr.Constantin Fota November 1992 – December 1996 – Mr.Dan Matei Agathon December 1996 – April 1998 – Mr.Akos Birtalan April 1998 – December 1998 – Mr.Sorin Frunza Verde December 1998 – December 2000 – n/a December 2000 – June 2003 - Mr.Dan Matei Agathon June 2003 – December 2004 – Mr.Miron Mitrea December 2004 – June 2006 – Mr.Gheorghe Dobre June 2006 – March 2007 – Mr.Radu Berceanu April 2007 – present – Mr.Ludovic Orban6 It can be observed that, with the exception of Mr.D.M.Agathon, the other ministers were in office for around 2 years. NAT was created later and already had two presidents; they were (Dogaru 2006): March 2004 – December 2004 – n/a December 2004 – November 2005 – Mr. Marius Crivtonencu November 2005 – July 2006 – Mr. Ovidiu Marian Mr.O.Marian resigned at the end of July 2006. N nomination was made until December 2006 when Mrs. M.Barbuletiu was appointed (http://albaiulia.mconet.biz, December 2006). The strategy available in August 2006 should be completed and implemented. However, the process was stopped for at least half a year since NAT had no appointed president. Discussions also continue about NAT position in order to become a stronger voice for tourism development. On suggestion was that NAT should be subordinated directly to the prime-minister. The other one was the reorganization of Ministry of Tourism. Neither was put into practice yet. On two fronts advances have been registered, despite the delay in strategy availability: - Romanian resorts - Romanian tourist information centers. Concerning resorts, since 1996 three regulations were successively issued. Attempts were made to implement them. Those regulations are: - Government Decision no.77/ 19967 which established the first set of criteria for Romanian resort; 6

As the site www.mediafax.ro/articole-free/Politica-114025-6.html announces.

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Government Decision no.1122/ 20028 replacing the previous and extending the criteria list; - Government Decision no.867/ 20069 which further expanded the criteria list, replacing the second regulation. All these regulations tried to encourage local authorities to have initiatives in identifying potential tourist resorts. In the same time, the imposed criteria ask that the request for a local community to be declared a resort must be made on a proper documentation. However, a large portion of the 82 resorts presently included in the official list, only partly meet the criteria. They have a long way to go until all the criteria can be met. The list of the 82 official resorts is presented in annex no.2. When a comparison is made between the list of official resorts from 2006 and the strategy elaborate in August 2006 the following discrepancy is obvious: the number of spa resorts in the official list is of 49, including Black Sea resorts, and the number mentioned by the strategy is 160 spa resorts. This only shows how far Romania is from recognizing its spa tourism potential. Other drawbacks of the effort of establishing resorts are: - Vama Veche, one of the Black Sea resorts, where a small natural reservation exists, is not on the official resort list; - only one location of the UNESCO heritage site list is considered to be a resort of local interest (Horezu); - no town or village from the Danube Delta is on the official list of resorts. The above mentioned regulations could also have been enhanced by special regulations and attention directed toward tourism development of places where heritage sites or unique natural beauty exists. -

In the 1970s, Romania had an operational network of tourist information centers (TICs). This was owned to the centralized structure of the 7

Two categories of resorts were created. Those of national interest had to fulfill a list of 25 compulsory criteria, while the resorts of local interest most respond only to 15 criteria. Based on those lists of criteria, 6 years latter a list including 29 resorts of national interest and 36 resorts of local interest emerged. 8 According to this regulation, the resorts of national interest must fulfill 26 criteria and those of local interest 19 criteria. Using the new requirements, 4 years later the former list was expanded. The number of resorts of national interest increased at 37, of which 7 were new entries and one upgraded from the status of resort of local interest. The number of local interest resorts increased to 45, with 10 newcomers. 9 This last regulation impose a list of 32 criteria for resorts of national interest and one of 30 criteria for resorts of local interest.

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National Tourism Organization which had offices at every county level and in popular resorts. As it was shown previously, the quantity of promotional materials was adequate. The events during the 1980s contributed to the slowly disappearance of the TICs network. The role of these tourist information centers was almost ignored between 1990 and 2002 by tourism authorities. However, several private initiatives existed and a small number of TICs were opened during the 1990s under private patronage. One of the best known was the TIC from Maramures region. In December 2002 the minister of tourism, D.M.Aghaton, publicly recognized the need for the creation of tourist information centres in every county and in every important tourist destination. A regulation regarding this process was promised. That regulation is still in the draft stage. Meanwhile the regulation concerning resorts requests the presence of a TIC in every declared resort. Despite the lack of regulation in this field, tourist information centres were created. In September 30, 2006, as the official website of Romanian National Authority for Tourism shows10, Romania had 38 tourist information centres of which 22 are situated in the administrative capitals of Romanian counties. It is encouraging that Constanta, the main town at the Black Sea, and Tulcea, the main town in the Danube Delta, have each 2 information centres. Other important tourist destinations like Prahova Valley or Sibiu region also have developed several information centres, too. The list of the tourist information centres is available in annex 2b. Nevertheless it is interesting to observe that Bucharest has no tourist information centre. By the end of 2005 the opening of 3 TICs in the Romanian capital was announced. Until now none was opened.

10

www.mturism.ro/fileadmin/mturism/centre_informative.ro

PART III: BRANDING ROMANIA AS A TOURIST DESTINATION

To become a well-known and desired tourist destination, Romania needs a brand. Every country claims a unique culture and heritage. Each place describes itself as having the friendliest people and the most customer-oriented tourism industry and service. Facilities themselves are no longer differentiators. As a result, the need for destinations to create a unique identity, to differentiate themselves from their competitors, is more critical than ever (Morgan, Pritchard and Pride 2002, pg.11). In marketing terms, a brand represents a unique combination of product characteristics and added values, both functional and non-functional, which have taken on a relevant meaning which is inextricably linked to that brand, awareness of which might be conscious or intuitive (Morgan, Pritchard and Pride 2002, pg.12) To present itself as a unique tourist destination Romania needs to follow the five steps needed for creating a destination brand: 1) Market investigation, analysis and strategic recommendation 2) Brand identity development 3) Brand launch and introduction – communicating the vision 4) Brand implementation 5) Monitoring, evaluation, and review The situation of Romania for each step will be presented.

1) Market investigation, analysis and strategic recommendation Destinations are not a single product, but composite products consisting of a bundle of different components including: accommodation and eating/ dining establishments, tourist attractions, arts establishments and cultural venues, and the natural environment (Morgan, Pritchard and Pride 2002, pg.19) The essence of creating a successful brand is to build an emotional link between the product and the consumer, the atmosphere of a resort, the hotels in

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which the tourist stays in, and the friendliness of the local people or some overall impressions. Most (popular) destinations have something, a specific selling opportunity that can be translated into a unique selling proposition (Morgan, Pritchard and Pride 2002, pg.20) According to these ideas, the following sections will present what has been done in the field of branding Romania. The direct competitors for Romania were identified (Moraru 2006, NAT Strategy 2006) as follows: - Poland, Czech Republic, Slovakia and Bulgaria which have similar natural environments; - Hungary for spa and business tourism; - Croatia for beach tourism and heritage tourism To this list Austria must be added as an important competitor in ski tourism. It must be also mentioned that currently Bucharest could not compete in tourism terms with Budapest, Prague, Vienna and Warsaw. It would be interesting to highlight several strap lines (slogans) for Romania and its competitors: o Romania tried to lure tourist with ‘Come as a tourist, leave as a friend’ (around 1998-2000). Since 2004, the strap line become: ‘Romania – Simply surprising’; o Czech Republic use the slogan In the heart of Europe o Hungary presents itself to tourists as The essence of Europe. The slogan for Romania raises some questions compared with the strap lines for the other two countries. The comments on Romania – Simply surprising will be made on the pages that follow. When analyzing what Romania can brand, those in charge with the branding process must be very realistic, as Michael Bird revealed (Bird, 2005): ‘…tourists come here (in Romania) because it is still a mysterious place to visit and they do not know what to expect… The Black Sea Coast is pleasant, but is not Croatian coast. The mountains are impressive, but they are not the Alps. The Danube Delta is pretty, but it is not the Everglades. There is a little bit of everything, but in miniature.’ For now, Romanian travel and tourism is characterized by a high level of seasonality, as the WTTC report from 2006 on the country highlights. New types of tourism and new products are necessary for minimizing this effect.

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From this point of view, the main market segments for Romania as a tourist destination could be: - meetings, incentives, conferences and exhibitions; Bucharest could be an interesting destination for international companies organizing such events; - mountain tourism (for winter and summer); - heritage tourism (for cities like Brasov, Sibiu, Sighisoara, Cluj-Napoca, Bistrita); - rural tourism (festivals, the road of monasteries, wine road, mineral water road); - spa & wellness tourism (Romania concentrates one-third of the supply of the thermal water in Europe, as specified above); - the Danube Delta (one of UNESCO’s World Heritage Sites); - geo-tourism (for 2007 is expected the launch of the guide for geotourism in Romania – in collaboration with National Geographic). The first five market segments are presented in the above mentioned WTTC report as tourism products to be developed in Romania. Between 2004 and 2005 NAT tried to find out how Romania is perceived as a tourist destination. Interrogated tourists came from: USA, United Kingdom, Ireland, Germany, the Netherlands, Austria, Spain, Italy, Sweden and Russia. The graph 5 below presents the structure of foreign person’s arrivals in Romania by country of origin. Graphic no.5 Structure of foreign persons arrivals in Romania - average between 1994 and 2006 source: based on NIS data North America 1.59%

Asia 2.29%

other regions 0.64%

Europe 95.48%

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Graphic no.6 Structure of Europeans arrivals in Romania - average between 1994 and 2005 source: based on NIS

other European countries 26.51% Hungary 22.44%

Germany 5.60%

Turkey 5.77%

Ukraine 7.80%

Austria 3.20% France 3.24%

Bulgaria 9.67%

other EU countries 11.49%

Rep.Moldova 22.22%

Graphic no.7 Structure of European Union arrivals in Romania - average between 1994 and 2005 source: based on NIS data

Czech Rep. 3.37% Slovakia 3.63%

Hungary 50.00%

Poland 4.71% Italy 7.90% Germany 12.48%

Considering the list of countries for interviewed tourists, NAT, generally, took into consideration those counties that can provide an increased number of tourists. Unfortunately, NAT omitted to interview Hungarian tourists, while the arrivals from this country represent 50% of the European Union arrivals in Romania. Other research conducted by NAT during the same period (NAT newsletters July 2004 – June 2005) pointed out the interest expressed by official tourism representatives from Czech Republic, Italy, Russia, Sweden, China, Germany, Slovenia, UK and Ireland, USA, Austria, Slovakia, Poland, and Turkey. These people expressed their interest for: cultural and heritage tourism in regions like Transylvania and Bucovina, including medieval towns; for

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mountain resorts located in Prahova Valley and for the Danube Delta. Least interest was expressed for Romanian littoral area and Wine Road program. The same source interrogated tourists from USA, UK and Ireland, Germany, the Netherlands, Austria, Spain, Italy, Sweden, Russia regarding their interest in various types of tourism. Their answers highlighted the following: - cultural tourism, including medieval towns and Transylvania, and cultural tours were on the top of foreign tourist preferences; - the Danube Delta and cruises on Danube were indicated next; - combined tours – urban tourism with spa & wellness followed; - theme tours were mentioned especially by American and British tourists, mainly concerning the Dracula theme; - mountain tourism, active tourism, and the Romanian littoral had average frequencies; - Ski tourism was the least preferred. As WTTC recommended and the NAT research results indicated, Romanian authorities responsible for tourism should give up their old ideas regarding the development of ski tourism and Romanian littoral tourism, especially when foreign tourists are concerned. Instead, they should concentrate on spa & wellness tourism and on cultural tourism if they want to be in tune with tourists’ requests. The following table compares the WTTC recommendations, what has been done and what the strategies for tourism development proposed.

Romania as a Tourist Destination and the Romanian Hotel Industry

MICE (meetings, incentives, conferences & exhibitions) Mountain tourism – with an extension for the summer period Heritage tourism

The 2006 strategy – priority sectors

The 2003 strategy

Business and MICE tourism Mountain tourism

Mountain tourism (1st place)

Mountain tourism (1st place)

Spa tourism (2nd place)

Cultural tourism (2nd place) Rural tourism (including local festivals – 3rd place) Spa tourism (4th place)

Cultural tourism

Rural tourism

Spa & wellness tourism

The new official website www.romaniatravel.com

The old official website www.turism.ro

WTTC recommendations

Table no.1: Comparative situation of tourism product recommendations

Rural tourism

Spa and recreational tourism Regions or destinations: Moldova & Bucovina Maramures Black Sea

Spa tourism

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Coast Danube Delta Transylvani a Bucharest Religious tourism Ethnograp hic tourism Cuisine & Wine tourism Active tourism

Forms of active tourism (5th place) Ecotourism, including Danube Delta (3rd place) Littoral tourism (4th place)

Littoral tourism

Sources: World Travel & Tourism Council Report, 2006, Romania: The impact of Travel&Tourism on jobs and the economy, http://www.wttc.org/publications/pdf/06WTTCRomania.pdf Institutul National de Cercetare-Dezvoltare in Turism - INCDT, Strategia Dezvoltarii Turismului Romanesc, November, 2003, www.nord-vest.ro as it was in December 2004 National Authority for Tourism, Srategia Dezvoltarii Turismului in Romania, August 2006, http://www.mturism.ro/index.php?id=96 www.turism.ro www.romaniatravel.com

Romanian websites have the disadvantage of focusing on underdeveloped products like cuisine and wine tourism. Also new products, like active tourism, need a lot of improvement since they started to be developed only 2 to 3 years ago.

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However, a positive outcome is represented by similarities between the WTTC recommendations and the existing tourism products. Also the 2006 strategy tried to follow the WTTC recommendations, when the list of priority tourist products was established. When red in detail, it could be discovered that the Romanian littoral is the best developed section, due to its former ‘glory’ from the 1970s. However, Romanian littoral can no longer rely on that. The WTTC do not recommend this product for extensive further development. Thus, Romanian officials keep putting Romanian Seaside on the top of their priorities. It is frustrating that they do not want to address the real problems this destination faces: erosion affecting the beaches, old fashion accommodations, crowdedness, and the low quality of services. Intelligent investments should be made in the years to come in order to develop mountain tourism in a way that makes it attractive all year round. Ski facilities need to be modernized and expanded. A lot should also be done to diversify the entertainment facilities and to offer more opportunities for spending free time in the mountain resorts during the summer. The product that Romania can count on is cultural tourism. Perhaps its development should be put at the top of the list because in 2007 the Transylvania medieval town of Sibiu will be the Cultural Capital of Europe. It is a good starting point and an opportunity to interview the tourists again regarding their demands from Romania as a tourist destination. The following pages will discuss two potential products which can be developed under the umbrella of cultural and heritage tourism. The first product involves the UNESCO heritage sites in Romania. The second product refers to the controversial problem of Dracula. Neither one of those products is considered in the strategy for Romanian tourism development; either as cultural tourism products or as independent products.

Romanian UNESCO heritage sites UNESCO heritage sites are unique and they can differentiate tourist destinations. When compared the 7 UNESCO heritage sites from Romania against those existing in the countries that are Romania’s direct competitors in the tourist market, a lot of similarities have been found. These are presented in the annex no.3 As table 2 shows, the number of UNESCO heritage sites is almost identical for Romania and its competitors.

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Table no.2: Number of UNESCO heritage sites Country Bulgaria Croatia Czech Republic Hungary Poland Slovakia Romania Europe

No. of heritage sites 9 6 12 6 13 4 7 378

Source: based on UNESCO information

These similar elements should be considered when a tourist destination is promoted in order to present those features that are really special, individual or reflecting a peculiarity. In Romania’s case it can be argued that the Danube Delta is singular; but so is every natural from the UNESCO’s list. What can be considered truly unique for Romania are the painted churches of Bucovina. An idea worth of consideration is the creation of a complex tourist product. This could combine similar UNESCO heritage sites in different countries from a region. A win-win situation might arise of these cross-countries tours. While the UNESCO heritage sites from Romania have a special section11 on the official website for Romanian tourism, nothing else has been done to promote them either inside a dedicated tourist package or as individual tourist products. The indifferent attitude toward the potential of UNESCO heritage sites to promote Romania as a tourist destination is supported by the following facts: - only two UNESCO heritage sites have tourist information centers12; - only the town of Horezu, where the Monastery of Horezu is locates, is included in the list of resorts of local interest, while its position should have been a resort of national interest. It may reach this position in the years to come. Local and central tourism authorities should work together in order to include more UNESCO heritage sites locations into the official resort list. It would represent a confirmation of the fact that those special sites receive the 11

http://www.romaniatravel.com/index.php?lng=en&tree=44 One of them is the Dacian fortresses; the TIC is located in Orastie, the nearest town. The painted churches from Bucovina also have two information centers; one in Suceava (the Municipality of Suceava County) and another in Sucevita, where Sucevita Monastery is located. 12

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needed attention in order to become important factors in tourism development. Unfortunately, the strategy formulated by NAT in August 2006 contains nothing concerning the UNESCO heritage sites. Not even a declaration that the local authorities should be encouraged to promote these sites, protecting them at the same time exists. The same indifferent attitude characterized the NAT approach to the tentative list of new UNESCO heritage sites proposed and submitted by Romania. As the table below shows, after 13 proposals submitted in 1991, new entries were added only in 2004 and 2005. What could be done further for Romania to have more UNESCO heritage sites is not specified. However, the NAT’s attitude toward these potential sites is at least odd when consider the declaration that tourism is a national priority. Table no.3: The tentative list submitted by Romania No Name of the proposed heritage site Year of . submission 1. Century-old forest of Slatioara 1991 2. The Byzantine and Post-Byzantine 1991 Church of Curtea de Arges 3. The Church of Densus 1991 4. The Church ‘Trei Ierarhi’ of Iasi 1991 5. The strengthened church of Dirju 1991 6. The sculptural ensemble of Tg.Jiu, 1991 realized by Constantin Brancusi: including: The Table of Silence, The Gate of the Kiss and the Endless Column 7. The Neamt Monastery 1991 8. The Rupestrial Ensemble of Basarabi 1991 9. The historical center of Alba Iulia 1991 10. 11. 12. 13. 14. 15.

The particular houses (cule) from Small Wallachia The Retezat Mountain The peak of Pietrosu Rodnei Mountain The paleontology site of Sinpetru The Historic Centre of Sibiu and its Ensemble of Squares The Church of Resurrection of Sucevita Monastery

Presence of TIC

Iasi Tg.Jiu

AlbaIulia

1991 1991 1991 1991 2004

Sibiu

2005

Sucevita

Source: http://whc.unesco.org/en/tentativelists/state=ro, end of July 2006

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To promote those sites, the TICs represent only the first step. Other step – from protection to special tourist packages or products should follow. The monuments sculpted by Brancusi are unique in the world. They can provide an important differentiation feature for Romania as a tourist destination. This position will only be enhanced when included in the UNESCO World heritage sites list. At the present moment, the tourism potential of those monuments is very little exploited. Local and central authorities invoked that the right to use Brancusi’s name is owned by its heirs from Canada (The Diplomat, February 2006). However, the problem should be solved soon id Romanian tourism authorities are truly concerned about making Romania a special tourist destination.

Dracula as a tourist product For many foreign tourists and tour-operators it is hard to understand why Dracula is not used as a typical Romanian tourist product. This section will explain why it was and still is difficult to develop a tourist product including Dracula name in Romania. Also it will be explained why NAT avoided to include such an idea in the 2006 strategy. Dracula is not a Romanian brand, but an international one. Its identity as international brand started in 1931, when the first Hollywood movie was made on this subject – based on Bram Stoker’s book Dracula. Even since Dracula’s notoriety grew and is demonstrated by over 200 films, more than 1000 books published on the subject and almost 50.000 existing associations and fan clubs (Gruia 2005). Bram Stoker chose to locate his vampire Count ‘home’ in the mysterious Transylvania13, region of the modern Romania. Romania could develop a competitive advantage by owning the position of ‘vampire Count home’, due to Stoker’s choice. Should this opportunity to be exploited or not? It is a question Romanians, Romanian authorities and the business community has been asking for decades. An answer is difficult to give, at least for the following reasons: - by adding the name Dracula14 to its vampire Count, Stoker created confusion between the fictional character and the historical figure of

13

The choice of the location for the vampire count was made by Stoker based on a 19th century book (Light 2005, Iancu 2005): Transylvanian Superstition written by a Scottish woman, Emily de Laszowska Gerard, and published in 1885. 14 The inspiration for the name Dracula seemed to be the following book (Light, 2005; Iancu 2005): An Account of the Principalities of Wallachia and Moldova, published in 1820 and written by William Wilkinson, former British consul in Bucharest.

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Vlad Tepes15, known as the Impaler. Vlad Tepes is perceived and considered by Romanians as a hero and his connection with the fictional Count Dracula is rejected by many. The confusion between those two personages was enhance in 1972 when the book In Search of Dracula, authors R.Florescu & R, McNally, was published; - the image of the vampire Count Dracula is negative, because it is a dark character, and it is very difficult to exploit a negative image in a positive manner; - Romanian folklore does not include the vampire. This fictional character is associated with Western cultures. However, in the Romanian folklore the evil spirit exists. It is named ‘strigoi’ - in English its best translation is ghoul. The Romanian ghoul does not have a human body and has no similar features with a vampire. These reasons suggest that the most likely answer to the question asked above seems to be negative. Thus, Romanians could not ignore the fact that, through Bram Stoker’s book, the Dracula myth was created and its connection with Romania can not be left aside or denied. Dracula’s myth was somehow exploited in Romania. However, it did not become a tourist product despite foreign demand. It is difficult to say whether the first Hollywood movie showing Dracula as principal figure16, in 1931, generated interest in Romania as tourist destination. This was due to the Great Depression. The correlation between the Dracula myth and Romania was also delayed by the Second World War the reconstruction decades which followed. The trigger point for the idea that the Dracula myth should be exploited in Romania was the publishing of the book In search of Dracula in 1972. After reading it, a lot of foreign tourists who visited Romania asked about Dracula 15

Vlad Tepes was born (presumably) in Sighisoara as the son of Vlad Dracul. He became the lord/ ruler (or voivode) of the Principality of Walachia in 1448, then between 1456 and 1462 and in 1476. Vlad Tepes is also known as Vlad the Impaler. The surname Dracul, inherited from his father, seemed to derive from the fact that the men from the family were member of the Order of the Dragon, an organization which fought against Ottoman Empire expansion. Because 15th century Romanian language had no word for dragon, it was translated ‘dracul’. Vlad Tepes was also considered one of the cruelest people of all time because he was portrayed in that manner by the German and Hungarian chronicles of 15th century (Miller, 2002; Light, 2005 and Rezachevich, 2005). For those with a real interest in history, Vlad Tepes was a man of his time, punishing the people who did wrong with the methods commonly used during the 15th century (Rezachevich, 2005). 16 In this movie, the Count part was played by Bela Lugosi, born in Transylvania at Lugoj, now a small town in Timis County (Iancu 2005). This coincidence generates a stronger link between Transylvania and Dracula.

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(Gruia 2005). At first, the communist authorities had a negative reaction to the success of this book and to the connection made with Vlad Tepes. As a result they tried to present the historical figure of Vlad Tepes to those foreign tourists asking about Dracula. The offered tours were concentrated on the history. No surprise, the tourists were not interested in the historical figure; they were looking for ‘their vampire’ (Gruia 2005, Iancu 2005). Because foreign tourists were a source of much needed currency, Romanian communist authorities changed the theme of the tours in order to keep the visitors coming. Thus, not understanding what the tourists wanted: stories about a fictional vampire Count Dracula, another extreme was reached. The new tours focused on Romanian folklore, superstitions and frightening experiences (Gruia 2005, The Diplomat 2006). The length of such a tour was supposed to be 6-7 days, but some sources (Gruia 2005) indicated that the foreign tourists lost interest in this particular and peculiar subject. An average tour lasted no longer than 3-4 days. After trial and error, in 1976 and 1977, a combination between historic and fictional tours was offered to those who expressed an interest in the Dracula myth (Gruia 2005). During that period, several locations became popular for Dracula tours: - Bran Castle17, named Dracula Castle, situated in Bran, near Brasov; it was the preferred destination because it was the easiest to reach and the closest to Bucharest; - Poienari Fortress18, presented by the book In Search of Dracula as the ‘real Dracula castle’, but it did not become a popular destination due to its isolated location; - Sighisoara, with its medieval fortress, where Vlad Tepes was supposedly born; - the Castle of Dracula Hotel opened in 1976/1977; the building copies a medieval style and was located in Birgau Pass19, at 42 km (26 miles) from Bistrita, the town mentioned by Bram Stoker in his book; 17

In Bran, the first fortress was built around 1377 and its strategic position was important for the rulers of Transylvania. In 1920 the castle was given as a gift to the Romanian royal family. For more information on Bran Castle please visit www.brancastlemuseum.ro. The castle was returned to the Romanian royal family heirs during the first quarter of 2006 (Anghel 2006). 18 Cetatea Poienari (Poienari Fortress or Citadel) is known also as Cetatea lui Negru Voda (the Citadel or Fortress of Black Ruler). Without solid historical evidence, it is supposed that the citadel was erected at the beginning of 13th century by the rulers of Walachia. Some historical sources indicate that Vlad Tepes, the Impaler, reinforced the fortress – due to its strategic location. The legend says that for this work Vlad used noble people, including their wives and children, whom he held responsible for the death of his father. But no documents were found to support the legend.

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Snagov Monastery where Vlad Tepes is supposedly buried. In the 1980s, Count Dracula became a ‘decadent’ figure (Gruia 2005, Iancu 2005) in the eyes of Romanian communist authorities and tours based on the Dracula theme were abandoned. In the first half of 1990s, when Bram Stoker’s book Dracula was translated into Romanian and became available to a large number of people, the idea of exploiting the Dracula myth was rejected. One of the most important reasons, according to The Diplomat from February 2006 was that any time Romania was mentioned, the name of Dracula almost always was associated. Considering the precarious economic situation of Romania, along with an unfavorable external image, the name of Dracula in direct correlation with Romania acted like ‘a last straw’. It should not be a surprise that many Romanians considered Dracula as a negative figure that cast a dark shadow over the country. By the mid 1990s feelings toward Count Dracula became mixed, since some, albeit very few, perceived the business opportunities which could be generated by Dracula’s name and its connection with Romania. In March 1995, the first World Dracula Congress took place in Romania. The media maintained a contemptuous attitude and all the participants were characterized as ‘odd people interested in vampires’. This attitude reflected the negative feelings of Romanians, or at least Romanian media, toward Dracula. Only in 2000, Romanian Ministry of Tourism announced its official position on this matter. The minister D.M.Agathon declared that Romania should see Dracula’s name as an opportunity to attract tourists and the Dracula myth should have been exploited during the 1990s at least in the manner of the 1970s. A tour named ‘On Dracula’s Tracks’ was proposed and the project of Dracula Park was launched. Both proposals never became real products. However, a positive outcome emerged from this change of attitude; it generated discussions and an increasing number of Romanians started to accept the fictional aspect of Count Dracula. Now fewer connections are made with the historical Vlad Tepes, though the link cannot be ignored. In 2005, over 20 Romanian travel companies offered packages based on the Dracula myth (Iancu 2005). Their activities are based around locations connected with the Dracula theme since the 1970s: Bran Castle, Poienari Fortress, Sighisoara, Castle of Dracula Hotel and Snagov Monastery. Two other activities are:

19 In Western literature, Birgau Pass is written as Borgo Pass; on Romanian maps it could be found under the name of Tihuta Pass, too.

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the Hotel ‘Home to Dracula’ opened in Poiana Brasov in November 2005. The main shareholder is a British company which owns other 3 lodging facilities in Romania; it stated the intention to initiate a hotel chain ‘Home to Dracula’ in the years to come20, if the 17 rooms hotel prove to be a success; in 1997, in Bucharest, the Count Dracula Club Restaurant was opened. It offers live performances, on Tuesdays and Fridays, provided by an actor impersonating Dracula. The restaurant is a favorite of foreign tourists; the Romanians only go there if they are accompanying a foreign friends or business partners.

Dracula Park (several facts) Taking into account the Dracula’s notoriety, the idea of the project Dracula Park (named also Dracula Land) was launched in November 2001. The investment was estimated at $ 31.5 million (Drumea 2002). When the idea of the park was formulated, 5 potential locations were on the list: Sighisoara, Rucar-Bran Pass (near Bran Castle), Birgau (Tihuta) Pass, Poienari Fortress and Snagov Monastery21. Breite Plateau, near Sighisoara22, was chosen because it was considered the most accessible location by road or railway. The Fund for Tourist Development of Sighisoara was created and an initial public offering was launched. Between December 2001 and April 2002, this public offering raised an estimated $ 3.3 million from 14,000 shareholders. (Drumea 2002) The location choice generated a lot of criticism and protests. UNESCO issued a report regarding the Dracula Park project and its conclusions were negative. The main recommendation formulated by UNESCO report was to relocate the park. UNESCO’s attitude was motivated by the fact that the historic centre of Sighisoara is one the 7 World Heritage Sites listed in Romania. Such a park would create a kind of mass tourism which would have a negative impact on Sighisoara’s historic centre and an unwanted influence on cultural tourism – a product more suited for Sighisoara and the fortified churches within the surrounding region. 20

As the following source suggests: AnatMedia, November-December 2005, www.anat.ro/index.php 21 www.draculaland.ro as it was in 2004 22 Sighisoara is situated at 50 km (31 miles) from the Tg.Mures airport and at 100 km (62 miles) from Sibiu airport. From Bucharest, by train, it can be reached in 5 hours and almost the same amount of time is needed by car. From Brasov by car or by train it takes 2 hours to reach Sighisoara and from Cluj-Napoca the time needed is 3.5 – 4 hours.

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Another strong voice in the matter of Dracula Park was the British Mihai Eminescu Trust23 which put a lot of pressure on Romanian authorities to reconsider the location. The motives invoked were historical, cultural and environmental. Breite Plateau is considered an ecological protected area. The protest had also the support of Prince Charles of Great Britain. Clergymen from Sighisoara also protested against the park, labeling the project as ‘satanic’ (Spicuzza 2003). In addition, Hollywood Universal Studios which threatened to begin legal action concerning the copyrights on Dracula (Spicuzza 2003). Some Western and American newspapers considered the project of Dracula Park to be in a bad taste for the 21st century (Iancu 2005). For a while it seemed that all the protests and criticism were in vain. Though, by the end of 2002 PriceWaterhouseCoopers was solicited to audit the Dracula Park project. The audit report recommended that the park should be relocated. The recommendation took into consideration the cultural and environmental problems. It also highlighted the fact that the location near Sighisoara could not support a large flow of incoming tourists, needed for a successful theme park. These pressures and opinions convinced the Romanian authorities to relocate Dracula Park to Snagov, at 30 km (19 miles) from Bucharest and near the Snagov Monastery. After generating much discussion during 2002, silence surrounded the Dracula Park project since 2003. No important steps were made toward transforming the project into a real park. One of the reasons could have been the vague and blurry ideas which existed about how the park should look. Another reason was the partnership between a private company (Dracula Park Company which replaced the initial Fund for Tourist Development of Sighisoara) and a state company, RA APPS24. The final reason may be that the official approval for the park construction was only given in October 2004, an election year, and the park was no longer a priority. In 2005 the political power changed and no more political support was directed toward the park. At the beginning of July 2006, the Romanian government decided to cancel the construction project for the Tourist and Leisure Park Snagov (the new name for Dracula Park) due to the fact that no investments have made to the established location since October 2004. Several days later, the minister of transportation, construction and tourism – Radu Berceanu – declared that the project ‘is not a bad idea’ and 23

www.mihaieminescutrust.org Regia Autonoma – Administratia Patrimoniului Protocolului de Stat (a State company which administre the buildings and accommodation establishments owned by the Romanian State) 24

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suggested a new study on the construction of Dracula Park, because ‘Dracula is the most well known Romanian brand’ (Stoica 2006). When the study should start, and who would support the costs, it was not specified. By the end of 2006 this suggestion was forgotten. The idea of such a theme park was not welcomed by everyone. Among the voices speaking loudly against a Dracula Park is Duncan Light, Associate Professor of Human Geography at Liverpool Hope University. He considers that a park with such a theme could generate a strange image for Romania, creating a distance between the desire to become a European country, and the message sent by a park with the Dracula theme. This message could be quite negative and dark. It should not be forgotten that Romania’s image abroad is still tainted the beggars, bad conditions in the orphanages and delayed political reforms (Gruia 2005). It is a strong possibility that 21st century tourists would have a cold attitude toward such a theme park. Older and more educated tourists would consider it kitsch. Younger tourists would associate it with Disney parks and might be disappointed. Only a niche of tourists interested in the dark spirits would still be attracted, after the initial curiosity would fade away. The niche mentioned above could prove to be too narrow to support the needed tourist inflow for a large amusement park. Besides, it is unlikely such tourists would come back every year to the same location. A thorough study on demand for a Dracula theme park should be conducted, mainly among foreign tourists, before any decision can be taken for developing such a project. The other voice speaking against the Dracula park was the Transylvanian Society of Dracula which, along with some Romanian touroperators, suggested the idea of two smaller parks: one situated in Bran and having the name Legend Land of Transylvania and the other one named Dracula Land located in Birgau Pass25. Other locations suggested for those smaller park projects were near Poienari Fortress and near Sighisoara. As the case of Dracula park showed, Sighisoara is not a good choice for such a theme park. However, the development of smaller theme parks could be a better choice. They can be operate easier, put less pressure on the environment, and do not require a large flow of incoming tourists. If the idea of a Dracula theme park is not abandoned, Romanian authorities should learn from the past mistakes which put the previous project on hold.

25

www.cesnur.org

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The project was stalled by administrative problems, lack of funding and political involvement. There was also no clear idea about the park design and attractions. In the first draft, the Dracula park project took into consideration only the book of Bram Stoker. This story is too narrow for a theme park. After the location change, it was not clear if the original idea of the theme park would be kept. Some officials suggested that the park should include a golf course, a hippodrome, an aqua park and a race car track (Iancu 2005, Stoica 2006). No one could say how this strange combination of amusement facilities would fit into a theme park about vampires. Such views only show the poor knowledge of those involved in Dracula park project. They also indicate the absence of professional advisers. A future park on the Dracula theme could exploit at least 3 books internationally successful: - Dracula by Bram Stoker published in 1897. This book represents the starting point for the spread of the Count Dracula myth all over the world, with the additional help of Hollywood movies since 1931; - In Search of Dracula by R.Florescu and R.McNally, published in 1972. the book represents the starting point for tourist’ interest in Dracula tours, searching for the vampire Count in Romania; - The Historian by Elena Kostova published in 2005, which presents the Dracula myth from a different perspective, and makes a better mix26 between the myth and history. It could be a model of how the Dracula myth should be exploited in the future. The theme could be completed by two other books which used the mysterious Transylvania in their pages before Dracula by Stocker. Those books are: - One thousand and One Phantoms by Al.Dumas, published in 1849 - The Castle of the Carpathians by J.Verne, published in 1892. However, the question asked previously has yet to be answered. A tourist product that features Dracula’s name should be developed in order to exploit the competitive advantage Romania has. The arguments in favor of such a product could be: - the story which created the Dracula myth exists, the book Dracula by Bram Stoker. It is complemented by at least two other books, mentioned above: In Search of Dracula and The Historian. These 3 books could serve as inspiration for literary tours27. 26

Based on a thorough documentation. Romanian tour-operators should not forget that literary tours are a new trend, launched by Brown’s Da Vinci Code. 27

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Romania already has a number of known locations in connection with the Dracula myth: Bran Castle, Sighisoara, Birgau Pass, Poienari Fortress, and Snagov Monastery. These advantages should not be lost. Dracula is an international brand and it has notoriety, built on over 70 years of existence28. The costs of promoting a tourist product including Dracula’s name internationally are very low due to the Dracula brand notoriety and to the fact that Romania and Dracula are mentioned in the Western press every year when Halloween approaches (Iancu 2005). Romania was almost absent from the tourist market since 1980s and had a low profile during the 1990s; the competition is fierce and any competitive advantage should be used.

The main barriers in developing a tourist product including Dracula’s name are both historical and cultural. Some of the cultural barriers were overpasses since 2000 when Romanians started to understand that Count Dracula is a fictional character. Other barriers can be overcome by a Dracula tourist product divided in two distinctive, yet complementary, products: - one product for foreign tourists must have as a base the fictional character created by Bram Stoker or the new, more sophisticated, figure created by Elena Kostova. Or it can combine features from both sources. When this product would be created, the Western vision of a vampire and the atmosphere the foreign tourists are looking for must be taken into account. This new product for foreign tourist should have a distinct component for the Halloween created mainly for American tourists who might choose spending this celebration in Romania. Until now, several sources (Gruia 2005, Iancu 2005, and Light 2006) show that the present offerings produced disappointment for foreign tourists because these did not match with their expectations. - one product for Romanian tourists which would include historical features in connection with Vlad Tepes and cultural features linked with local traditions and legends. This product is suited to smaller theme parks because they can combine the story told by international bestsellers with the local legends, customs and traditions. The two products mentioned above should have a common zone, where the fictional and fantastic elements of the story can be combined with Romanian

28

Considering as starting point the first film made at Hollywood in 1931.

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historical and cultural elements. This common zone will allow the product to be sold as a whole or by component parts, depending on (tourist) demand. In relation with these two products, the promotion of another product can be made: cultural tourism in Romania. General references to Vlad Tepes link his image with other important tourist destinations like: Bucharest, Snagov, Bran and Sighisoara. In fact, Vlad Tepes was a dynamic character, crossing many parts of Romania (mainly Wallachia) and facilitated the construction of important buildings during the second half of 15th century. The historical figure of Vlad Tepes can be related to medieval heritage sites like Sighisoara, Bran Castle, Thomas Altemberger House from Sibiu, the Huniazi Castle/ Citadel from Hunedoara, and also to late Gothic architecture style like Poienari Fortress, the old palace of Tirgoviste, Curtea Domneasca29 from Bucharest, Turnu Rosu Fortress, and the old fortress from Medias. Using the historical dimension of Dracula through its (unavoidable) connection to Vlad Tepes, cultural tourism could be more attractively promoted for foreign tourists. This kind of link could also soften the rejection of Romanians. However, the cultural dimension of the Dracula product could attract Romanian tourist to rediscover their country. Of course, the Dracula tourist product should be developed within the trends and requirements of the 21st century. It should be a flexible product. Its central character, Count Dracula, must be able to change form from the vampire created by Stoker to the sophisticated scholar from The Historian and even become a ‘Mr. Nice’ vampire if the trends and tourist tastes require that, particularly for children. When developed, the product should have style and should not offend local tradition, religion, and culture. If the Dracula tourist product would develop, it could open the door for other tourist products, from cultural to leisure and adventure, for those foreign tourists who want to know more about Romania beyond the connection with Dracula’s name and myth. Romanians should not be afraid of Count Dracula. The tourist product with the Dracula name could become less important in overall country’s tourism once Romania has developed a background to offer its other tourist product.

2) Brand identity development Successful destination branding is about achieving a balance between applying cutting edge advertising and public relations approaches to a marketing problem (Morgan, Pritchard and Pride, 2002, pg.14). Countries often promote their history, their culture and their beautiful scenery in their marketing, but many destinations have these attributes. It is 29

Roughly translated as Rulers Court or Palace.

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critical to build a brand on something which uniquely (and immediately) connects a destination to the consumer or has the potential to do so in the future (Morgan, Pritchard and Pride, 2002, pg.21) When developing a brand identity, destinations should consider that they are particularly vulnerable to international politics, economics, terrorism and environmental disasters (Morgan, Pritchard and Pride, 2002, pg.16) Starting from these ideas, a trial will be made to identify what Romania can promote in order to create a base for its brand identity. The main things which should be considered are: - Romanian tourist destinations are situated near to each other; this could provide a good base for combined tours in the space of several days; - the country could offer a complete tourist package (mountain, spa & wellness, cultural destination, the Danube Delta, the Black Sea); - traditions and customs are preserved in rural areas and could be included in tourist packages; - the mountain regions are unspoiled and can represent the potential for niche products like hunting, fishing, bird watching, hiking, mountain biking, and other forms of adventure tourism; - culture and history are rich, connected with Europe but with local particularities; they could form the core of the Romanian tourist product. In the process of Romanian’s brand identity construction, several national and international values should be properly exploited. Among them: - Constantin Brancusi and George Enescu as cultural values/ icons; - The combination between the historical figure of Vlad Tepes, the Impaler, and the fictional character of Dracula as a mix between history and myth. The name Dracula is often mentioned when Romania, and mainly Transylvania, is brought into discussion. This cannot be ignored. - Nadia Comaneci, Gheorghe Hagi and Ilie Nastase as sport values/ icons; their names represent good potential for the future. However, due to old and obsolete sports facilities Romania is not perceived as a destination for sporting events. Mainly during the first half of the 1990s, Romanian politicians managed to generate a sentiment of instability. This situation was combined with a precarious economic situation. As consequence, Romania was perceived by tourists to have a high level of security issues for almost a decade. The perception started to change since 2000. Now Romania has the position of a country with a more stable political environment, a developing economy and a low level of risk regarding terrorist attacks. Romania’s accession to the

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European Union begins with January 1st 2007 and the country potential as a secure travel destination is improving. However, since 2000, the number of Romanian tourists travelling abroad increased due to relaxation in visa requirements. Their preference for good quality tourist accommodation services increased too. During the past 5 years the Romanian authorities responsible for tourism development have regarded how Romanians ignored or avoided domestic destinations for various reasons: from the absence of promotional materials to the lack of amusement and leisure facilities, and to the low quality of service mainly in accommodations. How can a brand identity be built, when Romania was not considered interesting by its own people? A change for the better occurred since the autumn of 2005. Romanian authorities have tried to focus on promoting domestic tourism as well. It can be considered a good start in the process of building brand identity. Good destination branding is therefore original and different but those characteristics need to be sustainable, believable and relevant. As shown previously, Romania has the potential to develop original, relevant and sustainable products. The country needs to learn how to tell those product stories in an attractive manner for Romanian and foreign tourists alike. Romania’s brand identity building process is still in its early stages. This process should take into account that Romania, during the 1980s and the 1990s, lost several important elements which had represented it as a tourist destination in the 1970s. Among them, the most important were affordable prices in decent accommodation within spa and littoral resorts, and geriatric treatments with Ana Aslan products. The first were lost due to neglect and degradation of facilities. The second, a brand in itself, was almost forgotten due to endless legal battles among Romanian companies about the rights to use the name and the royalties generated by Ana Aslan products. The development of cultural tourist products should complete the brand identity building process, as WTTC Report (2006) also recommended. Two important events will take place in 2007: Romania’s accession to the European Union and the position of Sibiu, together with Luxembourg, as the European capital of culture. These events can steer Romanian authorities and private companies in travel and tourism sector in the right direction.

3) Brand launch and introduction – communicating the vision In a way, the delay Romania’s branding project was necessary. Romanian authorities, with the help of professionals in advertising, had to recognize the need for a brand for Romania. During the 1990s, the Romanian

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society was too preoccupied in solving economic, social, and medical problems. It would have been too soon to even think about a brand. It is also true that Romania lost the momentum of the year 1990, due to its elected politicians. Had quick and intelligent actions been taken, a brand based on the strengths developed during the 1970s could have been built. That brand could have provided a starting point for the future. However, the evolution of things took another direction and this held Romania back for 15 years before the brand idea was even considered.

Promotion campaigns for Romania as a tourist destination Further the promotional campaigns and efforts made by Romanian authorities in charge to promote Romania as a tourist destination will be presented. The first promotional campaign which has been identified after 1989 was the one connected with the total eclipse of the sun on August 11th 1999. The eclipse was announced to be fully visible from Romania with several optimal points in the southern part of the country. The title given to this campaign was The 1999 eclipse. An Inter-minister Committee was formed in 1998 to manage the project. The prime-minister was appointed president of this committee (Enea 1999). Romanian authorities wanted to show that they assigned a special importance to the event and tried to use it as a trigger point for rekindling foreign interest in Romania as a tourist destination. The budget for this campaign was 1.5 million USD. The money came from the Special Fund for Promotion and Development. This special fund was created through the contribution of 3% from the total income of every tourist agency within Romania (Enea 1999). One of these campaign outcomes was the fact that new and fresh images were used to present a brighter and better Romania. Until that moment the small numbers of printed materials promoting Romania were using old pictures from the1970s. These new images were also used in TV spots broadcast on the Discovery, Eurosport and Euronews channels and for printed materials presented at international tourist fairs and expositions in Berlin, Madrid, Milan and Paris. The total cost for the TV broadcasts was 140,000 USD and the costs for participating in fairs and exposition, including the printed materials, were 500,000 USD (Enea 1999). Romanian National Bank issued a special banknote of 2,000 ROL to celebrate the eclipse. Meanwhile, the printed materials promoting tourism were difficult to find inside the country.

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The results of the campaign were disappointing. Romanian authorities made a rough estimation that 500,000 people would be interested to come to Romania to see the total solar eclipse. In July the total number of foreign tourists who expressed an interest to come in Romania for the event was around 3,000 (Enea 1999). By the end of 1999 it was clear that the eclipse did not bring the expected number of foreign tourists. The total number of foreign tourists was lower in 1999, 794,000 compared with 1998, 807,000 foreign tourists, as can be seen from graph 1. What was wrong with this campaign? Several factors contributed to its low impact: - without a previous experience in this kind of campaign, those in charge of the project did not clearly identify the target; the printed materials were directed toward families and 65+ years old; but those groups were not interested to visit and many of them even ignored the astronomical event; - the discrepancy between the brighter and fresher images of Romania presented in the campaign and the tainted image of the country abroad was too great; - the TV spots and printed materials were introduced too late to the tourists, only sometime during the first quarter of 1999; - no evident and visible strap line/ slogan could be connected with the campaign. Those in charge of the campaign, trying to attract a larger number of tourists, forgot that a solar eclipse, even if it was the last from 20th century, is an event better connected with adventure tourism. Instead of targeting younger people and professionals interested in the eclipse, and offering them attractive tourist packages for the places where the eclipse could be best viewed, Romanian authorities believed that the event would attract mass tourism. Despite failure, this campaign was the first launched after 1989 and it paved the way to promote Romania as tourist destination through a coherent marketing campaign. A strap line which appeared sometime during 1999 was The eternal and fascinating Romania. It is not clear if it was connected with the campaign for the eclipse project. This slogan was used as the title for a photo album promoting Romania, mainly abroad. The author of this album was Adrian Costea and the Romanian media presented him as a controversial figure with many political connections. Public and private funds were used to finance the editing of the photo album. The album should have been on the market by the end of 1999. It was never clear what if the album was ever published. In May 2000, Romanian media highlighted the fact that some of the funds which were

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supposed to be used for the photo album, were instead used to finance the election campaign for the political party in the power, the Social-Democrat Party (Niculescu 2005). The idea of promoting Romania through a good photo album, financed partly by Romanian authorities, was a good one. Due to the embezzlement of funds, the entire project turned into a media scandal and failed. During 2000-2001 the strap line come as a tourist, leave as a friend was launched. It seemed to have no connection with any promotion campaign. This slogan was present on the old official website promoting Romanian tourism, www.turism.ro31. The strap line still can be found on the Romanian website dedicated to promoting tourism in the USA, www.romaniatourism.com. The idea is not very original. The American state of Louisiana has the slogan come as you are, leave different. By using a similar idea, the Romanian slogan only creates confusion, especially because it is used to attract American tourists. At the European level, Greece used a similar strap line. Therefore, a new strap line and a new promotional campaign were necessary for Romania. The most recent promotional campaign for Romania as a tourist destination was presented during the summer of 2004. The strap line for this campaign was Romania - Simply surprising. The project for the campaign initiated in 2003. Other sources indicate that the idea for this campaign was formulated in 2001 (The Diplomat Bucharest 2006). A source announced that the budget for this promotional campaign was approximately 1.7 million USD (Obae & Barbu 2004). Another stated that the total costs of the campaign were around 250 billion ROL - or around 7.6 million USD at 2004 rate (Niculescu 2005). The first source indicated only the budget for creating the campaign’s spot. The second source spoke about the total promotional costs, including the advertisement spot and its broadcasting costs, the printed materials and the participation in fairs and exhibitions. The campaign targeted the foreign tourists. The spot was developed by the advertising company Ogilvy & Mother Romania. The advertising company selection process was based on tender offers. It generated a lot of discussion in the media due to the fact that several companies which bid on the project belonged to the same advertising holding company (Obae & Barbu 2004). The main goals of the campaign Romania-simply surprising were: 30 31

The site still exists but was not updated since 2004. The site still exists but was not updated since 2004.

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1) to present Romania as a tourist destination; 2) to change the way Romania is perceived and to generate a different attitude toward Romania, mainly on the part of tourists from EU countries and the USA The message of the campaign was: Romania has changed and improved as a tourist destination. The spot had the duration of 60 seconds and was broadcast between June and August 2004 on Euronews, Eurosport, Discovery Channel, CNN, and BBC. It had the frequency of one broadcast per day per TV channel. The target of this campaign was: informed tourists of 20-55 year-old, who have an average income, with an interest in new experiences, culture and history. No information could be found to indicate whether the campaign continued during 2005 and 2006. The printed materials were still present in 2005 in several places in Europe, e.g. London underground stations. (The Diplomat Bucharest 2006). The moment chosen for the presentation of this campaign could prove to be an inspired one if the programs launched by NAT32 between 2000 and 2003, would have yielded some results. Unfortunately, it was not the case. Romania needed to wait for another year to see some improvement in its image as a tourist destination. -

The campaign Romania – simply surprising had several downsides: the spot realized was similar to an advertising presenting Turkey; the established target market was too broad; the tourists age 55+, a very good target for Romanian spa tourism, were completely left out; the strap line and the logo generated a lot of discussions and reserved reactions.

The comments and criticism of the slogan Romania – simply surprising were many. From the advertising professionals’ point of view, ‘simply surprising’ is ambiguous and can have both positive and negative connotations (Cosma 2004). The NAT representative, Mrs. Carmen Moraru, director for promotion, considered it appropriate because people expected something wrong or bad when they came to Romania, and it was important to highlight the changes (Obae & Barbu 2004).

32

The programs are presented in annex no.1

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Maybe the dual sense of the word ‘simply’ could have been avoided if the translation in English the Romanian language: Romania – mereu surprinzatoare, would have been more accurate. Then it would have become Romania – always33 surprising. The general opinion is that the existing slogan should be improved. The promotion campaign targeting domestic tourists was launched in July 25th 2006. It is the first since 1989. The idea of promoting the country for Romanian tourists was formulated by NAT president, M. Crivtonencu, in the fall of 2005 (AnatMedia, April 2005) and repeated by the newly appointed NAT president, Ovidiu Marian, in April 2006 (Dionisio 2006b). The message of the campaign is: reading a book about your country is not enough; one should travel to have first hand experience; the educational value of a trip is important. The chosen strap line/ slogan: A trip is a lesson of life34. The campaign has 5 themes: 9 Romania – general presentation 9 Littoral 9 Danube Delta 9 Cultural tourism 9 Spa tourism The first 3 advertising spots were ready and presented during the last week of July and during August. The spots for the last two themes were broadcast during September 2006. The campaign had a budget of 800,000 EUR (1,006,720 USD) and the money came from the total funds of 325 million EUR (409 million USD) allocated for tourism development (Dionisio 2006b, Morar 2006). The idea and the change in attitude of Romanian tourism authorities were welcomed. It was, finally, understood that Romania is a destination for Romanians too. The creation of a brand identity supposes that this identity should be accepted by Romanians experiencing their country also as tourist destination. However, at least on problem existed: the campaign was launched at the end of the summer. By that time, the vacation plans were already made and the traditional holiday period was almost over. The authorities invoked the slow budgeting process. The amount of money available for the campaign was 33

Always is the exact translation of the Romanian word ‘mereu’. Simply means - in Romanian – simplu (simply). 34 In Romanian language: o calatorie este o lectie de viata.

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announced only sometime during the spring of 2006. Even speeding up the selection process for an advertising company, the time elapsed. For a country where tourism was declared ‘a national priority’, the funds available for promoting Romania as a tourist destination were at a low level. The budget for the first Romanian international promotional campaign in 1999 was 1.5 million USD. In 2003 the funds allocated for promoting the Romanian tourism were announced at 3.5 million USD (Societatea Academica din Romania 2004). For 2006 Romania tourism promotion had a budget of 3.75 million USD (Gheorghe 2006b) Another problem is represented by the fact that events which generate tourist inflow have separate (small) budgets and no coordination exists between the central authorities in charge. As result, the funds are wasted by randomly promoting Romania as a tourist destination (Banii nostri 2006). Teamwork is needed to improve the efficiency in spending the money available for promotional campaigns. Despite NAT official declarations, the above presented campaigns did not create a brand for Romania as a tourist destination, as they were not powerful enough and were presented for a short period of time. Branding process for Romania it is making only the first, timid, steps.

Project Branding Romania It is clear that Romania needs a brand as a tourist destination and this is in direct correlation with the Romania’s brand as a whole. Several chronological events are presented below regarding the Branding Romania project. Summer – Fall of 2004: the idea of branding Romania was, for the first time, announced in the media. A conference on this topic was organized in Bucharest and Wally Ollins, one of the most respected specialists in branding nations, attended the conference. Mr.Ollins stressed the fact that such a project is a long term one, taking 8 to 10 years. The minister of foreign affairs, Mircea Geoana, promised his support. However, November 2004 elections came and his political party lost the elections (Ghyka 2005). For several months the Branding Romania project entered in stand by mode.

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During January 2005, Business Magazin35 had the idea to gather politicians, businessmen, and advertising professionals to discuss branding Romania. Some ideas came to light, but without any important result. (Business Magazin 2005a). The period February – March 2005 witnessed the launch of two initiatives for branding Romania: one by the Romanian Presidency with Romania’s President as main coordinator and the other one by the Romanian Agency for Governmental Strategies in collaboration with the Ministry of Foreign Affairs. No communication existed between those authorities and two parallel initiatives resulted. In both cases, a foreign independent consultant was suggested. The collaboration with a Romanian representative was highlighted as necessary for a better understanding of Romanian particularities, so an acceptable brand could be created (Todoran 2005). April – May 2005 brought the announcement of a third initiative by the National Authority for Tourism (NAT) and USAID. This time the project was only for branding Romania as a tourist destination. (Banii Nostri, May 2005). These kind of parallel actions are not uncommon in Romania. The communication systems between Romanian central authorities do not work properly. This might explain how 3 similar initiatives were launched in the space of 4 months. On the other hand this situation reflects that no clear idea exists is outlining Romania’ s brand. Branding Romania as a tourist destination must be correlated with branding Romania as a nation. The branding for the tourist destination might be the most important component of the national brand. None of the above mentioned authorities seem to make this connection. May 2005 – the Romanian Agency for Governmental Strategies36 formed a working committee for the Branding Romania project. The committee was formed from 12 members of which 7 represented the current political alliance and 1 represented the political opposition. One other member represented the advertising industry. The positions of the other 3 members were not revealed. This committee has held only two meetings and 5 of its members never showed up. Once again everything was put ‘on hold’ (Ghyka 2005).

35

A Romanian economic magazine. The official site is: http://www.publicinfo.ro/pagini/agentia-pentru-strategii-guvernamentale.php and it is only in Romanian version. 36

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The Napoleonic principle ‘when you want to bury a problem, create a commission’ worked rather well in this case too (Popescu 2006a). It is not clear if this committee still exists. July 2005 - the president of the Romanian Agency for Governmental Strategies announced, in an interview, that the consultant for Romania’s branding process would be selected at latest in the Fall of 2005 (Business Magazin 2005b). This promise was never kept. The Fall of 2005 came and passed by and the project (Branding Romania) was stalled again. The discussions and opinions expressed in Romanian media and on www.brandingromania.com continued between July 2005 and May 2006, but no further steps were made by any authority to continue the project Branding Romania as a nation or as a tourist destination. The only important thing during that period was the fact that the president of Romanian Agency for Governmental Strategies was changed. The media hype of 2005 on Romania’s branding was followed by a deep silence during the first half of 2006. June 2006 – the new president of the Romanian Agency for Governmental Strategies declared that the Branding Romania project was not included in the agency’s budget for 2006. He also stated that the promised selection of a branding consultant was not finished during the fall of 2005 due to the fact that the working specifications were considered too simple and new ones should be written (Todoran 2006). During the same month NAT announced the intention to create its visual identity. Several branding companies were contacted (Todoran 2006). No further information was available on this subject. August 2006 – the Romanian Agency for Governmental Strategies asked and invited several Romanian advertising companies for a bid with the goal of selecting a consultant. The consultant would have to create and write the work specifications needed for the selection process of a foreign consultant for the Branding Romania project. Several problems arose: - the invitation was made only to very few companies; other advertising companies declared they knew nothing about this matter; - in the selection process, financial criteria was weighted at 70% while technical criteria represented only 30%; - the winner of the selection process had only 4 months to elaborate the working specifications.

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Therefore it is no surprise that no bid was made and the agency had no one to choose from. A second request for a tender was launched at the end of August 2006 (Bunea 2006). September 2006 – the tender launched at the end of August had also been unsuccessful. Two reasons were identified for the lack of response from advertising companies (Iacob 2006): - the advertising companies feared that their position as consultant/ adviser for the work specifications would cause them to lose the opportunity to tender for the Branding Romania project; - for 2006 the (Branding Romania) project had no budget; only in 2007 the Agency for Governmental Strategies can formulate an official request to have a distinct budget for this project. The only thing that became clear, in the space of two years, is that the Agency for Governmental Strategies was responsible for the Branding Romanian project. However, this information was not widely known. Mr. Mihai Ghyka, president of International Advertising Association – Romania, made the observation that the Branding Romania project proved to be one too daring for Romanian political environment which is in a hurry to try to make big things happen in a very short period of time (Ghyka 2005). The observation is true and combined with the low capacity of Romanian authorities to manage complex process, explains the present very modest results.

4) Brand implementation For brand implementation, the presence at international tourism fairs and exhibitions is important. Romanian authorities have been making efforts to ensure Romania’s presence at those kinds of events, as the link http://www.mturism.ro/?id=109 shows. No consistent reports, either official or in the media could be found on how Romania presented itself at tourism fairs and exhibitions before 1999. However, the modest results depicted in graphs 8 to 12 suggest the conclusion that Romania’s presence at those events was not a notable one. The year 1999, when the first international promotional campaign was launched, provided new visual materials to improve Romania’s participation at international tourism fairs and exhibitions. After 2000, media coverage regarding Romanian presence at international tourism events became more frequent and more critical. The criticism always underlined the fact that the printed and other visual materials

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looked old or, if they were new, they were not printed in sufficient quantities. Other criticism regards the overall presentation of Romania is that it seems obsolete, not in keeping with 21st century tourism trends. The offered products also are either new but not ready for tourists, or not in tune with the tourists’ demands. The last two statements are supported by what Romanian authorities decided to promote at two international tourism fairs: - London, November 2003 – the Danube Delta was ‘rediscovered’ as a tourist destination; a lot of promotional materials were available on the Danube Delta, despite the fact that its fragile environment needs protection and it is not suited for mass tourism. The Danube Delta had neither the needed amount of accommodations, nor the transportation infrastructure to support the number of tourists desired by the minister of transportation, construction and tourism, Miron Mitrea. Fortunately, tourist interest in the offers made for the Danube Delta was low and they do not hurry to discover a destination not ready to welcome them. - Berlin, March 2006 – the Romanian booth seemed similar with those prior to 1990s. Printed materials with Romanian landscapes and Romanian folklore were available. The general impression of being obsolete was only enhanced by the modern stands of other countries. The trendy spa & wellness tourism or the (offers concerning) UNESCO heritage sites were barely present. Individuals who visited the Romanian booth at 2005 London tourism faire, spoke of the cold, abrasive and unfriendly attitude of the officials representing the country. NAT officials in charge of the Romania presence at international tourism fairs and exhibitions had the tendency to reject the criticism regarding the printed materials, out of date tourist products, and unfriendly attitudes. Finally, in 2006 some officials seemed to recognize that at least the printed materials could be improved. In the attempt to implement a brand for Romania as a tourist destination, the promotional campaign Romania – simply surprising was created, as mentioned above. The strap line is the same as the campaign name. Since 2004, Romania’s participation at tourism events takes place under this campaign slogan. The first part of the campaign, presented between June and August 2004, created a story in which were included the main points of tourist interest. The promotional spots and the film are available on http://www.romaniatravel.com/index.php?lng=en&tree=14.

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The second part of the campaign should have been the development of specific tourism offers. However, the progress on this stage can not be documented. No official information is available on the subject. The first part of the campaign tried to create an image for the tourist destination Romania. However, the concept ‘simply surprising’ could suggest the idea of simplicity, preserved traditions and warm hospitality. Meanwhile, the word surprising also could generate a negative interpretation due to a related bad image which Romania earned during the 1990s, as a confusing and unattractive place. If to that image is added37: - the underdeveloped road, railway and accommodation infrastructure; - the underdeveloped recreational facilities; - the low quality of services in the hospitality industry and the high prices paid for those services; - the abrasive and, sometimes, rude attitude of public servants, mainly at the borders; - the problems connected with medical services and medical assistance. Therefore it becomes clear to everyone why ‘simply surprising’ should be treated with care by those who would be put in charge of developing a brand for Romania as a tourist destination. Another way to present Romania as a tourist destination and the corresponding tourist products is represented by the tourism bureaus/ offices representing Romania abroad. These bureaus are few, understaffed, without printed materials in the necessary quantity and with a weak commercial component (Folea 2005). A list of the cities where Romania has tourism bureaus is presented in annex 2c. These offices can be used not only to promote Romania, but to gather much needed information for market research. No one in NAT regards those bureaus as primary sources for important information. It is no surprise that Romanian offers at tourism fairs do not meet the expectations. The official website for Romanian tourism, www.romaniatravel.com, is another way to implement brand identity. The website was launched in 2004, but the former website (www.turism.ro) still operates and no link with the new website was made. The website www.romaniatravel.com is better than the former website. The quantity of information is larger, but still needs better organization and

37 Supported by the results published in the newsletters from July 2004 – June 2005 available, in Romanian, on the site www.romaniatravel.com.

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structure. The film presenting Romania as general tourist destination can be used to open the website. It would be an improvement of its attractiveness. Correlated with the previous steps, the results of brand implementation for Romania as a tourist destination are modest.

5) Monitoring, evaluation and review Without a coherent and integrated strategy for tourism development and without a visible brand as a tourist destination, the results obtained from tourism promotion were modest too. The attention given to attract mainly foreign tourists did not yield the expected results, as the following graphs present. 7000

Graphic no.8 Number of foreign tourists compared to total foreign persons arrival in Romania

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The number of foreign tourists is small compared with the number of foreign individuals who enter Romania. There is an unexplored potential. When people come to visit friends, for business, and other events those persons could become tourists.

Chapter One Part III

56 60000

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55000

France

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Graphic no.9 Foreign tourist arrivals in accommodation establishments - comparative figures

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Compared with well know tourist destinations, Romania is almost invisible, as the graph 9 shows. 7000

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Graphic no.10 Foreign tourists arrivals in accommodation establishments - comparative figures 2 source: NIS and EUROSTAT

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Even when compared with the countries that are its direct competitors, Romania managed to lags behind them.

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0

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Graphic no.11 Balance of tourism account - million EUR -

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The balance of the travel and tourism account in Romania’s balance of payments has been negative since 1995. It became positive only in 2005. For 2006, the provisional data available indicate a very small negative balance. All the data presented in the graphs 8 to 11 are supported by the modest impact the travel & tourism industry and travel & tourism economy had on the Romanian GDP, as WTTC data shows in graph 12. Between 1990 and 2005 those percentages were constantly below 2%, and respectively below 5%. Graphic no.12 Travel & Tourism impact on GBP between 1990 and 2005 (%) source: WTTC

5 4.5 4 3.5 3 2.5

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Regarded in a more nuanced way, these results were generated also by a series of missing ingredients from Romania’s tourist offer:

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9 trendy products at affordable prices; their absence is due to almost no research conducted on the tourist market; not even tourism fairs and exhibitions are utilized for gathering information; 9 requested prices are too high compared with the quality of services in accommodations, restaurants and by the tour-operators as well. Romanians display a lack of understanding of travellers’ budgets and how much they are willing to spend per day. Consequently, the price are charged with the belief that a foreign tourist has an unlimited budget (Catatna, 2006) 9 tourist products and tourist packages are not in tune with specific market demands. Tours with the Dracula theme are presented in Southeast Asia, for example, where the myth is almost unknown. There, one of Romania’s attractions is the presence of the four seasons; mainly spring, autumn and winter. For Europe Romania’s offers is repeating the offers from the 1970s with little improvements, while a quarter of a century has passed; 9 tourist products or destinations are introduced late to the public, as the case of the campaign from 1999 promoting the total solar eclipse; the most recent example regards Sibiu, the European Capital for Culture in 2007. The printed materials for this destination were available to tourists only in the spring of 2006 and any information regarding a special campaign to promote Sibiu for 2007 was available until October 2006. Romanian authorities responsible with tourism development rely too much on prior knowledge. A comparison with Pecs, Hungary shows the town will be the European Cultural Capital in 2010 and the printed promotional materials were available since 2005. In its country report for Romanian (2006) WTTC forecasts that the country could achieve an annualized real growth of 6.7% in travel and tourism sector in the years to come. WTTC offered also a forecast for the next 10 years on the impact travel & tourism industry38 and travel & tourist economy could have on Romanian GDP. 38

The United Nations World Tourism Organization (UNWTO) and the World Travel and Tourism Council have developed a Tourism Satellite Accounting (TSA) system. Satellite accounts are used to produce two different aggregates: travel & tourism industry and travel & tourist economy. Travel and tourism industry concentrates the direct impact of visitor activity: transportation, accommodation, food and beverage, recreation, entertainment and travel services. Travel and tourism economy captures broader economy-wide impacts like direct and indirect impact of visitor activities, capital investment, exports and government services. Source:

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Graphic no.13 Travel & Tourism impact on GDP - forecast for 2006-2016 (%)

5

source: WTTC

4 Travel & Tourism Industry Aggregates (Direct Impact Only)

3

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)

2 1

2016

2015

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To achieve these goals, infrastructure must be developed, human working capital in the needs improvements, quality of services must increase, and support for the travel and tourism industry needs to be real and not declarative. The amount of funds specially dedicated to tourism development in 2006, for the first time since 1989, represents a step further, but more must follow. The fact that Romania has not a visible brand yet, as a nation or as a tourist destination, is not a tragedy. Other countries, that are direct competitors with Romania in the (world) tourism market, like Poland and Czech Republic, started to build their brand only 2-3 years ago. Jack Trout39, in November 2005, declared in an interview for the weekly Capital: “What is Romania for the foreigners? A big question mark. An empty space…that could be filled with everything” (Capital, November 2005). Trout added that Romania should find its position from both business and tourism perspective. After that, the branding process could start. In the future process of branding Romania, the following ideas should not be forgotten: ¾ as a symbol, slogan, name or design, or combination of these elements, a brand should comprise at least a clear and distinct image which differentiates it from its competitors (Aaker 1996)

http://www.propoortourism.org.uk/info_sheets/6%20info%20sheet.pdf 39 Jack Trout is recognized as one of the world’s marketing strategist. He is also one of the founders and pioneers of positioning theory (www.troutandpartners.com, http://en.wikipedia.org/wiki/Jack_Trout)

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¾

tourist destinations are probably one of the most difficult “products” to market, involving a large number of stakeholders and a brand image over which a destination marketing manager typically has very little control (Morgan, Pritchard and Pride 2002, pg.186)

Now Romania has the chance to build its brand in conjunction with travel and tourism sector development. The starting point in the brand creation process for Romania as a tourist destination should be represented by the identification of several common characteristics of the following: cultural & heritage tourism, including the 7 UNESCO heritage sites; to enhance Romania’s distinctive features, Brancusi monumental sculptures in Tg.Jiu should be added to the list of UNESCO heritage sites; spa & wellness tourism; Danube Delta. The road which should be followed for branding Romania is long. The success of this journey will depend on how well it is managed.

References Aaker, D., (1996), Building Strong Brands, The Free Press Anghel, C., (2006), Retrocedare istorica – Castelul Bran revine la Habsburgi, Jurnalul National, April 18, www.jurnalul.ro/articol_50919/retrocedare_istor Badulescu, T., (2005), Despre publicitate si branduri, AnatMedia, June, www.anat.ro/index.php?p=events&OID=EVE0 Bird, M., (2005), About tourism, July, www.brandingromania.com/?p=24#more-24 Budin, L., (2006), Superfinantare pentru Superschi, Saptamina financiara, March 6, pg.33 and 42 Budurca, D., (2005), Romania – o tara turistica prea scumpa pentru romani, Adevarul economic no.14, April 13-19, pg.24 Bufnila, O., (2005), Imaginea personala si dezvoltarea turismului, AnatMedia, November-December, www.anat.ro/index.php?p=events&OID=EVE0 Bunea, I., (2006), Brandul de tara paseste cu stingul, Capital no.34, August 24, pg.22 Catana, D., (2006), Romania, prea scumpa pentru turistii straini, Capital no.31, August 3, pg.15 Cosma, S., (2004), Tourist destinantion marketing – some aspects related to Romania, Studia Negotia, no.2, pg.69-76

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Dionisio, C., (2006a), Promoting a nation, Bucharest Business Week (BBW), April 3-9, pg.26 —. (2006b), Promoting brand identity, Bucharest Business Week (BBW), April 17-23, pg.18 Dogaru, G., (2006), Cum sa distrugi un litoral, Saptamina financiara, July 24, pg.40 Drumea, T., (2002), A fi sau a nu fi, HoReCa Profit no.3, July-August, pg.8-9 Enea, A., (1999), Eclipsa secolului nu va aduce profiturile asteptate, Piata financiara, no.7-8, July-August, pg.28 Folea, C., (2005), Turismul romanesc se va dezvolta ‘mai la vară’ – Nu stim sa ne vindem tara, e-Finance nr.54, February, pg.71-72 Gheorghe, L., (2006a), Turismul plateste greselile trecutului, Bilant, no.22-23, July-August, pg.90-91 —. (2006b), Romania n-are brand de tara, Bilant no.22-23, July-August, pg.89 Ghyka, M., (2005), Branding Romania – vaporul scufundat in port, Gindul, October 25, www.brandingromania.com/?p=69#more-69 Gruia, C., (2005) Ce facem cu Dracula – dilema schizofrenica a Romaniei, National Geographic Romania, November, pg.24-45 Iacob, M., (2006), Brandul de tara ramine un vis frumos, Bucharest Business Week (BBW), September 18-14, pg.2 Iancu, L., (2005), Cit ne datoreaza Dracula?, Business Magazin, March 2-8, pg.36-41 Light, D., (2005), The People of Bram Stoker’s Transylvania, Journal of Dracula Studies, no.7/ 2005, pg.38-45, www.lemmingworks.org/drc/images/07Light.rtf Light, D., (2006), Halloween in Transylvania: tourism, fantasy and play in a liminal space, International Conference on Halloween, 31 October – 1 November 2006, Glasgow Caledonian University, www.gcal.ac.uk/halloween/index.html Miller, E., (2002), The Question of Immortality: Vampire, Count Dracula and Vlad the Impaler, Journal of Dracula Studies, no.4/ 2002, www.lemmingworks.org/drc/images/04Miller.rtf Morar, B., (2006), Campanie de promovare a Romaniei pentru romani, July 24, www.cicerone.ro/index.php/turism/2006/07/24 Moraru, V., (2005), Turismul – imaginea unei politici (ne) conturate: Strategia de a avea strategie, Piata Financiara, October, pg.98-100 —. (2006), Destinatia Romania, Piata Financiara, February 2006, pg.72-74 Morgan, N., Pritchard, A., Pride, R., (2002), Destination Branding, ButterworthHeinemann, Oxford Niculescu, C., (2005), Fabricat si demontat in Romania, Banii Nostri, May 16, www.brandingromania.com//?author=18

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Obae, P., Barbu, P., (2004), Romania ‘mereu surprinzatoare’ cind isi liciteaza imaginea, Capital no.36, September 2, pg.22-23 Onaca Purdea, I., (2005), Romanii trebuie sa isi faca vacanta in tara, Jurnalul National, November 3 Pop, C., Cosma, S., (2005), Is There a Strategy for Tourism Development at Regional Level? Cluj Hotels’ Case, in volume Aktualni Otazky Rozvaje Regionu, Univerzita Pardubice, pg.241-246. Popescu, C.I., (2006a), Brandul ‘Romania’ pe internet – Sa ne vindem tara!, eFinance nr.70, June, pg.80 Popescu, I., (2006b), Turistii romani invata limba bulgara, Capital no.18, May 4, pg.2 Rezachevich, C., (2005), ‘Cruzimea’ lui Vlad Tepes – o exceptie, Magazin Istoric no.5 (458), May Stefan, A., (2006), Jocuri si socuri in turism, Romania Libera, June 24, www.romanialibera.ro/editie/index.php?url=arti Spicuzza, M., (2003), Another Strange Trip for a Blood-Soaked Country: Can Romania count on Dracula?, San Francisco Gate, October 26, www.sfgate.com/cgi-bin/article.cgi?file=/chronic Stoica, G., (2006), Berceanu s-a facut frate cu Dracula, Saptamina financiara, August 7 Todoran, A., (2005), Romania ca brand – Avem o tara, cum procedam?, Business Magazin, March 9-15, pg.14-21 —. (2006), Brandul Romania – Branding fara prioritate, Business Magazin, June 7-13, pg.26-27 AnatMedia, (2005), April, Interview with M. Crivtonencu, NAT President – Strategia turismului Romanesc trebuie pusa la vot in parlament!, www.anat.ro/index.php?p=events&OID=EVE0 —. (2005), February, Programul de guverare 2005-2008, Cap.14, Politica in domeniul turismului, www.anat.ro/index.php?p=events&OID=EVE0 —. November-December 2005, www.anat.ro/index.php Banii nostri, (2005), May 5, news, Un nou brand pentru promovarea Romaniei ca destinatie turistica, http://www.baniinostri.ro/stiri/stiri.php?ContentID=3463 —. (2006), April 3, cover story, Imaginea care doare, http://www.baniinostri.ro/dinrevista/cover_story.php?ContentID=111 Business Magazin, (2005a), January, Club Business Magazin: discutii libere, idei, opininii pentru Romania ca brand, pg.70-75 —. (2005b), July 8-14, , news, Branding de tara – In toamna vom avea consultantul, pg.6 —. (2006), June 28 – July 4, Club Business Magazin – Industria plecata in vacanta, pg.54-50,

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Capital, (2005), no.46, November 17, Interview Jack Trout:”Romania nu este pe radar, n-am auzit de voi, pg.28 —. (2005), no.51, December 22, Mai multi straini au vizitat Romania, pg.14 HoReCa Profit, (2003), no.8, September-October, 2003, news, pag.6-7 Institutul National de Cercetare-Dezvoltare in Turism - INCDT, (2003), Strategia Dezvoltarii Turismului Romanesc, November, 2003, www.nordvest.ro as it was in December 2004 National Authority for Tourism - NAT newsletters, July 2004 – June 2005, available in Romanian at www.romaniatravel.com National Authority for Tourism, (2006), Srategia Dezvoltarii Turismului in Romania, August, http://www.mturism.ro/index.php?id=96 National Institute of Statistics – NIS, (2003), Romanian Statistical Yearbook —. (2004), Romanian Statistical Yearbook —. (2005), Romanian Statistical Yearbook —. (2006), Romanian Statistical Yearbook —. (2006), Monthly Statistical Bulletin, no.12, December Societatea Academica din Romania, (2004), August Raport de analiza si prognoza - Policy Warning Report, www.sar.org.ro/pwr%20turism.pdf Romanian National Bank, (1998), Annual Report —. (2005), Annual Report The Diplomat Bucharest, (2006), February, Romania’s makeover strategy, www.thediplomat.ro/features_0106_2.htm World Travel & Tourism Council Report, 2006, Romania: The impact of Travel&Tourism on jobs and the economy, http://www.wttc.org/publications/pdf/06WTTCRomania.pdf www.brancastlemuseum.ro www.cesnur.org www.draculaland.ro as it was in 2004 www.mediafax.ro/articole-free/Politica-114025-6.html www.mihaieminescutrust.org www.mturism.ro www.mturism.ro/fileadmin/mturism/centre_informative.ro http://www.propoortourism.org.uk/info_sheets/6%20info%20sheet.pdf http://www.publicinfo.ro/pagini/agentia-pentru-strategii-guvernamentale.php www.recensamant.ro/fisiere/Analiza%20date%20prelim.doc www.romaniatravel.com www.troutandpartners.com www.turism.ro http://albaiulia.mconet.biz http://whc.unesco.org/en/tentativelists http://en.wikipedia.org/wiki/Jack_Trout

CHAPTER TWO: THE ROMANIAN HOTEL INDUSTRY

The success of any tourist destination depends on a hotel industry ready to receive and accommodate tourists. This chapter will present the evolution and development of the Romanian hotel industry. Special attention will be given to Romanian hotels, because this type of accommodation establishment is dominant in hotel industry in Romania.

PART I: TYPES OF ACCOMMODATION ESTABLISHMENTS IN ROMANIA

Some attempts to officially classify the Romanian accommodation establishments were made before 1970. Those regulations however are not available in the Romanian legislative databases. A further step was made in 1973 when a special regulation, an order of the minister of tourism, was issued for lodging classification. Three years later, in 1976, a set of two regulations (orders of the minister of tourism also) were issued for the classification of: 9 hotel units; Order no. 308/1976 of the minister of tourism which included in the category of hotel establishments the following types of accommodations: hotels, motels, inns, villas and villas with apartments; 9 lodges; Order no. 433/1976 of the minister of tourism introduced, apart from lodges, the notion of guesthouses as a separate type of lodgings in spa resorts. Another regulation existed for the classification of camping/ campgrounds, but no further details could be found about it. The classification system in Romania did not use the star system. The accommodation establishments were classified in different categories ranging from luxury, the highest, to category III or IV, for accommodations at the bottom of the scale. The classification was applied in the following manner: - the hotels and villas were classified in 4 categories: luxury, category I, II and III; - the motels and inns were classified in 3 categories: category I, II and III; - the villas with apartments were classified in 3 categories: luxury, category I and II; - the lodges were classified in 4 categories: category I, II, III and IV. This classification system was in use until early 1991.

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During the 1980s, the Romanian National Institute for Statistics (NIS), collected and offered data on the following types of accommodation establishments: - hotels - inns - lodges - camping1 - guesthouses - school camps - dwellings in school units - rooms for rent for tourists in private homes. Why motels and villas were not presented separately, is unfortunately undeterminable. It can only be presumed that the words ‘motel’ and ‘villa’ were considered too cosmopolite by communist authorities during 1980s. As a consequence, those types of accommodations were probably included under the category of ‘inns’2 and ‘guesthouses’. The supposition seems to be confirmed by the fact that after 1990, the figures included under ‘guesthouses’ were moved under the ‘villas’ category. In 1992, the former regulations regarding the classification system in Romania were replaced by the Government Decision no. 223/1992. This regulation introduced the current star classification system. The 1992 regulation was replaced by the Government Decision no. 114/1995. This one completed the categorization of Romanian accommodation establishments (hotels, motels, villas, lodges, and camping) with the followings: - holiday dwelling complexes3; - pensions4 (mainly for urban areas); - agro-tourist farms.

1

The camping stands for ‘popasuri turistice’ in Romanian language. However, a better translation would be dwellings in rest areas. Since the name ‘camping’ is also used, it was chosen for the list since is better understood. 2 In Romanian language, the corresponding word for inn is ‘han’ and it is probable that communist authorities gave preference to this term instead of motel. 3 This type of accommodation could be translated as ‘holiday village’. The regulation defines it very summarily. The Romanian accommodation of this type is very different from the holiday village concept developed by Club Med or Center Parks. 4 Due to the various names of those types of accommodation, the name ‘pension’ was chosen. They are similar to bed and breakfast accommodations known at an international level.

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Chapter Two Part I

As it can be observed, the category of inns was eliminated. No reason was given. It is probable that they were considered not trendy enough for a modern approach of accommodation categorization. The 1995 regulation had a short life. It was replaced two years later by the Government Decision no. 601/1997. In its original form this decision replaced the ‘agro-tourist farms’ category with ‘agro-tourist pensions’ for rural areas. It also, completed the accommodation categories with cruise ships. Over the few next years the Government Decision no. 601/1997 was modified at least twice when bungalow and hostel categories were added to the existing accommodation types. All the government decisions presented above were completed by orders of the minister of tourism. The orders detailed the criteria of each classification and the way the criteria should be applied. In 2001 a new regulation regarding the classification of accommodation establishments was issued, the Government Decision no. 1328/20015. This was completed by the Order no. 510/20026 of the minister of tourism which presents, in detail, the classification criteria and methodology. These regulations integrated all the experience accumulated in previous years and were considered more detailed than similar regulations in other countries (Lupu 2005, pg.119). The types of accommodation establishments defined by the present regulations are: - hotels7, classified from 1 to 5 stars; - apartment hotels, classified from 2 to 5 stars; - motels8, classified from 1 to 3 stars; - hostels9, classified from 1 to 3 stars; 5

This Government Ordinance was completed and modified by Government Ordinance no.1412/2002 which adds small details to 3 entries of the former ordinance. 6 This order was modified and completed twice: in 2002 through Order no. 911/2002 of the minister of tourism and in 2003 through Order no. 188/2003 of the minister of tourism. 7 The current regulation requests a minimum number of rooms for a hotel: 5 rooms for a 1 star hotel; 10 rooms for 2 stars; 15 rooms for 3 stars; 20 rooms for 4 or 5 stars hotels. 8 The word motel is applied to accommodation establishments similar to hotels, but located outside cities, towns or villages. Romanian motels are not similar to motor houses or motor inns as defined by the American hotel industry. A motel in Romania is supposed to have a lobby with a reception desk integrated in the building. 9 The Romanian regulation defines two types of similar accommodation establishments: hostels and youth hotels. This situation occurred due to confusion created when the regulation was written. Because they are similar types, they will be considered in the category of hostels for the present study.

Romania as a Tourist Destination and the Romanian Hotel Industry

-

69

villas10, classified from 1 to 5 stars; lodges, classified from 1 to 3 stars; bungalows11, classified from 1 to 3 stars; campsites and cabins in campgrounds, classified from 1 to 4 stars; dwellings in rest areas12, classified from 1 to 2 stars; holiday dwelling complexes, classified from 2 to 3 stars; urban pensions, classified from 1 to 5 stars; rural pensions, classified from 1 to 5 flowers (or daisies); rooms and apartments for rent to tourists in private homes, classified from 1 to 3 stars; accommodations on cruise ships or on docked ships, classified from 1 to 5 stars;

The classification system in Romania is based mainly on physical criteria: lobby, room and bathroom dimensions; fixtures and furniture; types of facilities. Cleanliness plays also an important role in the evaluation. Points are given depending on the number of services13 provided for guests. The quality of services and amenities are only marginally considered. The evaluation or re-evaluations (every 3 years) of the accommodation establishments is made by a representative of NAT (National Authority for Tourism). The visit may be announced or unannounced, but the inspectors must identify themselves. The method of mystery guests is not used. The classification system is compulsory for any accommodation establishment that intends to enter the market. The number of not classified accommodation establishments is relatively low, as the following pages will show. If the classified accommodation establishments provide up-to-date information to NAT, they are included in an annual guide. Since 2003 until 2006 only the guide for hotels and apartment hotels was published. In 2007 10

This type of accommodation, with the special name of villa, could be considered a small hotel. The regulation establishes the maximum number of rooms: 40 rooms for 1 star; 35 rooms for 2 star, 25 rooms for 3 star, 15 rooms for 4 star and 10 rooms for 5 stars. 11 This type of accommodation is smaller than a villa and it is supposed to be integrated in a holiday dwelling complex or in a dwelling in a rest area. It is also possible for bungalows to function independently in a resort. 12 A dwelling in a rest area is supposed to be a less sophisticated and smaller alternative of a holiday dwelling complex and situated near main roads. The main accommodation types in such an establishment would be: bungalows and cabins. 13 The number of services which should be offered is the following: an 1 star hotel – minimum 5 services; a 2 stars hotel minimum 10 services; a 3 star hotel – minimum 15 services and a 4 or 5 star hotel – minimum 18 services.

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along with the guide for hotels, the guides for motels, villas and pensions. However, the pensions in rural area are included also in the guide published by ANTREC14. Some attempts to modify current regulations were made during 2005 and 2006. A proposed regulation resulted and presented on NAT official website15. It remained only as a proposal. However, it did not suggest many alterations to the current regulations. The focus remains on physical criteria. The idea of a private or alternative classification system was timidly issued in the last years. No further development on this subject surfaced. Despite the fact that the accommodation establishment categories increased in variety, they have local particularities and their integration in accommodation types known at international levels is difficult. The exceptions are the hotels, apartment hotels and hostels. The translation of Romanian accommodation establishment types into English was not easy and NAT does not have an official translation of the names. A rough English translation is offered by the Romanian National Institute of Statistics, as presented in annex no.4. For a better understanding of statistical data, it must be noted that Romanian National Institute of Statistics (NIS) does not present separately data on apartment hotels. The situation is similar for rooms and apartments for rent to tourists in private homes. This is due to the fact that the accommodation establishments with less than 5 bed places are ignored. The total number of accommodation establishments provided by NIS includes school camps.

14

Asociatia Nationala de Turism Rural, Ecologic si Cultural (the National Association for Rural, Ecologic and Cultural Tourism). 15 www.mturism.ro/fileadmin/mturism/noutati/hg_clasificare.pdf. The file is available only in Romanian language.

PART II: THE EVOLUTION OF THE ACCOMMODATION ESTABLISHMENTS

Graphs 1 and 2 present the evolution of accommodation establishments and the number of bed places between 1970 and 2005. The number of hotels, villas and pensions was presented separately to highlight their unique evolution. hotels

source: NIS

rural pensions

2905

597

956

993 1021 400

201

812

1066

1324

1551

813

784

497

500

707

1000

830

1500

1464

1309

2000

1531

2385

2500

128

3190

3000

3121

total 3213

3500

urban pensions

4226

Graphic no.1 The evolution of accommodation establishments (number) 1970 - 2005

villas and bungalows 4000

3330

4500

0 1970

1980

1985

1990

1995

2000

2005

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72

villas and bungalows urban pensions

source: NIS

rural pensions

157848

161497

146531

2000

1995

1990

1985

1980

1970

0

2005

3544

50000

85511

100000

167979

150000

163828

200000

283194

248434

250000

164102

300000

11151

353236

350000

280005

total

289539

400000

Graphic no.2 The evolution of bed places in Romanian accommodation establishments 1970 - 2005

hotels

410575

450000

404432

500000

The number of accommodation establishments grew from 1970 until 1985. The significant growth registered between 1970 and 1980 was generated by large investments made in Romanian hotel industry. Within a decade, the number of accommodation establishment grew by 33.8%. The number of bed places increased even more, by 62. 8%. In the same period, the number of hotels increased by 42.3% and the number of villas grew by 17.0%. The hotel bed places grew by 71.4% indicating that, during the 1970s, hotels with large capacities were built. An odd situation was noted for villas; while their number increased, the number of bed places in villas dropped slightly by 3%. Overall, due to the extensive growth in lodging capacity, the Romanian tourism thrived. The pace of capacities development slowed down between 1980 and 1985. The establishment number increased only by 4.4% in five years, while the bed places grew by 1.5% during the same period. The hotel number grew by 10.9% as did the bed places in hotels, growing by 10.2%. The number of villas decreased by 4.4%, while the bed places in villas increased 1.7%. The figures indicate that the investments were directed toward other economic sectors. The last 5 years of the 1980s were very difficult for Romania due to the economic crisis caused by the country’s isolation and questionable political decisions. As result, between 1985 and 1990 accommodation establishment number dropped 3.5% and the bed places decreased by 14.0%. However, the most important types of accommodation, hotels and the villas, registered a growth. Hotels number increased by 5.9% as did the bed places in hotels,

Romania as a Tourist Destination and the Romanian Hotel Industry

73

increasing by 3.9%. The villas recuperated the decrease five years previous growing by 6.0%, but the bed places in villas dropped again, by 3.2%. During the same period, the accommodations built in the 1970s needed modernization. Thus, for the Romanian communist authorities growth in numbers was more important. In 1990 the Romanian hotel industry seemed to be in good shape, but needed important investments for modernization and refurbishing. The delay in the privatization process and the use of ‘hiring of management’ contracts did not encourage direct investments. As consequence, the next five years witnessed a decrease in the total number of accommodation establishments - by 9.6%. The number of total bed places dropped too – by 18.0%. The same trend was registered for hotels and villas; their number decreased by 2% and 14.6% respectively; the corresponding bed places dropped by 2.5% and 34.5% respectively. The drop in hotels could be explained by the closure of some for renovation and modernization. The decrease in number of villas could be explained either by their closure due to poor accommodation conditions, or because the buildings were reclaimed by their former owners. Another alternative explanation could be a change in their classification type, from villa to urban pension. However, no exact data is available. During the next 5 years a recovery was registered. Interest in the hotel industry reappeared due to the start of privatization, but also due to direct investments in new accommodation establishments. Their total number grew – by 7.4% - almost reaching the level of 1990. The number of bed places however decreased by 3.3% indicating that the new accommodations have small lodging capacities. At the same time, the number of hotels remained relatively constant, but the corresponding bed places decreased by 3.7%. The decline in villas continued; their number dropped 19.5%, while the respective number of bed places decreased by 20.5%. The newly introduced accommodation types, urban and rural pensions, registered an important growth in the last half of the 1990s. Between 2000 and 2005 it was trendy to invest in accommodation establishments. Old establishments were modernized and new ones were built. The total number increased by 35.4%, but the bed places grew only by 1.1%, indicating a continuing orientation toward accommodations with small capacities. In fact, despite the growth in number, the number of bed places in the Romanian accommodation establishments is behind the 1990 level, representing only 69% of the bed places available in 1985. During the same period, the number of hotels increased too by 22.9%; the corresponding bed places grew only by 4%, supporting the idea that the newly built hotels have a small number of rooms. However, investments in

Chapter Two Part II

74

hotels managed to increase the number of bed places in this type of accommodations above the 1985 level. The decline in villas number and corresponding bed places continued. In 2005, the number of bed places available in villas represents only 41.7% of the 1985 level. From 2000 to 2005, the urban and rural pensions had an impressive growth in number, by 197.0% and 139.0% respectively. Special programs financed by the European Union, like SAPARD program, supported the development of rural pensions. Despite the growth in number, the number of available bed places in urban and rural pensions is modest, indicating an average number of 18 bed places, (or roughly 9 rooms) for urban pensions, and 12 bed places (roughly 6 rooms) for rural pensions. 5000

hotels

Graphic no.3 The evolution of accommodation establishments (number) between 1990 and 2005

villas and bungalows

4500

urban pensions rural pensions

4000

source NIS

total

3500 3000 2500 2000 1500 1000 500

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

500000 450000

Graphic no.4 The evolution of bed places in Romanian accommodation establishments 1990-2005

hotels villas and bungalows urban pensions

source: NIS

400000

rural pensions total

350000 300000 250000 200000 150000 100000 50000

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

Romania as a Tourist Destination and the Romanian Hotel Industry

75

Graphs 3 and 4 present the evolution of Romanian accommodation establishments by number and by bed places on a yearly basis. After the decrease registered in 1993, due to the changes occurred in classification system, an upward trend in accommodation number can be observed. Meanwhile, the trend for bed places was descending from 1991 to 2003. During the period 1990-2005 the number of hotels was relatively constant with a slight upward trend since 2003. The evolution of bed places in hotels is almost parallel. Despite the fact that in the last 3 years the number of hotels did not registered an impressive growth compared to the growth of urban and rural pensions, their lodging capacity is dominating Romanian lodging industry. The following graphs present the concentration of Romanian accommodation establishments, in both number and bed places, by main tourist destinations, as categorized by Romanian National Institute for Statistics (NIS). The following conventions are used by NIS in grouping the main Romanian destinations: 9 Romanian littoral: all seaside resorts are included in the Constanta county; the municipality of this county is Constanta city; the accommodation establishments from the city of Constanta are not included among those considered to be on the Romanian littoral. The accommodations in Constanta city are included in the category of ‘county residences’16; 9 the Danube Delta: the Delta area is included in Tulcea county; the municipality of this county is the city of Tulcea; it is the most important community in the Danube Delta and contains an important number of accommodation establishments in that region; as result, Tulcea city is included in the Danube Delta and excluded from ‘county residences’. 9 the category ‘county residences’ includes the Romanian capital, Bucharest. Data regarding the concentration of the accommodation and tourist arrivals by main destinations are available only from 1993 to present.

16

In the present study the terms ‘county residence’ and (county) municipality are used to designate the city where the administrative centre of a county is situated.

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76

Graphic no. 5a The concentration of accommodation establishments by main destinations county (average 1993-2005)

residences (Tulcea excluded) 14.06%

source: based on NIS data

other destinations 25.30%

littoral (Constanta excluded) 23.27%

Danube Delta (Tulcea included) 2.34%

mountain resorts 21.68%

spa resorts 13.35%

Graphic no.5b The concentration of bed places in accommodation establisments by main destination (average 1993-2005)

other destinations 13.31% Danube Delta (Tulcea included) 1.01%

source: based on NIS data

county residences (Tulcea excluded) 15.83%

mountain resorts 12.14%

spa resorts 15.96%

littoral (Constanta excluded) 41.75%

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77

The littoral and mountain resorts show important concentrations of accommodation establishments, with 22.98% and 21.68% respectively. The Danube Delta contains only 2.45% of all accommodation establishments. The concentration of bed places by main destinations, plotted in graph 5b, depicts a different situation. The littoral leads with 41.69% of total bed places, followed by spa resorts with 15.96% and county residencies with 15.83%. This indicates that lodging capacity in those destinations is important. The Danube Delta has a small share of the total, only 1.01%, reflecting the small lodging capacity of the accommodations concentrated there. The capacity situation of the Danube Delta shows how unrealistic the 2003 attempt17 was to promote this destination for mass tourism. If the expected number of tourist would have arrived, they could not have been accommodated. It would have compromise the destination’s sustainability from all points of view. Fortunately, the idea presented by Romanian authorities was not very successful and the worst case scenario did not occur.

other destinations 16.09% Danube Delta (Tulcea included) 1.64%

Graphic no.6a The concentration of hotels by main destinations (average 1993-2005) source: based on NIS data

county residences (Tulcea excluded) 29.73%

mountain resorts 9.15% spa resorts 12.35% littoral (Constanta excluded) 31.04%

17

The situation was presented in chapter 1.

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78

Graphic no.6b The concentration of bed places in hotels by main destinations other (average 1993-2005)

Danube Delta (Tulcea included) 0.80% mountain resorts 6.81%

destinations 7.10%

source: based on NIS data

county residences (Tulcea excluded) 21.30%

spa resorts 18.00% littoral (Constanta excluded) 45.99%

The hotels concentration by destinations, plotted in graph 6a, is different from that of total accommodations. While the seaside is still on top, with 30.98% of total hotels, second place is held by county residences with 29.73%. This is due to the growing importance of business tourism. Mountain resorts rank only 5th, indicating that hotels are not the most important type of accommodations in mountain regions. The Danube Delta lies in last place with only 1.64% of hotels concentrated there. Being a special destination, more suited for fishing lodges and other types of small accommodations, this should not be a surprise. The concentration of hotel bed places, presented in graph 6b, support the important place Romanian littoral has among tourist destinations, concentrating 46.04% of total bed places in hotels. In the second place are county residences with 21.30%, indicating a lower lodging capacity of city hotels. Is this concentration supported by tourist preferences by main destinations? The graphs below plot tourist arrivals by destination.

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79

Graphic no. 7a Tourist arrivals by main destinations average 1993-2005 source: based on NIS data

Danube Delta (Tulcea included) 0.94%

other destinations 13.09%

county residences (Tulcea excluded) 46.57%

mountain resorts 14.43%

spa resorts 11.79%

Danube Delta (Tulcea included) 1.01%

littoral (Constanta excluded) 13.18%

other destinations 7.97%

Graphic no.7b Foreign tourist arrivals by main destinations average 1993-2005 source: based on NIS data

mountain resorts 8.95% spa resorts 4.02%

littoral (Constanta excluded) 6.96%

county residences (Tulcea excluded) 71.10%

As can be seen, tourist preferences are concentrated in county residencies. Foreign tourists’ preferences for these destinations are more expressed. Unfortunately, there is not sufficient data to discern the importance

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80

Bucharest has for the same period of time. This supports the idea of a growing business segment in tourism. Also, county residences as tourist destinations are not directly influenced by seasonality: during the summer they host both leisure tourists interested in visiting places and business tourists. For the remaining seasons, business travelers are accommodated. The Romanian littoral has such a low percentage of tourist arrivals because it is under the influence of the summer season travel. Mountain resorts manage to attract a similar number of tourists, like the littoral despite the fact that they are open all year round supporting the idea of a low number of leisure facilities in mountain areas. The interest of foreign tourists in the Romanian littoral, spas, mountain resorts and Danube Delta could be considered very low.

50.0 45.0

(%)

The information regarding occupancy rates18 and the length of stay by main destinations is available since 1994. The length of stay for 2005 was not available by the end of September 2006.

40.0

47.1

35.0 30.0 25.0

37.0

47.1

34.6

28.8

10.0 5.0

Graphic no.8a Occupancy rate for Romanian accommodation establishments by main destinations average 1994-2005

23.0

23.3

other destinations

15.0

Danube Delta (Tulcea included)

20.0

source: based on NIS data

18

mountain resorts

spa resorts

littoral (Constanta excluded)

county residences (Tulcea excluded)

country level

0.0

The occupancy rate is calculated by NIS using the number of bed places available.

Romania as a Tourist Destination and the Romanian Hotel Industry

81

9.0 Graphic no.8b Aveage lenght of stay between 1994-2004

8.0 8.1

7.0

- days -

source: based on NIS data

6.0 6.5

5.0 4.0 3.0 2.0

3.5 2.9

1.0

2.2

1.8

2.4

other destinations

Danube Delta (Tulcea included)

mountain resorts

spa resorts

littoral (Constanta excluded)

county residences (Tulcea excluded)

country level

0.0

The highest occupancy rate is registered on the Romanian littoral and in spa resorts. The lowest occupancy rate is registered in the Danube Delta. The average occupancy rate of 37% for the whole country indicates that a lot of effort must be undertaken to improve the situation. The average length of stay is highest in spa resorts, due to the length of treatments, up to 18 days or more. Also, the length of stay is connected with the subsidized tickets for retired people who, otherwise, could not afford to stay for almost 3 weeks, even at two star hotels. The average length of stay for littoral supports the idea that it is a summer holiday destination. For the county residences, the length of stay is consistent with the business tourism. The other destinations are either chosen for week-ends, or represent an occasional vacation choice. The data regarding the structure by star ratings of Romanian accommodation establishments are available only since 1993. The star classification, as mentioned earlier, was introduced in 1992.

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82

Graphic no.9a The evolution and the structure of Romanian accommodation establishments by stars between 1993-2005

not classified 5 stars 4 stars 3 stars

source: NIS

2 stars 1 star

100% 80% 60% 40% 20%

not classified 23.71%

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

0%

Graphic no.9b The average structure by stars of bed places in Romanian accomodation establishments 1993-2005 1 star 26.16%

source: based on NIS data

5 stars 0.40% 4 stars 1.89% 3 stars 8.69% 2 stars 39.15%

As presented in graph 9a, the Romanian hotel industry is dominated by 1 star and 2 star accommodation establishments. These types of accommodations concentrate around 66.0% of bed places. The 1 star lodging establishments showed a downward trend, while 3 star and 4 star accommodations slightly increased in number. The 5 stars accommodation establishments are few; they are not represented on graph 9a due to their small number. They concentrate only 0.44% of bed places. The

Romania as a Tourist Destination and the Romanian Hotel Industry

83

number of ‘not classified’ accommodations decreased and this could be considered a positive sign. not classified

Graphic no.10a The evolution and the structure of Romanian hotels by stars between 1993-2005

5 stars 4 stars 3 stars

source: NIS

2 stars 1 star

4 stars 2.59%

3 stars 12.53%

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Graphic no.10b The average structure by stars of bed places in Romanian hotels 1993-2005

not classified 4.54%

sourc e: based on NIS data

5 stars 0.69%

1 star 22.27%

2 stars 57.38%

The situation is almost the same for hotels. Hotels classified at 1 star and 2 stars dominate the market and concentrate almost 76.0% of the corresponding bed places. The number of 1 star and 2 star hotels slightly decreased in the last 2 years, while the number of 3 and 4 star hotels increased

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Chapter Two Part II

slowly and represents around 14% of hotel bed places. The number of 5 star hotels remains low, only 8 in 2005, and they concentrate 0.75% of hotel bed places. Compared with data provided by classification systems like those managed by the Mobil Travel Guide19 and the American Automobile Association (AAA)20, the situation of Romanian 4 and 5 star hotels is similar, as follows: ¾ Mobile Travel Guide classifies less than 5% of properties at 4 or 5 stars; ¾ With AAA, around 8%of properties receive 4 or 5 diamonds; ¾ Romanian classification system included in 4 and 5 star category 3.40% of total accommodation establishments for 1993-2005, concentrating 3.8% of total bed places. This shows a normal situation for Romanian lodging industry and indicates the fact that the classification system functioned well between 1993 and 2005. The table 1 presents the growth rate of 3, 4 and 5 star accommodations, which increased rapidly since 2001. The rate is calculated on an annual basis and expressed as percentage increase from previous year. The number of 3 and 4 star accommodations and the corresponding bed places increased mainly in the last 3 years. The situation is slightly different in the case of 5 star accommodations, where the increase in number is not replicated by the increase in bed places due to the fact that some 5 star accommodations were closed for renovations and those that entered the market had a low number of rooms.

19 20

www.mobiltravelguide.com www.aaa.com/aaa/aaadiamonds/about.html

Romania as a Tourist Destination and the Romanian Hotel Industry

42.12%

2005

22.76%

36.77% 25.13%

17.96% 12.40%

9.04%

16.90% 6.44%

11.15%

-2.07%

Bed places in 3 star establishments

2.26%

Table no.1: The growth rate of 3, 4, and 5 star accommodations 2000 2001 2002 2003 2004 3 stars No. of establishments

85

30.36% 48.83%

34.40% 42.65%

25.00% 14.94%

8.70%

8.24% 4.74%

15.12%

-6.59%

Bed places in 4 star establishments

0.71%

4 stars No. of establishments

20.00%

16.67%

14.29%

25.00%

0.00%

40.00%

53.01%

21.81%

-10.73%

8.35%

6.53%

Bed places in 5 star establishments

31.78%

5 stars No. of establishments

Source: based on NIS data

Tourist arrivals by accommodation star classification are synthesized in the following graphs. Data are available only since 2000.

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86

Graphic no.11a Total tourist arrivals in accommodation establishments by stars between 2000 and 2005 source: NIS

not classified 5 stars 4 stars 3 stars 2 stars 1 star

100% 80% 60% 40% 20% 0% 2000

2001

2002

2003

2004

2005

not classified

Graphic no.11b Foreign tourist arrival by stars between 2000 and 2005

5 stars 4 stars

source: NIS

3 stars 2 stars 1 star

100% 80% 60% 40% 20% 0% 2000

2001

2002

2003

2004

2005

As the 1 and 2 star accommodation establishments dominate the market, it is normal that over 60% of tourist arrivals are to these types of accommodations. As far as foreign tourists are concerned, see graph 11b, they prefer 3, 4 and 5 star accommodations because their expectations are higher than those of the Romanian tourists and those accommodations provide the requested services.

Romania as a Tourist Destination and the Romanian Hotel Industry

87

When the tourist arrivals in hotels are considered, as the graphs 12a and 12b show, the situation is similar to that presented above. This is consistent with the fact that hotels dominate the Romanian lodging industry. not classified

Graphic no.12a Tourist arrivals in hotels by stars between 2000-2005

5 stars 4 stars 3 stars

source: NIS

2 stars 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000

1 star

2001

2002

2003

2004

2005

not classified

Graphic no.12b Foreign tourist arrivals in hotels by stars between 2000-2005

5 stars 4 stars 3 stars

source: NIS

2 stars 1 star 100% 80% 60% 40% 20% 0% 2000

2001

2002

2003

2004

2005

PART III: THE ROMANIAN HOTEL MARKET

The important place Romanian hotels have in the country’s accommodation industry is further supported by the following facts: - Hotels represents 25.89% of total accommodation establishments, for the period 1990-2005; - Bed places in hotels represent 56.04% of total bed places, for the same period. Graph 13 plots the dominant positions of hotels inside the main Romanian tourist destinations. This position is due to the number of bed places the hotels concentrate: 9 more than 75% of total bed places in country residences; 9 over 60% of total bed places in spa resorts and on Romanian littoral; 9 around 45% of total bed places in the Danube Delta; 9 over 30% of total bed places in mountain resorts. 90.00 80.00

76.77 62.83

70.00

40.00

source: based in NIS data

64.33

60.00 50.00

Graphic no.13 The hotel importance by detination average 1993-2005

45.35 54.94

34.63 30.45

32.03

30.00 20.00

% of hotels from total accommodation establishments

10.00

% of bed places in hotels from total bed places

10.95

0.00 county residences (Tulcea excluded)

littoral (Constanta excluded)

16.52

24.01

spa resorts

mountain resorts

18.18 Danube Delta (Tulcea included)

other destinations

However, in 2005, only 12 county residences, including the capital Bucharest, had over 10 hotels, as table 2 below shows.

Romania as a Tourist Destination and the Romanian Hotel Industry

Table no.2: Hotel concentration in main county residences Rank County residence No. of hotels 1. Bucharest 83 2. Timisoara 33 3. Cluj-Napoca 30 4. Constanta 23 5. Brasov 15 6. Pitesti 15 7. Iasi 12 8. Sibiu 12 9. Arad 12 10. Suceava 11 11. Oradea 11 12. Galati 10 Total 267 % of total at country level 26.89% % of the destination 77.39%

89

Bed places 12737 2524 2551 1960 1685 1188 1452 1320 1216 945 750 862 29190 17.79% 75.53%

Source: based on NAT data

This reflects the economic importance and the attractiveness to tourist those cities. On the Romanian littoral, as of 2005, the resort areas which have the largest concentration of hotels are Mamaia and Eforie Nord, as table 3 shows. Other resorts have between 2 and 26 hotels. Table no.3: Hotel concentration in main littoral resorts Rank Resort No of hotels 1. Mamaia 61 2. Eforie Nord 53 Total 114 % of total at country level 11.48% % of the destination 40.00%

Bed places 18323 9928 28251 17.21% 38.06%

Source: based on NAT data

It must be noted that only two seaside resorts concentrate a similar percentage of hotel bed places as 12 county residence do (see table 2 and no.3). This data support the importance attached to Romanian littoral, considered a traditional tourist destination. It also indicates that Mamaia is considered the most important resort at seaside. In the second place ranks Eforie Nord a resort

90

Chapter Two Part III

know since the beginning of 20th century not only as a seaside destination, but also as a spa resort for the treatments with the special mud from the closed by Techirghiol Lake. The number of Romanian spa resorts is significant, around 160 (NAT Strategy 2006). Thus, the official list21 of resorts includes 19 spa resorts of national interest and 20 of local interest. Despite these numbers, only 3 spa resorts have an important concentration of hotels, as table 4 shows. All 3 resorts are considered of national importance. Table no.4: Hotel concentration in main spa resorts Rank Resort No of hotels 1. Baile Felix, Bihor county 15 2. Baile Olanesti, Vilcea county 13 3. Baile Herculane, Caras Severin 10 county Total 38 % of total at country level 3. 83% % of the destination 31.41%

Bed places 9467 1952 3496 14915 9.09% 51.27%

Source: based on NAT data

The hotel location could be classified using the dimension, the business importance and the level of demand, as follows (Johnson 2002, pg.104): - major location, specifically called gateway cities; - primary location, important for industrial and business purposes; - secondary location: a place where an important level of demand for hotel service exists; - tertiary location: a town, a village or other site of lesser importance. In Romania, a gateway city – could be considered the capital, Bucharest. The 12 county residences and the two resorts at the Black Sea, presented in tables 2 and 3, could be considered primary locations. In the category of secondary locations, could be included the 3 spa resorts from table 4. At the international level, as results published in 1995 by Kleinwort Benson Securities revealed22, only 13 primary locations have been identified worldwide: 10 in USA along with London, Paris and Tokyo (Slattery, Feehely and Savage 1995). In this context, even after more than 10 years, Bucharest could be considered a secondary location for hotels, lagging behind other 21 22

The list of those resorts is available in annex no.2a. The study refers to quoted hotel companies on capital markets.

Romania as a Tourist Destination and the Romanian Hotel Industry

91

eastern capitals like Prague and Budapest. However, Bucharest position is improving since Romania’s accession to the European Union. Being the Romanian capital, it is situated now among top choices for those foreign companies which want to enter the market of Eastern Europe. When the structure by star categorization is analyzed, the importance of hotels is once again highlighted. As graph 14 shows, hotels concentrate around 80% of bed places in all accommodation establishments of 2, 3 and 4 stars. Their importance is even higher, of 96.96%, in the 5 star category. 120.00

100.00

Graphic no.14 The importance of hotels by stars average 1993-2005 source: based on NIS data

96.96 78.05

80.00

83.55

82.26

60.00

48.52

33.20

40.00

50.67

10.92

36.09 23.38

% of hotel number % of bed places in hotels

20.90

9.90 5 stars

4 stars

3 stars

2 stars

1 star

0.00

not classified

20.00

The Romanian star classification system can be used to group the hotels in the following categories: - budget/ economy hotels including 1 and 2 star hotels; - mid-market hotels including 3 stars hotels; - up-market or luxury hotels including 4 and 5 stars hotels; Budget/ economy hotels are very well represented in the market. They represented, on average for 1993-2005, 75.51% of total hotel number and 79.65% of total hotel bed places. The up-market hotels represented, on average for 1993-2005, 2.94% of total hotel number and 3.28% of total hotel bed places. When the current classification system was introduced, the highest classification of Romanian hotels was 4 stars, corresponding to the former luxury category. In 1993, the number of 4 star hotels was 7. It increased to 67 in

92

Chapter Two Part III

2005. The first 5 star hotel was registered in Romania in 1998. In 2005, the number of this hotel category included 8 hotels. Table no.5: The Romanian 5 star hotels in 2005 No. Hotel name No. of Bed rooms places 1 Palm Beach 50 115 2 Grand Hotel Rex 102 210 3 Casa Capsa 61 114 4 Crowne Plaza – Flora 164 330 5 InterContinental 187 276 6 Athenee Palace Hilton 272 544 7 Howard Johnson Grand 285 570 Plaza 8 J.W.Marriott Grand 402 804 Hotel

Location Mamaia, littoral Mamaia, littoral Bucharest Bucharest Bucharest Bucharest Bucharest Bucharest

Source: based on NAT data

These hotels represent, as of 2005, 0.81% of total hotel number and 1.81% of total hotel bed places. Of the 6 hotels (located) in Bucharest, 5 are operated under an international brand. The rate of increase/ decrease of hotels and hotel bed places by star category are presented in table 6 below. The rate is calculated for the period 2000-2005 on an annual basis as percentage increase/ decrease from previous year.

Romania as a Tourist Destination and the Romanian Hotel Industry

-3.03%

-9.38%

-7.39%

-15.80%

-9.21%

2005

-3.89%

-4.94%

-1.22% -5.25%

-5.64%

-5.02%

Bed places in 1 star hotels

-5.54%

Table no.6: Rate of increase/ decrease of hotels and hotel bed places 2000 2001 2002 2003 2004 1 star No. of hotels

93

2.23% 1.14%

1.64% 0.47%

6.20% 0.78%

0%

1.77% 0.65%

-1.31%

2.06%

Bed places in 2 star hotels

-1.29%

2 stars No. of hotels

31.98% 13.23% 42.55%

30.46% 19.40% 42.42%

17.97% 10.86% 50.00%

15.32% 10.62%

11.00% 4.65%

37.50%

9.89%

Bed places in 3 star hotels

1.35%

3 stars No. of hotels

14.29%

0.00%

4 stars No. of hotels

39.79%

47.29%

11.45%

16.24%

-0.06%

Bed places in 4 star hotels

4.99%

Chapter Two Part III

94

50.00%

33.33%

25.00%

40.00%

14.29%

0.00%

54.33%

22.17%

-10.87%

9.15%

3.45%

Bed places in 5 star hotels

32.83%

5 stars No. of hotels

Source: based on NIS data

The number of 1 star hotel and corresponding bed places constantly decreased since 2000. The situation for 2 star hotels shows a slow increase in number and an oscillating evolution for bed places. Hotels classified at 3 and 4 stars hotels registered an important increase in number and corresponding bed places, mainly in the last three years. The 5 star hotels witnessed a decrease of their development rhythm. The increase in the categories of 2, 3 and 4 star hotels can be partly explained by the construction of new hotels, and/ or renovation and modernization of the existing hotels. Another reason for this growth is represented by the desire of the hotel owners to rank their hotels at 3 stars or higher because this could be representative for their status as business people. This attitude was confirmed by a study published in 2007 by Roibu (2007). The previous section presented hotel dominance in the Romanian accommodation market. As result supported, by graph 15, over 80% of tourist arrivals are in hotels. The preference for hotels is even higher as far as the foreign tourists are concerned; over 88% of their arrivals are in hotels, as shown in graph 16. The decrease in number of foreign tourist arrivals in hotels, over 6% in 12 years, could be explained by the diversification of accommodation offerings. 3 and 4 star villas and pensions of appeared rapidly since 2001 and offered similar accommodations at reasonable room rates. Even more, they offered a much more intimate ambiance and friendly atmosphere than some hotels.

Romania as a Tourist Destination and the Romanian Hotel Industry 10000

85.00

Graphic no.15 Tourist arrivals in Romanian accommodation establishments betwee 1994 and 2005

9000

84.00

source: NIS

8000

83.00

7000 6000

82.00 (%)

thousands

95

5000 81.00

4000 3000

80.00 total tourist arrivals

2000

79.00

of which in hotels and motels (%)

1000 0

78.00 1994

1995

1996

1800

1997

1998

1999

2000

2001

2002

2003

2004

2005

98.00 Graphic no.16 Foreign tourist arrivals in Romanian accommodation establishments between 1994 and 2005

1600

96.00

source: NIS 1400

94.00

1000

92.00

800

90.00

(%)

thousands

1200

600 88.00 400 200

total foreign tourist arrivals 86.00

of which in hotels and motels (%)

0

84.00 1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

The occupancy rate of Romanian hotels leaves room for improvement, as graph 17 shows. Occupancy rate dropped dramatically from over 60% in 1990, to less than 40% in 1999. Increases were seen again from 2000, when an increase in hotel number was also observed (see graph 1). Several reasons for the decrease of the 1990s can be offered: - differentiated room rates for foreign tourists established by Romanian authorities at the beginning of 1990s;

Chapter Two Part III

96

-

the lack of investments which made many hotels look old, obsolete, and dusty; the delay in privatization was the main cause for this situation; - the quality of service was average or below average, but prices were high compared with the offered quality; - few facilities and fewer amenities offered; - seasonality; - the absence of strategies to ensure the loyalty of customers. Since 2000 the situation gradually improved. New hotels were built, and old hotels were modernized. More facilities are now offered, including rooms for meetings and conferences. As for amenities, there is a lot of room for improvement. The same is true regarding the quality of services. The occupancy rate by star classification, available only since 2000, leads to similar conclusions. Romanian hotels should make efforts to attract more tourists and keep their room occupied. 70

Graphic no.17 Occupancy rate evolution between 1990 and 2006

60

source: based on NIS data

50

(%)

40 30 20 accommodation establishments

10

hotels

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

Romania as a Tourist Destination and the Romanian Hotel Industry

Graphic no.18 Occupancy rate by stars average for 2000-2005

34.0

not classified

source: based on NIS data

37.8

5 stars

97

30.8

4 stars

36.6

3 stars

45.4

2 stars

41.3

1 star

0.0

hotels accommodation establishments

10.0

20.0 (%) 30.0

40.0

50.0

Romanian statistics do not offer information regarding the number of hotel rooms. Using NAT data for 2005 (those data could not be followed on an annual basis), the Romanian hotel structure by number of rooms is plotted in graph 19: Graphic no.19a Hotel structure by number of rooms source: based on NAT data

100 to 199 rooms 19.94%

200 to 299 rooms 6.55%

50 to 99 rooms 19.03% Other 3.32%

300 to 399 rooms 2.72% 400 rooms or more 0.60%

6 to 49 rooms 51.16%

Chapter Two Part III

98

It can be seen that small hotels dominate the Romanian hotel market. More than 51% are hotels under 50 rooms and around 19% are hotels with 51 to 99 rooms. The average number of rooms per hotel is 82 (based on NAT data for 2005). A different scale, similar to one used in a study published in May 2005, regarding European hotels, in Cornell Hotel and Restaurant Administration Quarterly (Bohdanowicz 2005), can be used to break Romanian hotels into only 3 categories: 9 small hotels with less than 50 rooms; 9 medium sized hotels between 50 and 149 rooms; 9 large hotels with 150 rooms or more. The results are presented in graph 19b showing a low percentage of large hotels in Romania. Graphic no.19b Hotel structure by number of rooms - 2 source: based on NAT data

150 rooms or more 17.02%

50 to 149 rooms 31.82%

6 to 49 rooms 51.16%

Below are presented the data available on the 6 Romanian hotels with more than 400 rooms each.

Romania as a Tourist Destination and the Romanian Hotel Industry

99

Table no.7: Romanian hotels with more than 400 rooms Hotel name No. of No. of No. of Location stars rooms bed places J.W.Marriott 5 stars 402 804 Bucharest Grand Hotel Bucuresti 3 stars 446 845 Bucharest Hotel Muncel Hotel 2 stars 490 940 Baile Felix, spa resort in Bihor county Lebada Hotel 2 stars 507 944 Amara, spa resort in Ialomita county Dacia Hotel 2 stars 535 1070 Baile Herculane, spa resort in Caras-Severin county Padis Hotel 2 stars 728 1456 Baile Felix, spa resort in Bihor county Source: based on NAT data

The biggest hotel in Romania is located in Baile Felix, a spa resort in Bihor county. The spa resort is also the place for another hotel of over 400 rooms. Both hotels were developed between 1975 and 1985 through huge investments made by trade union organizations, controlled by the communist party. The location was chosen based on existing thermal springs. The hotels offer also treatment facilities. At 2005 level, at least one of the hotels was modernized and the other one was undergoing renovation. The number hotels with 200 to 399 rooms was 92 in 2005 and 58.70% of them were 2 star hotels. On Romanian littoral, 63 of the 92 hotels are located, while other 18 are located in spa resorts. Bucharest is concentrating other 8 of them. Two of the most popular mountain resorts, Poiana Brasov and Sinaia, have a hotel with over 200 rooms each. The only county residence where such a hotel is located is Pitesti, Arges county. The presence of the hotel in Pitesti was

100

Chapter Two Part III

triggered by the fact that the Romanian main carmaker, Dacia, has its manufacturing plant near Pitesti23. Only 3 apartment hotels were registered by NAT in 2005. Those hotels were: - Guci Hotel with 20 apartments, 40 bed places, ranked at 3 stars and located in the city of Constanta; - Casa Locato Hotel with 21 apartments, 42 bed places, ranked at 3 stars, located in Bucharest; - Centre Ville Aparthotel with 220 apartments, 536 bed places, ranked at 4 stars, located in Bucharest. These 3 hotels are not reflected by NIS figures for 2005. As the number shows, this sector of the hotel market is open for development. Other types of hotels (like resort hotels or conference hotels) were difficult to identify since criteria of classification specific for this categories are unknown in Romania.

23

The company is now part of the Renault Group.

PART IV: HOTEL OWNERSHIP

As table 8 shows, an important change in hotel ownership took place between 2002 and 2003 reflecting the privatization process. In 2005, 79.96% of hotels and 78.28% of hotel bed places were under private ownership, compared to the year 2000 when only 48.40% of hotels and 42.49% of hotel bed places were under private ownership. The main increase in the number of privately owned hotels took place in 2003 when not only existing hotels were privatized, but also a number of newly built hotels entered the market. The important drop in number of state owned hotels was generated by the acceleration of privatization process between 2002 and 2004. The slight increase in the number of hotels owned by state in 2004 and 2005 was induced by voided privatization contracts, when the private partners did not transfer the money for the hotel ownership. Table no.8: State and private owned hotels and corresponding bed places 2000 2001 2002 2003 2004 2005 State owned 419 406 390 176 209 199 hotels Corresponding 90783 87930 84687 29669 35063 35642 bed places Private owned 393 423 447 710 719 794 hotels Corresponding 67065 69773 72596 129107 125307 128460 bed places Source: NIS

The study identified, at 2005 level, the ownership structure by type. The 993 hotels considered are owned by 753 entities/ companies, structured as seen in graph 2024 below. 24 The category ‘others’ included public institutions, state owned companies offering services for public administration, ministries or departments in ministries. The ‘uncertain

Chapter Two Part IV

102

individuals and family associations 1.20%

others 2.92%

uncertain situation 1.86%

co-op 0.66%

incorporated 31.34% LLPs 62.02%

Graphic no.20 Hotel owners structure by types - level 2005 source: based on NAT data

Because the most part of Romanian Limited Liability Partnerships (LLPs)25 could be categorized as SMEs, a direct conclusion is that Romanian hotels are owned mainly by small and medium sized companies and operated by these SMEs’ owners or their representatives. Graph 21 presents hotel owners by their main activity, as declared with the Romanian Ministry of Finance. These data are available on the ministry website26 to any interested party. Data regarding the Romanian company activities are available from 1999 to present.

situation’ refers to entities which could not be identified due to mistakes in their names and registration numbers. 25 In Romania the abbreviation for LLPs is SRL. 26 www.mfinante.ro

Romania as a Tourist Destination and the Romanian Hotel Industry

other activities 23.24%

n/a 3.85%

103

Graphic no.21 Hotel owners structure by activites - level 2005

source: based on NAT data

restaurants, bars, tour operators 10.23%

in hotel bussiness 62.68%

At first glance, the situation seems normal, with almost 63% of hotel owners declaring the main activity as being in the hotel business (NACE27 code 55.10). Another 10% declared related activities like: other provision short-stay accommodation (NACE code 55.20), restaurants (NACE code 55.30) and bars (NACE code 55.40). The study went further analyzing in detail the situation of the dominant form of business: LLPs; 467 such entities were identified. Their structure by activities replicates the general structure shown in graph 21. This correlation is normal because LLPs are the dominant ownership form. Their structure by activities is as following: - 60.60% declared their main activity as the hotel business (NACE code 55.10) - 2.78% declared as the main activity: other provision short-stay accommodation (NACE code 55.20)

27

NACE provides the classification of economic activities in the European Community. A complete list of NACE codes can be found at http://ec.europa.eu/comm/competitions/mergers/cases/index/nace_all.html

Chapter Two Part IV

104

-

10.49% considered their main activity to be restaurants (NACE code 55.30) or bars (NACE code 55.40) or in the field of travel agencies and tour operators (NACE code 63.30) - 12.21% were oriented mainly toward wholesale trade of various type (NACE code 51.00) or retail trade of various type (NACE code 52.00) - 13.28% had other main activities like construction, manufacturing of various goods or real estate business. This situation too seems normal, but ¼ of the hotels under LLPs control are operated by owners which consider the hotel business as a collateral activity. This could be one of the reasons why the quality of service is poor in those hotels. When the LLPs with their main activity in hotel business were put under scrutiny, they yielded interesting results - 33.92% were in the same hotel business activity before 2000; - 26.50% were established between 2000 and 2005 with the main activity in the hotel business; - 37.81% switched to the hotel business from other activities, between 2000 and 2005 - 1.77% had switched from hotel business to other activities and then back to hotels; - 0.64% had no information available. These results show how trendy the hotel market became for many small company owners. Their entry in this market seems to resemble a ‘herding behavior’. It also indicates that the Romanian hotel market is still young and needs time to mature. A further analysis of the 107 LLPs that switched to the hotel business from other activities between 2000 and 2005 generated the following results: - 22 switched to hotels from related activities: other provision short-stay accommodation, restaurants, bars, and activities of travel agencies and tour operators; - 21 were involved in at least 2 other activities before switching to hotels; most of the time those activities were completely different from the hotel business; - 30 were in the field of wholesale trade and retail trade before becoming interested in the hotel market; - 34 switched from other activities such as transportation, manufacturing of various goods, construction, or real estate activities. From these results at least two conclusions arise:

Romania as a Tourist Destination and the Romanian Hotel Industry

-

105

the flexibility of SMEs is high; when an activity becomes trendy it is easy to be considered as the main business; the attitude of ‘me too’28 is common among Romanian business owners considering that they should be on a market which become trendy; the study of Roibu (2007) supports this conclusion; the abrupt switch to a different activity, the hotel business in this case, generated an increase in hotel number and bed places which could be considered a positive sign; however, the positive evolution did not increase the quality of service in those hotels.

In Romania LLP is the most popular form of association29, time involving members of the same family or/ and closed friends. They are very similar to family companies in Western countries. The LLPs represent 62.02% of total hotel owners, or 467 entities. Only 8 LLPs, owning a hotel each, included their hotels under a brand. The remaining LLPs have the following situation: - 9 LLPs own 3 or more hotels as the table 9 shows - 22 LLPs own 2 hotels. - 434 LLPs own one hotel each. As the present study could establish, the 459 LLPs independently operate their hotels, even when the number of hotels they own is over 3. It can be concluded that Romanian hotel market is also dominated by independently operated hotels. An analysis of the structure of the 235 companies identified as joint stock companies30 (Inc.) revealed the following: - 189 (80.43%) declared their main activity as the hotel business; - 15 have main activities in related fields such as: other provision shortstay accommodation, restaurants, bars, and activities of travel agencies and tour operators - 29 have other main activities; - 2 had no information available regarding their main activity. 28

The idea of this attitude is very well described in the book Blue Ocean Strategy by Kim & Mauborgne (2005). It presents the intention of a company or a business person to enter markets where the boundaries are defined and accepted; where the competitive rules are known. 29 In Romania, a LLP can have 1 to 50 associates/ members; the minimum capital required is 200 RON (approximate 57 EUR at the exchange rate of 1 EUR= 3.5 RON). The preference for this form of business in the hotel industry was induced by easier access to commercial loans than is the case of individuals or family associations. 30 The abbreviation in Romanian for this type of company is SA.

106

Chapter Two Part IV

Of 189 only 42 were established in or switched to the hotel business since 2000. Five of these companies were created as spin-offs of two former state owned companies on the Romanian littoral with the main activity in hotels. The presence of the 235 joint stock companies in the Romanian capital market was also analyzed. The results were the following: - 167 are not listed companies; 56 of them were traded between November 1996 and September 2006 on the Rasdaq market31 but their majority shareholders chose to redrew them from market quote; - 68 are listed, as follows: o 3 on the Bucharest Stock Exchange32 (BVB); only one of the 3, traded under the symbol EFO, is in the hotel business; it is also the biggest hotel group in Romania, concentrating 42 hotel on Romanian littoral; o 65 on Rasdaq market; 55 companies of these are in the hotel business; 5 of them have discrepancies between the NACE code declared with the Ministry of Finance and the NACE code available on Rasdaq website. The declarations made with the Ministry of Finance in the last 7 years were taken into consideration and the companies were considered to belong in the hotel business. As of September 2006, 7 of these 65 companies were suspended from trading for various reasons; most of them will resume trading in the months to come. 31 The Rasdaq market was established in November 1996 as an OTC market, following the NASDAQ’s model. The Rasdaq market was necessary to intermediate the transactions of privatized companies’ shares which did not fulfill the conditions to be listed on the Bucharest Stock Exchange. During 1998, the highest number of listed companies was reached: over 5000. Due to Rasdaq’s relatively poor results combined with several scandals involving theft of shares and price manipulation, the Rasdaq was transformed, with the hope of a change in image, in the Electronic Exchange Rasdaq. The situation slightly improved. The decision of a merger with the main Romanian capital market, Bucharest Stock Exchange, was taken during 2004. The merger took place in December 2005 and since then Rasdaq market became part of the Bucharest Stock Exchange. More information could be found at www.rasd.ro 32 The Bucharest Stock Exchange opened for transactions in November 1995. Only companies which fulfilled the imposed conditions were listed. The maximum number of listed companies at Bucharest Stock Exchange was 132, reached between 1998 and 1999. With higher liquidity and transparency, the Bucharest Stock Exchange became the main capital market in Romania. To avoid any confusion with the Budapest Stock Exchange, the abbreviation for Bucharest Stock Exchange used in this study is be BVB, the initials of its Romanian name. More information can be found at http://pilot.bvb.ro/ or at http://wwwold.bvb.ro.

Romania as a Tourist Destination and the Romanian Hotel Industry

107

The 56 companies in hotel business listed on the Romanian stock exchange represent 136 hotels, or 13.70% of total hotels. Of these 56 companies, only 13 were established in or switched to the hotel business since 2001.

PART V: ROMANIAN HOTEL GROUPS

The current research investigated how the Romanian hotels are grouped. Because the Romanian hotel market can be considered in its early stages, established ways in which hotels are typically operated, e.g. management contracts or franchising, are not wide spread practices. Until now, only one or two Romanian hotel groups have made timid attempts to develop a brand. They are still far away from truly establishing a brand. The other hotel companies grouped the hotels under their ownership and operate them as branches, not through management contracts or franchising. Due to these reasons, the terminology of hotel group was chosen instead that of hotel chain. Table 9 presents the companies having at least 3 hotels of which they are registered as owners. Table no.9: Romanian hotel groups No. Group name, No. identification number33, of main activity hotels 1 THR Marea Neagra SA 42 2980547 Hotels 2 SIND ROM SRL 23 1589592 Hotels 3 Unita Turism Holding SA 18 2094737 Hotels

33

No. of bed places 14935

Observations (Remarks) Listed at BVB under EFO symbol

10964 3554

The identification number allows to interested parties to find information about those companies on the Ministry of Finance website. The information is available only in Romanian.

Romania as a Tourist Destination and the Romanian Hotel Industry

4

Tratament Balnear si Recuperare a Capacitatii de Munca SA 15619634 Hotels

14

3168

5

Continental Hotels SA 1559737 Hotels

13

3152

6

RA APPS 2351555 Services for supporting the public administration Turism Felix SA 108526 Hotels

13

1806

9

3058

ANA HOTELS SA 8468423 Hotels ARO PALACE SA 1102041 Hotels Calimanesti-Caciulata SA 3237150 Hotels

6

1373

6

1267

5

1608

11

Hercules SA – 1070543 Hotels

4

1424

12

AF35 Dracsanu Ion 14490867 n/a

4

1185

7

8 9 10

34

109

The only shareholder – through government ordinance – is CNPAS34. 3 hotels under IBIS brand through management contact State owned company Listed at BVB – Rasdaq market – under TUFE symbol

Listed at BVB – Rasdaq market – under CALU symbol Listed at BVB – Rasdaq market – under ERCA symbol

CNPAS is the Romanian abbreviation for the National House of Pensions and Other Social Insurance Rights, www.cnpas.org 35 AF stands for family association.

Chapter Two Part V

110

13

Hefaistos UCECOM SCA 8468393 Hotels Euro Hotels & Suites SRL Uncertain situation Sulina Estival 2000 SA 14681581 Hotels MAPN36 n/a National Defense Pen Tur Com Perla SRL 2484098 Hotels Olimp Estival 2002 SA 14662536 Hotels

4

893

4

873

4

792

4

521

4

196

3

1528

19

Steaua de Mare SA 2412342 Hotels

3

1386

20

Perla Majestic SA 7940489 Hotels

3

1312

21

Balneoclimaterica SA 1245068 Hotels

3

788

14 15 16 17 18

36

MAPN is the Romanian abbreviation for Ministry of Defense.

Listed at BVB – Rasdaq market – under OLIP symbol Listed at BVB – Rasdaq market – under STST symbol - suspended for reorganization in Sept.2006 Listed at BVB – Rasdaq market – under MAJE symbol Listed at BVB – Rasdaq market – under BALO symbol One hotel in Danubius chain

Romania as a Tourist Destination and the Romanian Hotel Industry

22

Turism Covasna SA 559747 Hotels

3

708

23

Tratament Balnear Buzias SA 1849307 Hotels BTT SA 1573170 Activities of travel agency and tour operator Valdor SRL 1333674 News agency activities Savion Hotel SRL 2833457 Hotels ENL Turist Lira SRL 10282898 Hotels Corsa Trans SRL 5579001 Real Estate Activities Bia Mary SRL 5717309 Retail trade Robinson SA 1127941 Hotels

3

666

3

476

3

401

3

381

3

299

3

296

3

294

3

276

Romtelecom SA 427320 Telecommunications Translemn Tulghes SRL 508980 Sawmilling and planning of wood

3

242

3

240

24

25 26 27 28 29 30

31 32

Listed at BVB – Rasdaq market – under TUAA symbol Listed at BVB – Rasdaq market – under BALN symbol Listed at BVB – Rasdaq market – under BIBU symbol

Listed at BVB – Rasdaq market – under ROPR symbol

111

Chapter Two Part V

112

33

34

Turism si Agrement CFR SA 14925783 Hotels SNP Petrom SA 1590082 Extraction of crude petroleum % of total

3

167

3

165

228 22.96 %

60394 36.80%

Listed at BVB under SNP symbol

Source: based on NAT and NIS data

More detailed information about the most important and interesting Romanian hotel groups can be found in annex no.5. Another 48 companies have 2 hotels each, for a total of 96 hotels, or 9.67% of all hotels. The bed places controlled by those companies are 14977 representing 9.14% of hotel bed places. The other 671 companies and legal entities own 1 hotel each and represent 67.37% of Romanian hotels and 54.06% of hotel bed places. The data above reflects that the Romanian hotel industry is dominated by small companies which own and operate one hotel. This (situation) is similar to the European hotel industry as a whole (Johnson 2002, Leidner 2004, Johnson & Vanetti 2005, and Holverson & Revaz 2006) and similar to the hotel industry at the international level where 2/3 of all hotel rooms are in independent hands, often SMEs (Johnson 2002). The international hotel chains presence in Romania as of 2005 is displayed in tables 10 and 11.

Romania as a Tourist Destination and the Romanian Hotel Industry

113

Present since

Observations

Bucharest

Accor, France 4 203 406

1994

2 Ibis (Gara de Nord)

Bucharest

3

250

469

2001

3 Ibis (Palatul Parlament ului) 4 Ibis

Bucharest

3

163

326

2004 estim ated

Management contract Management contract Hotel owned by the Romanian hotel group Continental – exclusivity in developing this brand in Romania Ibid previously Ibis hotel

Constanta

3

154

308

2004 estim ated

T o t a l

770

1509

No. of bed places

Location

1 Sofitel

Stars

No. Hotel name

No. of rooms

Table no.10: European hotel groups and voluntary hotel chains in Romania as of 2005

Ibid previously Ibis hotel

Chapter Two Part V

114

1 Crowne PlazaFlora 2 InterConti nental

1 Golden Tulip Times Bucharest 2 Golden Tulip Bucharest

1 NH Bucharest

InterContinental Hotel Group, UK Bucharest 5 164 330 1998 Bucharest

187

276

1971

Franchise37

T 351 606 o t a l Golden Tulip, Netherlands Bucharest 4 70 140 2004

Franchise

Bucharest

159

2005

Franchise

T 153 299 o t a l NH Hotels, Spain Bucharest 3 78 148

2005

n/a

Hilton UK 272 544

1997

Management contract

Danubius, Hungary 3 160 320

2003

Branch of Danubius in Romania

1 Athenee Palace Hilton

Bucharest

1 Danubius Hotel

Sovata, Mures county

37

5

Management contract

4

5

83

Since January 2007, the InterContintal Hotel Bucharest is operated under management contract (www.banisiafaceri.ro, Hotelul InterContintal din Bucuresti are un nou manager, January 22nd 2007)

Romania as a Tourist Destination and the Romanian Hotel Industry

1 Fenyo

Miercurea -Ciuc, Harghita County

Hunguest, Hungary 3 108 184

2002

115

Affiliation with the voluntary hotel chain

Source: Hotel web sites and Lupu (2005)

A Holiday Inn Resort (InterContinental Hotel Group brand) existed in Sinaia. The entry date for this brand could not be established and no information was available on the way the hotel was operated. The partnership was silently dissolved after the hotel closure between 2003 and 2004 due to large fiscal liabilities in charge of the Romanian hotel building owner.

2

3 4

5

Best Western Bucovin a

No. of bed places

No. of rooms

Best Western 4 267 354

Observations

Bucharest

Stars

Location

Best Western Parc Best Western Balvany os Best Western Topaz Best Western Central

Present since

1

Hotel name

No.

Table no.11: US hotel groups and voluntary hotel chains in Romania as of 2005

1999

Affiliation

Balvanyos, Covasna county

3

78

143

1999

Affiliation

ClujNapoca

3

47

94

2003/ 2004

Affiliation

Arad

3

42

84

2000

Affiliation

Gura Humorului, Suceava county

4

130

222

2002

Affiliation

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116

6

7

1

2

1

Best Western Ambass ador Best Western Savoy

Timisoara

4

40

80

2002/ 2003

Affiliation

Mamaia, Constanta county

4

127

235

2000/ 2001

Affiliation

T 731 1212 ot al Wyndham Worldwide (former Cendant Hospitality) Howard Bucharest 5 285 570 2005 Franchise Johnson Grand Plaza Ramada Bucharest 4 111 220 2005 Franchise Majestic Buchare st Hotel T 396 790 ot al Marriott International Inc. J.W.Mar Bucharest 5 402 804 2000 Management riott contract Grand Hotel

Source: Hotel web sites and Lupu (2005)

The first hotel chain that entered the Romanian hotel market was InterContinental in 1971. This was possible due to an opening demonstrated by Romanian communist authorities toward Western countries. The next international entry was registered in 1994 when a Sofitel hotel (Accor brand) was opened in Bucharest. It was followed by Hilton in 1997 and another InterContinental brand, Crowne Plaza, in 1998. The first affiliations with Best Western were registered in 1999. All other market, entries took place between 2000 and 2005. As of 2005, 22 hotels of the total 993 hotels in the Romanian market were integrated under international brands’ umbrella. The international brands have a penetration rate of 2.22% in the hotel number and a penetration rate of

Romania as a Tourist Destination and the Romanian Hotel Industry

117

rooms of 4.19%. The percentage of rooms affiliated with an international hotel chain in Romania is closed to the figure reported in 2003 for Italy, 4.4% (Marvel 2003). The presence of European and American brands is relatively balanced, with a main chain from each region having strong representation in Romania, as the next table shows. Table no.12: Total number of rooms and bed places controlled by international brands in Romania as of 2005 Total European brands USA brands Hotels 22 12 10 Rooms 3421 1892 1529 (Accor concentrates (Best Western 770 rooms or concentrates 731 40.70%) rooms, or 47.81% Bed places 6416 3610 2806 (Accor concentrates (Best Western 1509 rooms or concentrates 1212 41.80%) bed places or 43.19%) Source: based on NAT data

The structure of these branded hotels, using the Romanian star system, is as follows: - 9 hotels are ranked at 3 stars (mid market hotels); - 8 hotels are ranked at 4 stars (up-market hotels); - 5 hotels are ranked at 5 stars (luxury class); all 5 star hotels are located in Bucharest. -

Using the number of rooms, the structure of these hotels is as follows: 3 small-size hotels having less than 50 rooms; all are affiliated with Best Western; 8 medium-size hotels with 50 to 149 rooms; 11 large hotels with over 150 rooms.

As was expected, 13 of the 22 branded hotels are located in Bucharest. This demonstrates that the capital is a major and important location. A lot of hotel demand occurs in Bucharest being the main business, administrative and cultural center.

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Best Western, due to its flexible affiliation policy, and NH Hotels were present in other Romanian cities in 2005. Hungarian Danubius Hotels situation is peculiar: the choice for the spa resort Sovata reflects the profile of Danubius Hotels as spa and wellness hotels. The choice was also supported by the fact that in Mures county, where Sovata is situated, an important Hungarian minority exists and the language barrier is relatively small. Additionally, the Danubius Hotels case triggered the location choice of Hunguest Hotels for a hotel in Miercurea-Ciuc, Harghita county. The interest of international hotel brands to have their name present in Romania, mainly in Bucharest, is increasing. The following hotels were opened under international brand names in 2006 and were not included in the study: - Tulip Inn Bucharest City and Golden Tulip Sky Gate, Bucharest; both hotels were opened at the beginning of 200638. Golden Tulip brands are represented in Romania by Peacock Hotel Management, the best known Romanian company offering professional advice in hotel sector39; - NH Timisoara Hotel was opened in February 2006; - Ramada Bucharest City North40 was included in the Ramada portfolio in 2006; its official opening took place in November 1st 2006 (Tudor 2006); - in September 2006, as the website of Danubius Hotels41 indicated, another 3 hotels ranked 2 stars, located in Sovata, entered under this chain umbrella; - Accor introduced the Novotel brand on the Romanian market with a first hotel opened in Bucharest in September 2006; the opening was expected since 2005 (Roibu 2006b); - a hotel under RIU brand, RIU Fantasy Beach Hotel, was opened in Mamaia, the main resort on the Romanian littoral; - Art’othel, a Park Plaza brand, opened a hotel in Bucharest also during 2006; - K+K Hotels put their name on the Elisabeta Hotel in Bucharest during 2006 (Cojocaru 2006). Additional facts concerning international hotel brands in Romania are: 38

www.goldentulip.com www.peacockhotels.ro 40 www.ramada.com 41 www.danubiushotels.com/opendoc.php?db=3%id=26. The hotel names are: Bradet, Faget and Alunis. 39

Romania as a Tourist Destination and the Romanian Hotel Industry

-

-

-

-

-

119

TH Hotels – a boutique hotel brand was mentioned for the first time during September 2006; according to Roibu (2006b) it already has two hotels in Bucharest, the Opera Hotel and the Palas Hotel since 200542; a third one, Venetia Hotel is expected to open in 2007; Ramada is expected to increase its portfolio with another two hotels in Bucharest: Ramada Convention Center, a 300 room hotel and Ramada Encore, with 165 rooms, a mid-scale hotel; Ramada’s representative in Romania, Trend Hospitality, is considering opening a hotel in Sibiu under the Ramada name in 2007 (Dionisio 2006); Golden Tulip is expected to increase its Romanian portfolio with another 6 hotels; several of which will be opened in Transylvania (Dumitru 2006); during the first quarter of 2007 the first Golden Tulip affiliation took place in Cluj-Napoca where the Tulip Inn Sunny Hill, a 3 stars ranked hotel can be found43; Best Western announced a new hotel affiliation in Resita, Hunedoara county; it would operated under Best Western name starting at the end of 2006; a new hotel in Bucharest is expected to be affiliated with Best Western in 2007 (Dumitru 2006); Ibis (an Accor brand) has the intention to develop another two hotels between 2007 and 2009; the location choice will be made between Timisoara, Cluj-Napoca and Brasov (Dumitru 2006); a 400 room hotel is expected to be open under the Radisson brand in Bucharest, during 2007 (Dumitru 2006); Hyatt announced the intention to open a 300 room hotel in Bucharest; however, the opening date has not been announced yet (Dumitru 2006); InterContinental expressed interest to reintroduce the Holiday Inn brand and develop Holiday Inn Express in Romania (Tinteanu Moldoveanu 2006b) Sheraton also expressed some interest for a hotel in Bucharest (Tinteanu Moldoveanu 2006b).

The interest of international hotel groups to expand their brands in Romania is obvious. Special attention is directed to Bucharest, the most active hotel market at the country level, as the highest demand for hotel rooms exists in the capital. Their presence would increase the brand penetration rate and would 42 The presence of this group is very discrete in Romanian and was first mentioned during 2006. This is the reason why those hotels were not included in the branded hotel category. 43 http://www.tulipinnsunnyhill.com/ and http://www.goldentulip.com/PropertySearch.aspx?Country=RO&City=Cluj%20Napoca

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likely decrease the fragmentation of Romanian hotel industry. An estimation of the penetration rate is almost impossible due to the lack of detailed information.

PART VI: THE ACTUAL STAGE OF DEVELOPMENT OF ROMANIAN HOTEL INDUSTRY

For the last 16 years, the investment level in the hotel and restaurant sector44 in Romania represented, constantly, less than 2% of the total investments made in the Romanian economy. The level of investments in the hotel & restaurant sector oscillated until 2001, when it took an ascending trend. This low percentage of total investments shows that, despite the official declarations regarding the importance of tourism, the important sector of hotels & restaurants was neglected. 2.00

300

250

Graphic no.22 The investments in hotel and restaurant sector between 1990-2004 source: based on NIS data

1.80 1.60 1.40

200

1.00

150

(%)

1.20

0.80 100

0.60 0.40

50 h & r investments in million ECU/EUR

0.20

% h & r of total investments 0

0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

44 The data provided by NIS are for the hotels & restaurant sector; no further details are available.

Chapter Two Part VI

122

The lack of a trend in hotel & restaurant sector investment from the 1990s can be correlated with the evolution of accommodation establishments in Romania, presented in graphs 1 and 2, for the same period. The increasing trend of investments that started in 2001 was generated by a number of special financing programs for the sector offered by international financial institutions, and by the European Union through Romanian banks and trough the special SAPARD program which supported the development of rural pensions. Since 2001, also, mortgage loans for commercial purposes were included in Romanian bank product portfolios, and allowed a diversification of financing alternatives. The contribution of the hotel & restaurant sector to GDP, as total inflows and gross added value, is presented in graph 23. 3.50

Graphic no.23 Hotel & restaurant sector contribution to GDP between 1990 and 2005

3.00

source: based on NIS data

2.50

2.00

1.50 gross added value - %

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1998

production - %

1.00

The figures presented in this graph above are different from the WTTC data presented in the first chapter because of methodological differences between NIS and the Council. During the 1990s, the hotel & restaurant sector’s contribution to GDP replicated the oscillating trend of investments in the sector. An important decrease was noted in 1994 when tourist arrivals in Romanian establishments dropped by half a million. Since 2000, the sector’s contribution to GDP became less volatile, but a declining trend was registered. This that the investments made in hotels & restaurants between 2001 and 2004 still need time to yield an increased contribution to GDP.

Romania as a Tourist Destination and the Romanian Hotel Industry

123

Both situations described above demonstrate that the Romanian hotel industry needs further development. This is further supported when comparison are made with other European countries. Graphs 24a and 24b present the situation of hotels and similar accommodation establishments45 in main European destinations. 60000

Graphic no.24a No of hotels and similar establishments source: Eurostat and NIS

50000 40000 30000 20000 10000

France Italy

0

2500

2005

2004

2003

2002

2001

2000

1999

1998

United Kingdom Romania

Graphic no.24b Bed places in hotels and similar accommodations source: Eurostat and NIS

2000

thousands

1997

1996

1995

1994

1993

Spain

1500 1000 500 Franc e Italy

0

45

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

Spain United Kingdom Romania

As the category is defined by EUROSTAT and includes: hotels, apartment hotels, motels, roadside inns, beach hotels, residential clubs, rooming and boarding houses, tourist residences and similar accommodation.

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The number of hotels and similar accommodation establishments and the corresponding bed places in Romania are small compared to the most important European tourist destinations. The gap is huge but correlated with tourist arrivals in Romanian establishments, as presented in the first chapter. The future development of Romanian hotel and similar accommodation establishments must take into consideration the country’s profile as tourist destination, without its charm and attractiveness. When compared with its direct competitors in the tourism market, Romania’s position is different. 4500

Graphic no.25a

4000 Hotels and similar accommodations source: Eurostat and NIS

3500 Bulgaria

3000

Czech Republic

2500

Hungary

2000

Poland Slovakia

1500

Romania

1000 500

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

19 96

19 95

19 94

19 93

0

300

Graphic no.25b Bed places in hotels and similar accommodations source: Eurostat and NIS

250

Bulgaria Czech Republic 150

Hungary Poland Slovakia

100

Romania 50

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

0 1993

thousands

200

Romania as a Tourist Destination and the Romanian Hotel Industry

125

Both graphs presented above show that Romania is well situated with the number of hotels and similar accommodations and the corresponding bed places. A surprise result was the fact that Romania, until 1996, was well ahead of its main competitors in accommodation capacity. The position was lost to the Czech Republic in 1996. The bed places increased slowly in Romania due to the low investment level presented above. At the same time, in Bulgaria, while the number of hotels and similar accommodations remained at around 1200 units, compared with Romania’s 3500 units in 2005, the number of bed places increased at a comparable level for the same year. Why did Romania not capitalize on the advantage it had on accommodation capacity? When hotels were put under scrutiny, it became clear that the quality of the accommodation was far from what was expected. However, the situation was the same for Romania’s main competitors in tourism market, as several studies revealed: - the design of many hotels in the region was post-war, concrete block construction style (Roh & Andrew 1994); - there was a serious lack of investment for renovation and refurbishing during the operational years of the hotels (Roh & Andrew 1994); - modern hotels were not in place (EBRD 1997); - the quality of the hotel portfolio in the region was low (Johnson 2002) - investments were needed to bring hotels up to international standards in areas such as: ventilation, bathrooms and information technology (Roh & Andrew 1994 and Johnson 2002). The presence of these problems voided the Romania’s advantage in accommodation. During the early 1990s, many studies that reviewed mainly Hungary, the Czech Republic, Slovakia and Poland suggested a need for hotels to cover the mid-market and budget/ economy segments of the market (Kerpal 1990, Hall 1991, Trew 1993, and Hall 1995). Despite these suggestions, the hotels developed were mostly in the upper and luxury end of the market (Johnson 2002). From this point of view, Romania showed a strong budget/ economy segment inside its hotel market, with 1 and 2 star hotels dominating. The highest concentration of 1 and 2 star hotels in 2005 was (based on NAT data) on the Romanian littoral, 32%, followed by county residences, including Bucharest with 26%.

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The mid-market and upper market segment started to increase rapidly since 2001, as the table 6 shows. The interest expressed by international hotel chains in the Romanian hotel market is expected to generate an increase in the number of units included in the upper and luxury segment of the hotel market. The need for a development of up-market hotel segment was made by WTTC in its report for Romania (2006). Between mid 2007 and 2010 a number of 11 hotels ranked at 4 and 5 stars are expected to open in Bucharest, adding to the accommodation capacity a number of approximate 3378 rooms (Smadeanu 2007) When the hotel dimension is analyzed, an important difference appears between Romanian and European hotels. The average of 48.0 bed places per hotel was reported in 2001 (Leidner 2004) as an average for European hotels. While in the last 5 years the Romanian newly built hotels were small-sized, when the average number of rooms and the average number of bed places was calculated, as of 2005, they yield the following result: 82.1 rooms/ hotel and 165.3 bed places/ hotel. This is due to the existence of large hotels, of 200 rooms or more, built before 1989. The difference can be important for international hotel chains in search of medium-size or large hotels. The way the privatization process was conducted influenced the level of concentration of hotel industry in Central and Eastern Europe. The information available for Romania’s direct competitors in the tourism market shows that (Johnson 2002): - in Hungary and Poland the governments chose to privatize hotels by finding buyers who would purchase several hotels; in Poland, the concentration level is notable due to the influence of a semi-privatized company Orbis46; - in Czech Republic and Slovakia, the governments sold individual properties; by 1999 over 90% of the hotels in those countries were privately owned and operated. The privatization process in Romania was similar to that in the Czech Republic and Slovakia, but did not begin in earnest until 2000. Since 2002, the biggest hotel group in Romania, THR Marea Neagra Inc., started to acquire hotels under its ownership. The process was replicated by Unita Turism Inc., but not at the same intensity. A tendency of Romanian companies owning 1 or 2 hotels to expand to 3 or more owned hotels was observed during 2005 and 2006, but the development took place mainly through building new properties.

46

In 2000, Accor took a 25% share in Orbis, Poland (Johnson 2002).

Romania as a Tourist Destination and the Romanian Hotel Industry

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The international chain penetration rate in Romania is still low, as presented above. Considering the InterContinental entry in 1971 as an exception, the first entry on the Romanian free hotel market was that of Accor with the Sofitel brand in 1994. This correlates with the situation revealed by Hunt (1993) that almost every major international hotel operator wanted to have a property in Eastern Europe. The next entry in the Romanian hotel market was only noted in 1998 with Hilton. The 4 year gap can be explained by reasons similar for the hotel industry in the region by Trew (1993): - property ownership titles; in Romania this problem is still persistent not only due to delayed privatization, but also to unclear legal frameworks regarding the return of property which were confiscated by communists to their former owners; - economic performance of hotels; Romanian hotels had to face, mainly during the 1990s, a decreasing number of tourist arrivals and increasing needs for renovation and refurbishing; - the lack of external funding; in Romania’s case, the lack of domestic funding can be added; the financial market developed slowly, and the loans for long term investments were few and very expensive. Other motives, identified in the Czech Republic, Hungary, Poland and Slovakia, completed the picture (Johnson 2002): - political instability; - administrative bureaucracy; - the time needed for change from a planned economy to a free market economy; - legal framework. All these motives could be found in Romania as well. Some of them were even more problematic, for example, the legal framework changed rapidly due to various influences over time. Other barriers which delayed the entry of international hotel chains were similar to those identified for the entire region of Central and Eastern Europe (Slattery and Johnson 1993): - the age of hotels. In the case of Romania, hotels built in the second half of the 19th century and the first 40 years of 20th century are still in use. The number of these properties could not be established due to the fact that almost none of them consider their age a competitive advantage, and therefore the information is not mentioned to the public. Only one historical hotel, Athenee Palace, is operated under Hilton brand. The others either can not be modernized to the standards required by an

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international chain, or the investment needed is very high and the process is difficult. - the way the hotel was built. In Romania over 300 hotels were built between 1970 and 1990, these hotels have simple construction structures. Bringing them to the standards of the 21st century would require significant investments. A third category of hotel buildings exist in Romania: those developed mainly after 2000. Many of these buildings, despite their young age, can not meet the demands of an international hotel chain. Attention was given to the building to answer to the regulation regarding safety, to room dimension, and the presence of bathrooms. The details were, most of the time ignored or considered unimportant. As result47, steep staircases, small elevators, dark and unfriendly the corridors, noisy the fittings, rooms without any view, toiletries without personalized touch are common feature for newly built hotels. The public spaces also give the impression of something improvised in hurry. The location of the hotel, if in a city or town, is often hidden, and the building is small and/or without any possibility of development. As it was expected, Bucharest gathers an important number of hotels: 83 at the level of 2005 with a lodging capacity of 12,737 bed places. It has the most important number of 5 stars hotels, 6 out of 8 in the entire country. The budget/ economy hotels are 16, representing 19.28%. Taking into account all the facts presented above, it could be concluded that Romanian hotel market correspond with the European hotel market profile, with small differences like those regarding the average number of bed places per hotel. From the points of view of hotel number and the available bed places, Romanian hotel market seems ready to receive the incoming tourists and to support the further development for Romania as a tourist destination. However, important steps are needed for improvement of the Romanian hotel industry as a whole: 1) special regulations regarding hotel construction must be issued. The creation of a professional association of architects and builders in hotel field should be encouraged. The association can issue standards for the 47

All these findings were made by the authors of the present studied during overnights staying in Romanian hotels in the last 4 years and completed with personal opinions of known persons (from personal friends and relatives to master students and fellow teachers). The findings are supported by the opinions expressed by the president of Peacock Hotel Management during 2006 (Cojocaru 2006).

Romania as a Tourist Destination and the Romanian Hotel Industry

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sector. Regulations regarding the classification system should be improved and made more flexible. Improvements must come in the field of complex hotels like resort hotels, spa & wellness hotels which require more comprehensive regulations because the obvious health problems. More flexibility must be allowed for hotels to develop inside historical properties. Temporary accommodations, like ice hotels48, should be included in regulations. Models which already exist on the international hotel market should be considered as well. 2) the attention of hotel owners should be orientated toward details. From the attitude of the front desk staff, to the comfort of the room, every detail is important in a hotel. Most Romanian hotel owners do not pay attention to range of details like those presented above or to the dimension of the furniture not fitting the dimension of the room, the colors used in decorating the room, the lack of amenities, doors and windows which do not fit or close properly. 3) there is no tendency for the owners of small hotel to differentiate their property from the competition. The ‘me too’ attitude is obvious: what the competitors have is copied but rarely improved. As was mentioned previously, the historical significance of the hotel property is often ignored. Logos and coherent designs rarely exist in Romanian hotel properties. The exceptions are represented by branded hotels and one of the Romanian hotel groups (Continental Hotels). The development of Romanian hotel industry must be supported also by: -

a more strategic approach in the development of hotels; attention toward quality and the development of true customer loyalty programs; the use of unique and special features of the hotel property for differentiation from the competitors can create the base for a brand.

If steps are taken in the right direction, the Romanian hotel industry can be shaped up to add value through its brands in the differentiation features of Romania as a tourist destination.

48

During February 2006 an ice-hotel was opened in Fagaras Mountains. The hotel operators had a lot of problems to keep the hotel open because Romanian regulations do not have any entries regarding this type or accommodations.

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130

References Bohdanowicz, P., (2005), European Hoteliers’ Environmental Attitudes, Cornell Hotel and Restaurant Administration Quarterly, Volume 46, Number 2, pg.188-204, http://cqx.sagepub.com/cgi/reprint/46/2/188.pdf Cojocaru, O., (2006), Hotelieri din toate tarile investesc in Romania, Bilant, April, 2006, pg.94-99 Dionisio, C., (2006), Trend Hospitality continues investments, Bucharest Business Week (BBW), May 1-7, pg.17 Dumitru, E., (2006), Hotelurile romanesti viseaza la sigle cu staif, Capital no.39, September 28, pg.30 Hall, D.R., (1991), Tourism and Economic Development in Eastern Europe and Soviet Union, Belhaven, London and New York —. (1995), Tourism Change in Central and Eastern Europe, in Montanary, A. and Williams, A.M., European Tourism: Regions, Spaces and Restructuring, John Wiley and Sons Ltd, UK Holverson, S., Revaz, F., (2006), Perception of European independent hoteliers: hard and soft branding choices, International Journal of Contemporary Hospitality Management, Volume 18, no.5, pg.398-413, http://xtra.emeraldinsight.com/Insight/ViewContentSer Hunt, J., (1993), Foreign Investments in Eastern Europe’s Travel Industry, Travel and Tourism Analyst no.3, Economist Intelligence Unit, pg.65-85 Johnson, C., (2002), Locational Strategies of International Hotel Corporations in Eastern Central Europe, PhD thesis, Faculty of Economic and Social Sciences, University of Fribourg, Switzerland, http://ethesis.unifr.ch/theses/downloads.php?file=johnsonc.pdf Johnson, C., Vanetti, M., (2005), Locational strategies for international hotel chains, Annals of Tourism Research, vol.32, no.4, pg.1077-1099 Kerpal, E., (1990), Tourism Potential in Eastern Europe, Travel and Tourism Analyst no.1, Economist Intelligence Unit, pg.68-86 Kim, W.C., Mauborgne, R., (2005), Blue Ocean Strategy, Harvard Business School Press, Boston, USA Kleinwort Benson Securities Research, (1995), Quoted Hotel Companies: The World Markets, Kleinwort Benson Research, London, UK Leidner, R., (2004), The European Tourism Industry, Enterprise Publications, European Commission, http://ec.europa.eu/enterprise/library/libtourism/doc/european_tourism_industry.pdef Lupu, N., (2005), Hotelul, economie si management, 5th edition, Editura All Beck, Bucuresti, pg.119 .

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Marvel, M., (2003), Hotel chain penetration in Europe: understanding the European hotel market, EHLITE, vol.4, pg.12-14. Roh, Y.S., Andrew, W., (1994), US Hospitality Investments in Six Potential Eastern European Markets, The Council of Hotel and Restaurant and Institutional Education, Volume 17, no.3 Roibu, I.,(2006a), Nu negociem, Business Magazin, March 1-7, pg.34-35 —. (2006b), Rezervare pentru 2007, Business Magazin, September 13-19, pg3437 —. (2006c), In afara de lux, Business Magazin, September 20-26, pg.30-31 —. (2007), Am hotelul meu, Business Magazin, March 14-20, pg.28-31 Slattery, P., Johnson, S.M., (1993), Hotel Chains in Europe, Travel and Tourism Analyst, no.1, Economist Intelligence Unit, pag.65-80 Slattery, P., Feehely, G., Savage, M., (1995), Quoted hotel companies: the World markets, Kleinwort Benson Securities Ltd., London Smadeanu, A-M., (2007), Investitorii romani pluseaza masiv in competitia stelelor, Capital no.9, March 1st, pg.32 Tinteanu Moldoveanu, G., (2006), Fratii Paunescu in hora imobiliarelor, Capital no.36/ September 7, pg.1 —. (2006b), InterContinental, al doilea hotel Marriott din Bucuresti?, Capital no.36/ September 7, pg.20 Trew, A., (1993), Hotels in Eastern Europe, Travel and Tourism Analyst, no.4, Economist Intelligence Unit, London, UK Tudor, C., (2006), Ramada Bucharest North isi deschide portile, BBW, October 30 – November 5, pg.17 European Bank for Reconstruction and Development, (1997), Annual Report, pg.27 Government Decision no.233/ 1992, Monitorul Oficial no.105/ 1992, May 25 Government Decision no.114/ 1995, Monitorul Oficial no.42/ 1995, March 6 Government Decision no.601/ 1997, Monitorul Oficial no.279/ 1997, October 16 Government Decision no.1328/ 2001, Monitorul Oficial no.17/ 2002, January 15 Government Decision no.1412/ 2002, Monitorul Oficial no.923/ 2002, December 17 Order of minister of tourism no.308/ 1976, Buletinul Oficial no.49/ 1976, May 29 Order of minister of tourism Order no.433/ 1976, Buletinul Oficial no.60/ 1976, June 28 Order of minister of tourism no.510/ 2002, Monitorul Oficial no.582bis/ 2002, August 6 National Authority for Tourism, (2006), Srategia Dezvoltarii Turismului in Romania, August, http://www.mturism.ro/index.php?id=96

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National Institute of Statistics – NIS, (2003), Romanian Statistical Yearbook —. (2004), Romanian Statistical Yearbook —. (2005), Romanian Statistical Yearbook —. (2006), Romanian Statistical Yearbook World Travel & Tourism Council Report, 2006, Romania: The impact of Travel&Tourism on jobs and the economy, http://www.wttc.org/publications/pdf/06WTTCRomania.pdf www.banisiafaceri.ro, Hotelul InterContintal din Bucuresti are un nou manager, January 22nd 2007

CHAPTER THREE: HOTEL MARKET IN THE CITIES OF BRASOV, CLUJ-NAPOCA AND TIMISOARA

PART I: GENERAL FACTS

Few studies have reviewed the Romanian hotel market in general and even fewer have focused on the hotel market outside Bucharest. Not even Romanian seaside, which supplies a large number of bed places, was included in many research studies; only one study published by the Romanian National Institute for Research and Development in Tourism and conducted in 2004 could be identified. The attention given to the Bucharest hotel market is understandable; it is the country’s capital. Bucharest holds on average, for the period 1998-2004, 10.63% of the active Romanian companies in the hotel & restaurant sector, representing 29.36% of the turnover in the sector and 33.52% of investment in the sector. It is also, the target market for international hotel operators. This preference is caused by the demand generators, as Bucharest is the administrative, business and cultural centre of Romania. The capital is the only Romanian city with more than 1 million inhabitants. Its importance as business centre is given by the presence on average, for the period 1998-2005, of 21.51% of the total active companies in Romania, generating a turnover representing 31.21% of the total turnover of the period and concentrating 35.11% of total investment made by active companies. In 2006, HVS International published a study on the Bucharest hotel market entitled: ‘Bucharest, Romania: where are the hotel investment opportunities?’1. It mentions for the first time that Bucharest has the potential to become interesting for those involved in hotel transactions. Since 1993, NIS started providing data on tourist arrivals by main destinations within Romania, on average for the period 1993 – 2005, the Romanian county capitals2, including Bucharest, accounted for 46.57% of total

1

The study, written by Jakob Forsting & Elana Bader, is available using the following link: www.hvsinternational.com/content/1895.pdf 2 As was explained in the second chapter, the city of Tulcea, capital of Tulcea county, is excluded from this group and included in the Danube Delta.

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tourist arrivals at the county level. The data do not present a separate situation for Bucharest. The importance of urban tourism was confirmed by a study published in 2005 by the Romanian National Institute for Research and Development in Tourism (INCDT), which reveals that this type of tourism was the choice of 47.63% of the total tourists registered in Romania during 2004. This figure does not include other Romanian towns; with few exceptions (such as Sighisoara) they do not attract many tourists, either due to the lack of tourist attractions or to the old road and railway infrastructure. At the same time, county capitals are easier to reach as main roads or railways pass through them. The number of local airports is also growing, making the access to these cities easier. The present study will focus on 3 of the most important Romanian cities: Brasov, Cluj-Napoca and Timisoara. If Bucharest can be considered a gateway city, these three cities would be considered primary locations. By number of inhabitants, the 3 cities are among the top 10 Romanian cities with a population over 200,000 each. Table 1 below presents the top 10 cities as of January 1, 2005 (the cities in the study are highlighted). Table no.1: Main Romanian cities by population Rank City 1 Bucharest 2 Cluj-Napoca 3 Iasi 4 Constanta 5 Timisoara 6 Craiova 7 Galati 8 Brasov 9 Ploiesti 10 Braila

Population (thousands) 1,930 312 308 307 304 300 299 283 234 219

Source: NIS

All three cities are respective county capitals for the counties of Brasov, Cluj and Timis, and hold local administrative institutions. They also are important business, cultural and university centres. Cluj-Napoca has the unique position by being the most important medical centre in Transylvania, with over 7000 hospital beds in university hospitals and approximately 3000 medical doctors. Each of the 3 cities is situated on main routes that connect Western Europe with Bucharest. They are also important railway junctions. Timisoara

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and Cluj-Napoca have international airports which allow connections with Bucharest and other cities within Europe. During the summer, charters to the popular international destinations are available. Due to its position near the Southern (Meridional) Carpathians, Brasov has no airport. Being 3-4 hours by road or rail from Bucharest and 5 hours3 from Cluj-Napoca, for now the construction of an airport has not been considered so far. The importance of these cities has been revealed in two studies: One study4, made by the Group of Applied Economics5 investigated how connected Romanian cities are to the European Union, and revealed that Timisoara is the most prepared city for the accession process from an economic point of view. Second is Cluj-Napoca, which attracted the highest level of financial resources through NGOs focused on cultural activities and which had the highest number of cultural exchanges. (Roibu, 2006) The second study6, based on the cost of living and using 23 criteria, indicated that Cluj-Napoca is the most expensive Romanian city. Timisoara ranked 6th and Brasov 8th on the list (Amariei, 2006). Both studies support the idea about the important position of Brasov, Cluj-Napoca and Timisoara as economic centres within their respective regions. The importance of two of these cities was only enhanced when the Regional Development Agencies for Center, North-West and West Romania chose to locate their headquarters in Cluj-Napoca and Timisoara. In 1998, based on European Union NTUS-II7 divisions for better coordination of regional development and the future accession process, 8 regions were created. These regions have no administrative status8. The following table shows the various regional classifications for Romania.

3

The time needed for reaching Brasov is expected to diminish in the future after the construction of the highway connecting the Western Romanian border with Bucharest. The highway should link Oradea, Cluj-Napoca, Brasov and Bucharest. 4 Bucharest was excluded from the study. 5 www.gea.org.ro; the title of the study is ‘The Index of European Readiness’. 6 The study results were published by weekly economic review Capital in March 2006. From this study too, Bucharest was excluded. 7 The abbreviation indicates the common classification of territorial units for statistics, as presented in the Official Journal of The European Union L154, volume 26, June 2003. 8 The regulations based on which the regions function were: Law no.151/ 1998 and Government Decision no.634/ 1998. Both were replaced by Law no.315/ 2004.

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Table no.2: Counties included in the Romanian development regions Name of the region Counties included North-East Bacau, Botosani, Iasi, Neamt, Suceava, Vaslui South-East Braila, Buzau, Constanta, Galati, Tulcea, Vrancea South Arges, Calarasi, Dimbovita, Giurgiu, Ialomita, Prahova, Teleorman South-West Dolj, Gorj, Mehedinti, Olt, Vilcea West Arad, Caras-Severin, Hunedoara, Timis North-West Bihor, Bistrita-Nasaud, Cluj, Maramures, Satu-Mare, Salaj Center Alba, Brasov, Covasna, Harghita, Mures, Sibiu Bucharest Ilfov, Bucharest Source: NIS

The map below shows the geographic boundaries of the 8 regions.

Figure 1 – Map of Romania with development regions

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As revealed by the map, the 3 cities included in this study are located in different regions: Brasov is in the Center region, Cluj-Napoca is in the NorthWest region and Timisoara is in the West region. Data regarding the economic importance of these regions and the counties where these cities are located are presented in table 3 below in average figures for 1998-2005.

% from the country surface area

Average number of employees – thousands

Investment made by active companies (% of total investment)

Active companies (% of total companies)

Turnover of active companies (% of total turnover)

GDP contribution (1998-2004) 12.50%

12.14%

10.62%

9.31%

620

14.30%

12.03%

13.65%

10.12%

8.42%

588

14.33%

9.83%

8.87%

8.22%

8.90%

482

13.44%

West

North-West

Center

Region

Table no.3: Main economic indicators for Center, North-West and West regions

Source: based on NIS data Note: The data for GDP contribution are available only for 1998-2004

Among all 3 regions, industry and services (mainly trade) have almost equal contributions to GDP. The Center region has the highest tourist potential, as all six counties included have mountainous areas.

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Data on Brasov, Cluj and Timis county within their respective regions is presented in the table below. The data are average figures for the period 199820049. Table no.4: County position in the corresponding development region Region Contribution to Average % from the GDP of the number of region surface region employees – area thousands Brasov county – in Center 27.81% 174 15.73% region Cluj county – in North32.49% 178 19.54% West region Timis county – in West 40.46% 180 27.15% region Source: based on NIS data Other information, which is available at regional level as presented in table 3, unfortunately is not available at county level. The importance of the hotel & restaurant sector in the Center, NorthWest and West regions is presented in the following table. The data are average figures for the period 1998-2005.

9

At the country level the data are available only for 1998-2004.

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Investment made by active companies in hotel & restaurant sector (% of sector investment)

Average number of employees in hotel & restaurant sector – thousands

12.62%

13.88%

14

10.34%

14.04%

10.26%

8.12%

11

8.95%

11.94%

8.98%

6.40%

10

34.22% 40.85% Source: based on NIS data

31.86%

28.40%

West

NorthWest

Center

Active companies in hotel & restaurant sector (% of companies in the sector) 14.87%

Contribution to GDP generated by the hotel & restaurant sector 14.93%

Region

Turnover of active companies in hotel & restaurant sector (% of sector turnover)

Table no.5: Hotel & restaurant sector in Center, North-West and West regions

Note: The data for GDP contribution are available only for 1998-2004

Note that these figures meet or exceed average percentages presented in table 3 and the hotel & restaurant sectors of the 3 regions have a relative low economic position. If this issue is combined with the fact that the hotel & restaurant sector contributed to GDP, on average for 1998-2004, only 2.20%, the low importance of this sector is revealed. The situation is quite consistent with the lack of direction in tourism development, as presented in chapter 1.

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The tourism potential of the Center region is higher due to the fact that it is home to a large number of mountain & ski resorts, two of which are well known nationally: Poiana Brasov and Predeal in Brasov county. Another 10 mountain & ski resorts are considered of local interest; two of them are very popular for rural tourism: Bran10 and Moeciu also situated in Brasov county. The presence of these resorts and destinations for rural tourism is a factor influencing the concentration of accommodations and tourist arrivals in Brasov county, as shown in table 6. One important reason for these destinations popularity is that they are accessible by car, train and bus and are located within a reasonable driving distance from Bucharest (around 4 hours). The Center region is, also, the only of the 3 where UNESCO heritage sites are present, including the strengthened churches of Brasov, Sibiu, Harghita and Alba county. Another UNESCO heritage site in this region is the historic centre of Sighisoara, Mures county, which is an important tourist attraction. The North-West and West regions, as annex no. 6 shows, have tourist potential because of the spa, mountain and ski resorts present here. However, the low level of development and the low level of accessibility to these resorts, make them less popular than the resorts in the Central region. 4500

Graphic no.1 The evolution of accommodation establishments

4000

source: NIS

3500 3000 2500

country level Center region

2000

North-West region West region

1500 1000 500 0 1998

1999

2000

2001

2002

2003

2004

2005

10 Bran is the location for Bran Castle which is one tourist destination for those ‘in search of Dracula’.

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142 350000

Graphic no.2 The evolution of bed places source: NIS

300000 250000 200000 150000

country level Center region North-West region West region

100000 50000 0 1998

1999

2000

2001

2002

2003

2004

2005

Further analysis on accommodation growth at regional level is presented in graph 1 and 2. The higher tourism potential of the Center region is correlated with the presence of almost double the number of accommodation establishments compared with the other two regions. The Center region holds 23.54% of total number of accommodation establishments, on average for the period 1998 - 2005. This was due to the fast growing number of small accommodation establishments, like rural pensions in mountainous areas in all counties included in the Center region. The number of bed places in every region is almost the same, indicating that despite the growth in number of facilities, the capacity of the newly opened establishments remained low in the Center region. The growth of tourist arrivals in the Center, North-West and West regions, presented in graph 3, is correlated with the number of accommodation establishments. It supports the fact that the Central region has higher tourism potential than the other two regions.

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Graphic no.3 Evolution of arrivals (thousands persons) source: NIS

6000 5000

country level Center region

4000

North-West region West region

3000 2000 1000 0 1998

1999

2000

2001

2002

2003

2004

2005

The data presented in table 6 below highlight information on lodging establishments in the 3 counties (average figures for the period 1998-2005). Table no.6: County position in the corresponding region – hotel sector % of % of bed County % of places arrivals accommodation from total from establishments from total region region total region Brasov county – in 40.51% 29.18% 39.71% Center region Cluj county – in 32.09% 21.82% 29.67% North-West region Timis county – in 25.85% 21.28% 34.71% West region

& restaurant Average occupancy rate 32.8% 21.1% 27.7%

Source: based on NIS data

Cluj and Timis counties have fewer tourist attractions and this is a factor of a lower number of accommodation establishments and fewer tourist arrivals. Considering the importance of every county in its respective region, this study will focus on the profile of the hotel markets in the cities of Brasov,

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Cluj-Napoca and Timisoara, as well as the relative position these cities have when the number of hotels and bed places are considered. Table no.7: City rank using the hotel number and the number of bed places City Rank according to No. of hotels No. of table 2, chapter places two Timisoara 2 33 Cluj-Napoca 3 30 Brasov 5 15

bed 2530 2551 1685

Source: based on NAT data Note: the rank in the second column was given using the number of hotels in every city.

The authors made the following assumptions: the profile of the tourism market influences the hotel market. The profile of every city was considered the following: - Brasov’s tourism market has a combined profile of both leisure and business; - Cluj-Napoca’s tourism market seems to be dominated by business tourism, and the strong presence of universities must influence this profile; - Timisoara’s tourism market is dominated by business tourism. Do the hotel markets in these cities match the profile of the dominant tourists?

PART II: THE CITY OF BRASOV

The location of Brasov county in the Center region is presented in figure 1. It is in the heart of Romania, representing 2.25% of the country’s surface area. The southern part of the county is mountainous, including the Tampa, Postavarul, Piatra Craiului and Bucegi Mountains. Due to this fact, mountain tourism is important for Brasov county. Two of the most popular mountain resorts can be found here: Poiana Brasov and Predeal. Also, mountain tourism is complemented with tourism in several natural parks; the best known of which are Piatra Craiului National Park, Bucegi National Park and Tampa National Park. In the last 10 years, rural tourism has grown strongly in Bran and Moeciu, both declared mountain resorts of local interest. Components of cultural and heritage tourism is supported by the presence of medieval citadels from the 10th and 11th centuries in Fagaras, Risnov, Rupea, and by the strengthened churches included among UNESCO heritage sites in Prejmer, Saschiz and Viscri. The city of Brasov is the capital of Brasov county. A wealthy handicraft center of Transylvania, the city of Brasov had an important economic life between the 14th and 16th centuries, witness being the numerous buildings and architectural elements build at the highest standards of the past times. Some of these silent witnesses are nowadays tourist attractions. During the 1950s, communist authorities changed the name of the city into Stalin. The Ceausescu regime had the ambition of turning Brasov into one of the main industrial cities of the Romania. Thus, a lot of factories sprang up and thousand of workers from other parts of the country (mainly Moldova) were brought to settle in Brasov. The most important works included tractors, trucks, bearings, motors and other industrial devices. After the fall of the communist regime, most of these factories, due to a lack of commitment in privatising them, got into financial trouble and were downsized during the years. Their place as most important employers in Brasov was taken by foreign direct investments (mainly German and mainly concerned with car parts) that built new, modern plants at the outskirts of the city – such as INA Schaeffler, Autoliv, Losan, Lisa Draexlmaier Group, or Kraft Foods. Lately,

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plans for the development of a Hutchinson plant have been unveiled. This way, the city is looking toward a new industrial future, together with the officially declared goal of local authorities to transform Brasov into the country’s number one tourist destination. Brasov city is positioned at the foot of Tampa Mountain. With a rich history, going back to the 11th century, Brasov1 has managed to preserve, in its centre, the features of a medieval town. The medieval image was enhanced in the last 2-3 years as the medieval fortress walls and towers were restored and now can be visited by tourists. Brasov’s history is characterized by a strong presence of traders and craftsmen. This is why, when compared to Cluj-Napoca and Timisoara, Brasov has no palaces or bold, aristocratic buildings. The most important tourist attractions in Brasov are2: Historical and cultural monuments - the Council House (Casa Sfatului) is the central point of the Council Square (Piata Sfatului). It was built as a watch tower during the 13th century. Later the building was expanded and played the role of city hall. Most of what can be seen today dates from the 15th century. Today the building houses the History Museum of Brasov. The building is one of the most important symbols of Brasov. - the Renaissance style Hirscher House or Merchant House, which was built in the 16th century by the widow of Mayor Hirscher was used as a trade centre by Brasov’s merchants; - the Brasov citadel, which was built at the end of the 14th century, destroyed at the beginning of the 16th century and rebuilt two decades later. Today it can be visited and is a popular place for wedding ceremonies during the summer; - Ecaterina’s Gate, the only original city gate which survives from medieval times; - the Black Tower and the White Tower, two of the original seven bastions which were part of defensive wall system surrounding the old city. They were built during the 15th century; - the Graft bastion, which was intended to provide ammunition for the people who defended the city walls from the White Tower;

1

The present name of the town, Brasov, is mentioned in a written document in 1294. The city was also known by the name Kronen or Corona, given by the Teutonic Order. The Hungarian name for the city was Brasso. (Oprea 2004) 2 The information in this section is combined from the following sites: www.brasov.ro, www.brasovean.ro, http://virtualromania.org/places/brasov.vr/places.vr, www.virtualtourist.com

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-

-

-

3

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the Rope Street (Strada Sforii) is the narrowest street in Brasov3, and most likely in entire Romania. It links Cerbului Street with Schei Gate and was originally built to be used by firemen. Churches the Black Church4 (Biserica Neagra); the construction of the Black Church began in 1383 on a place where a small chapel existed previously that was destroyed by the Tartars in 1242. Construction ended in 1477 and the first name of the church was St. Virgin Mary. It is considered the last Gothic cathedral to be erected in Eastern Europe (Oprea 2004). Its current name stems from the blackened walls, due to a fire which almost destroyed the church in 1689. The Black Church is still in use today by the German Lutherans and hosts organ concerts. It is one of the most important Gothic monuments in Romania and one of Brasov’s symbols; St. Bartholomew Church is considered the oldest monument in Brasov and has been mentioned since 1223. It is constructed in a Romanesque style mixed with an early Gothic style; St. Nicholas Church is the oldest Orthodox church in Brasov, first built of wood in 1392 and replaced by a stone structure in 1495. It mixes Byzantine, Baroque and Gothic styles; the Synagogue, decorated with vegetal motives on its front. Museums: the History Museum is located directly in the main square of the old city centre, in the building of the former City Council, houses a rich collection of historical documents which trace the evolution of Brasov, collections of coins, as well as various artefacts from different period of time; the Art Museum houses mainly Romanian painters, like Aman, Grigorescu, Luchian and others; the Ethnographic Museum hosts folk art objects developed in the region during various historic periods; the Museum of the first Romanian School located in the building which served this purpose in 1559; for the fist time in that year the Romanian history teaching was done in Romanian language;

Its width is between 111cm and 135 cm (3.64 feet and 4.42 feet) and 80 meters long (264.32 feet). 4 More information on the Black Church can be found at: www.ici.ro/romania/orase/bv_bisericaneagra.html, http://en.wikipedi.org/wiki/Biserica_Neagr%C4%83

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-

-

-

-

-

Casa Muresenilor Museum is based on a donation made by one of the richest families of the city; the museum exhibits valuable furniture, paintings, sculptures as well as a rich archive of historical documents; Weaver’s Bastion (Bastionul Tesatorilor) Museum was named after the guild of weavers which in medieval period was in charge with the maintenance of this tower and had also to defend it against attackers; Parks: the Tampa National Park, considered a natural reservation, for its rich flora and fauna, includes the whole Tampa hill, which is about 900 m (around 2953 feet) high. It can be reached by means of a cable car, offering a beautiful perspective of the Brasov city; the Nicolae Titulescu (Central) Park is situated near the current City Hall, in front of Capitol Hotel and ARO Palace Hotel is a welcome oasis of recreation ; Other points of attraction: the Redoute, a well-known local cultural centre which has been recently renovated; the statue of Johannes Honterus, the person who brought the art of typing books to Transylvania and also developed the first map of the region.

For those interested in cultural events, Brasov hosts performances of local artists as well as those coming from other Romanian cities or from abroad at the Opera Hall, ‘Sica Alexandrescu’ Theatre and Brasov Philharmonic Hall. Brasov has established the last years a regular calendar of cultural events. The main cultural events organized in Brasov are: The ‘Cerbul de Aur’ (Golden Stag) International Music Festival. Every year (with the exception of 20065) Brasov hosted the ‘Golden Stag’ music festival which gathered singers from all over the world. The festival was first held in 1968, then interrupted in communist times and re-established after 1990. Famous international artists who have sung on the stage of the festival include: Kylie Minogue, Julio Iglesias, Jerry Lee Lewis, 5

The festival is organized by the Romanian Public Television. Due to the fact that 2006 celebrated 50 years of existence, the music festival was cancelled due to other special programs organized for the celebration. More information on the festival can be found at www.cerbuldeaur.ro.

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Toto Cutugno, James Brown, Patricia Kaas, Joe Cocker, Vaya Con Dios, Johnny Logan, Sheryl Crow, Ricky Martin, Simple Minds, Pink and others; ‘Sarbatoarea Junilor’ (The Celebration of the Juni) is a traditional, purely local event, organized every year on the first Sunday after Easter, when the ‘juni’6, organized in different teams, parade through the city centre on horseback, taking great pride in their traditional folk art costumes. This event dates back medieval times; The Fair of Folk Craftsmen lasts for three days and gives craftsmen from various regions of Romania the opportunity to present their hand-made merchandise and to sell different folk objects pertaining to the local culture; The Days of Brasov is an event initiated in 2002 by the City Hall of Brasov in order to redeem Brasov as a commercial and cultural centre to its own inhabitants and give them a sense of unity and belonging to the same values and aspirations concerning the city. During these days, various music events, celebrations, beer festivals, exhibitions, theatre plays and other shows are held. With the same purpose, for the Christmas holidays a slogan has been established in the last years for the city, calling it: “Brasov – a city like a fairytale”. A simple list of potential tourist attractions cannot highlight the ambience of the old city of Brasov. In the city centre, every house has something attractive attached to it. Surrounded by the old city walls any tourist can experience the medieval past. The city of Brasov was ruled by Saxons between the 13th and 17th centuries and they continued to live here after that period. Due to this heritage, German tourists are frequent in Brasov. Since 2004, the presence of two tourist information centres, a small one outside the railway station and the second one inside the Council Hall, reflects the fact that local authorities realize the importance of tourism for their city. The tourist market in Brasov is typically categorized as leisure, it is supported by its tourist attractions and by the fact that Brasov is the most important city in the region. Tourists who come, no matter the season, for a vacation or a weekend in Prahova Valley or in the Bran-Moeciu area, visit Brasov at least once. 6

The specific name given to the inhabitants from the old area of Brasov

PART III: THE HOTEL MARKET IN THE CITY OF BRASOV

As of 2005, out of 438 accommodation establishments that were registered in Brasov county, 65 (representing 14.84%) are concentrated in the city of Brasov. The number of bed places in Brasov represents 14.97% of the total bed places at county. From numeric point of view, accommodation establishments are dominated by urban pensions. Their number is almost double that of hotels. The situation is generated by several reasons: 1) the conditions imposed by Romanian law for the development of pensions are easier to fulfil; 2) having smaller capacities than hotels, the required investment is lower. To these two factors one more should be added: mountain tourism is predominant in Brasov area and encourages the development of pensions, which presumably offer a higher level of intimacy and are more in tune with local customs. The combination of these factors with a growing demand for low-cost accommodation in Brasov yield a large number of urban pensions, as graph 4a reveals. When reviewing the number of bed places, there is no surprise that hotels are at the top. This is consistent with the general situation nationwide, as presented in chapter 2. With two hotels, each comprising more than 100 rooms and both constructed during the 1970s and 1980s, the dominance of hotels in Brasov’s accommodation market was ensured.

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Graphic no.4a The structure of accommodation establishments by number source: based on NAT data

others 27.69%

hotels 23.08%

urban pensions 49.23%

Graphic no.4b The bed place concentration by type of accommodation establishment source: based on NAT data

others 20.68%

urban pensions 18.81%

hotels 60.51%

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This study will focus on Brasov’s hotels, due to their top position in the market. With only 15 hotels registered by NAT as of 2005, Brasov has the lowest number of hotels out of the 3 cities (Brasov, Timisoara and Cluj-Napoca) included in the present study. This unique situation is explained by the fact that only 13 km (slightly more than 8 miles) away is the resort Poiana Brasov. It is one of the most popular mountain resorts (mainly during the winter time) and 13 hotels are located there. Access by car or bus to Poiana Brasov is easy, and tourists who want to avoid staying overnight in the town could choose to go to Poiana Brasov. A map was constructed, in order to show the location of Brasov’s hotels (see figure 2): - 7 hotels are located in the centre of the town; on the map only five could be highlighted (marked by round signs) because two hotels (Coroana and Postavarul) are located in the same building, the same being valid for the ARO Palace and ARO Business hotels; - another 2 are within walking distance from the city centre; - Hotel Tampa, has a hidden, but very beautiful, location at the bottom of Tampa Mountain; - another 3 hotels are located on main streets; - 2 hotels are in hidden locations, not visible from main streets; - no hotel is located near the railway station due to the way the area was developed during the 1970s and 1980s. Little space for hotel development is currently available there. The location of Brasov’s hotels is related with their year of construction. With the exception of Bella Muzica, a small 22 room hotel opened in an old house near the Council Square, all the other hotels opened after 1990v were located near or outside the centre of the town either due to the lack of space or to the high costs imposed by the renovation of an old/ historic building. Of the seven hotels opened before 1989, three are located in buildings erected before 1940: ARO Palace, Coroana and Postavarul. The other 4 were constructed and opened between 1970 and 1989: ARO Sport, ARO Business, Capitol and Tampa. When asked to rate the location of their hotels, 67% of managers and hotel owners considered it ‘very good’ and only 17% considered the location to be a common one. Graph 5 presents the hotel structure using the year of construction as criterion. It shows that the hotel market in Brasov is dominated by the presence of old hotels, with large lodging capacities. This could influence the decision to open new hotels in the market. Another factor influencing this decision is the

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neighbourhood of Poiana Brasov, which is more attractive for those investing in hotels.

Figure 2 – Location map of Brasov hotels

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Graphic no.5 The hotel structure by year of construction/ opening source: own

could not be established 13.33%

before 1989 46.67%

after 2000 26.67% between 1990 and 1999 13.33%

As NAT evidence revealed, during 2005 an analysis by star rating of Brasov hotels shows an equally split between the mid-market and budget market segments, with equal shares in the number of hotels. Of hotels with 1 star and 2 star ratings, only two are new hotels; the remaining 5 were built before 1989 and now need renovation and modernization for a higher classification. In the midmarket segment, of a total of 7 hotels, six were built between 1990 and 2005, revealing that with new construction it is easier to meet the classification requirements of a 3 star hotel. The upper-market segment had a poor representation in Brasov. Partly, this is consistent with the leisure profile of the tourist market; tourists look more for clean accommodations, with affordable room rates, rather than a luxury hotel. The absence of the luxury market segment in Brasov was not a barrier to hosting the ‘Cerbul de Aur’ international music festival because the distance from Bucharest could be easy covered by car or helicopter and the international stars who attended the festival could choose to be accommodated in Bucharest or in the 4 star ARO Palace hotel in Brasov.

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4 stars 6.67%

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Graphic no.6 The structure of hotels by stars sourc e: based on NAT data

1 star 26.67%

3 stars 46.67% 2 stars 20.00%

Brasov’s hotel market is dominated by small hotels, as graph 7 shows. Eight of 10 hotels, with less than 50 rooms each, were opened between 1990 and 2005. Their small capacity is a function of the financial resources available to their owners and, in some cases, the space available for developing the building. As mentioned above, two hotels of over 100 rooms each were built during the 1970s and 1980s. 150 rooms and more 13.33%

50-149 rooms 20.00%

Graphic no.7 Hotel structure by number of rooms source: based on NAT data

less than 50 rooms 66.67%

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The breakdown of hotel ownership in Brasov was the following in 2005: -

6 hotels were owned and operated by ARO Hotels SA; 1 hotel was owned and operated by a football club, Hotel Tampa; 8 hotels were independently owned and operated by LLPs. No hotel in Brasov was affiliated with or operated under an international brand. In the Brasov hotel market, only one Romanian hotel group is present: ARO Hotels SA. A brief description of this group is available in annex 5. All its hotels are located in the city center of Brasov. ARO Hotels SA comprises 662 rooms and 1267 bed places, around 75% of available rooms and bed places in Brasov. ARO Hotels portfolio is diversified: two hotels ranked at 1 star, two others at 2 stars, one hotel ranked at 3 stars and another one at 4 stars. ARO Hotels owns all the medium and large size hotels in Brasov and, also, one small 33 room hotel. The diversification is also present when reviewing the year of construction. Three of the ARO Hotels were erected before 1940 and another 3 hotels are located in buildings constructed during the 1970s and 1980s. The hotels operating in historical buildings are: Coroana, Postavarul and ARO Palace. The building in which the Coroana and Postavarul hotels operate was constructed at the end of 19th century, in an eclectic style. Previously, at the same location an old inn existed. The 19th century building was also dedicated as a hotel and was named Hotel Coroana. At the time, the hotel was very modern: it had 100 rooms with individual baths, central heating and electric lighting. It also had its own bus (named omnibus) serving the railway station7. Sometime around the 1980s the building was split into two hotels; now those hotels share the lobby and reception desk: Hotel Postavarul has 63 rooms and is classified at 1 star and Hotel Coroana has 76 rooms and is classified at 2 stars. Unfortunately, the hotels’ presentation does not mention anything about the past. History is not a theme in the hotel room designs. In fact, the overall impression is ‘obsolete’ and, clearly, those hotels need to be refurbished. The other hotel, ARO Palace, is located in a 60 year old building. Construction was finished in 1939, in a Romanian style by architect Horia Creanga and designed to be a hotel (Oprea 2004). During the communist period, the name of the hotel was Carpati. In 2005 and in 2006 major investment was made for modernization and refurbishing the hotel in order to bring the hotel to 21st century standards. However, ARO Palace presentation do not highlight the 7

www.brasovean.ro

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historical identity of the building. ARO Hotels SA has not considered the idea of operating its hotels under an international brand. The effort made by ARO Hotels in modernizing the ARO Palace hotel showed the following results as of 2006: - ARO Palace and ARO Business hotels became one hotel under the name ARO Palace, classified at 5 stars; it also includes rooms classified at 4 stars; as a result, the number of hotels in the ARO Palace SA portfolio has been reduced to 5; - concentrating its resources in what, unofficially, could be considered the flagship of ARO Hotels (ARO Palace hotel), the other 4 hotels were neglected. The most neglected are Coroana, Postavarul and ARO Sport which need major investment for renovation and refurbishment. Of the remaining hotels, which are owned and operated independently, only one, the Bella Muzica hotel, is located in an old building. The hotel, at least in the lobby, provides a good mix between modern design and the historic past of the building. It could be considered a boutique hotel. All other Brasov hotels function in rather common buildings, with no distinctive features. The results that will be presented in the following pages are based on a structured questionnaire8 comprising 17 questions. The questionnaire was distributed to all 14 Brasov hotels included in the study. The rate of response was 85.71% (12 out of 14 hotels responded). Taking into consideration only 5 hotels included in the ARO Hotels group, the positioning map9 of Brasov hotels was constructed. Two dimensions were used: the room rate/ night (on the y axis) and the number of services offered (on the x axis). The map shows the 12 Brasov hotels that answered the questionnaire. The two hotels that did not answer also have no websites, so no information regarding the number of services and room rates were available. 8

The same questionnaire was used in the studies on Timisoara and Cluj-Napoca hotels. The positioning map shows the position desired by the hotel on the market; it does not represent a customer rating of the hotel’s service quality and prices. It has 4 quadrants: the high-high quadrant where the number of services offered and the room rates are above average; the high-low quadrant where the number of services is lower that the average and room rates are higher than average; the low-high quadrant where the number of services is above average and room rates are lower than average; the low-low quadrant where both the number of services and room rates are lower than average.

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Figure no.3 – The positioning map for Brasov hotels The average number of services was 14.58, with a minimum of 2 and a maximum of 23. The room rates ranged between 16 EUR (20 USD)10 and 146 EUR (184 USD), with an average room rate of 58.75 EUR (74 USD). These averages mark the intersection of the x and y axis. In the high-high quadrant, 4 hotels can be found, offering 18 services or more with room rates over 60 EUR/ night (76 USD/ night); ARO Palace and Capitol are owned by ARO Hotels SA.

10

The average exchange rate for 2006 used was 1 EUR = 1.2584 USD (USD 1.2584/ EUR)

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In the high-low quadrant two hotels are positioned, with only 14 services and room rates similar with the hotels in high-high quadrant. These hotels should either increase the number of services they offer or lower their room rates. Both hotels situated in this quadrant are owned by companies having main activities outside the hotel industry. In both cases the hotels entered the market in 2005 and probably their managers and owners did not take the time to find the proper balance between the room rates they charge and the number of services they offer to their guests. The low-high quadrant includes only one hotel, which offers a large number of services and a room rate around 50 EUR/ night (63 USD/ night). The low-low quadrant includes 5 hotels, offering a low number of services and charging low room rates. The hotels ARO Sport, Postavarul and Coroana are all owned by ARO Hotels SA. Although Brasov is mainly a leisure destination, due to its location near the Prahova Valley and Bran-Moeciu region, business tourism is also important. The positioning map reflects this situation, with 4 hotels in high-high quadrant, targeting mainly the business clients. The 4 hotels in the low-low quadrant are preferred by those guests who are only passing through Brasov and need a hotel with a central location and a low room-rate. The low-low quadrant contains the hotels classified at 1 and 2 stars representing the budget segment in the market. Their presence in this quadrant is normal, correlated with the segment they represent. However, these hotels need investment for renovation and modernization. Their owners have the following choices: a) to keep them in this market segment or b) to position them to the high-high quadrant or, better, in the low-high quadrant, where only one hotel is present for now. The dominance of leisure tourism in Brasov is supported by the findings of a study made in 2004 by the Romanian National Institute for Research and Development in Tourism (INCDT). A number of 200 questionnaires were distributed in Brasov and the rate of response was 62.5%. Of the 140 tourists who answered, 58.5% were Romanian. 48.8% of Romanians declared they travelled to Brasov for leisure; the percentage was higher, of 64.9%, for foreign tourists (INCDT, 2005, pg. 139-149). While the sample’s statistical significance could be contested, it reveals that Brasov is perceived as a leisure destination. Business travel to Brasov is important mainly for Romanian citizens. However, Brasov hoteliers focus more on business tourism, considering it most important. Correlated with the fact that they indicated 66.6% of their clients to be Romanian, this perception is not a surprise. Hotel managers in Brasov do not perceive that their clients travel for personal interest and even

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those passing through could come for leisure purposes, since a short visit of Brasov’s city centre can be done in an hour.

personal interests 11.80%

Graphic no.8 Tourists visit purpose viewed by hotel managers/ owners source:own

transit 29.40%

business 58.80%

The hotel market in Brasov is not too crowded. Despite this situation, the present study tried to identify the distinctive features and elements Brasov hotels use or intend to be viewed as unique in the eyes of tourists. Also, this study attempted to establish if Brasov hotels try to be ambassadors for their city’s ambiance and culture. This is the first study to ask this kind of question to Brasov hotel managers and owners. -

-

The findings were as follows: no hotel name is repeated and 50% of the responding managers consider that their hotel name is an element of differentiation; for other 16.6% the name of the hotel does not represent such an element; the remaining 33.4% do not know; graph 9 presents additional distinctive elements indicated by the hotels. The results were surprising because on visiting the hotels, there was only one hotel where the mix between the old building and the design elements create a unique ambiance, Bella Muzica Hotel. Obsolete atmosphere could be observed in hotels classified at 1 and 2 stars, through old carpeting and furniture. This effect was not intentional, but

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resulted from a lack of renovation and modernization. Where the elements of architecture and design were noted, they were mentioned mostly as ‘desired elements’ because almost no new hotel has a distinctive design or a unique theme in its architecture. The 3 hotels owned by ARO Hotels SA, operating in historic buildings, do not capitalize on this asset. The ARO Palace Hotel building, constructed in the 1930s, is included as a Romanian national patrimony as civil construction of exceptional historical value11. However, the hotel owners never mention this special aspect when advertising the hotel; Graphic no.9 Distinctive elements for Brasov hotels source: own

elements of architecture and design 30.83%

logo 26.93%

colors 7.61% atmosphere 34.63%

-

11

the study tried to evaluate how Brasov hotels perceived themselves as cultural ambassadors for their city; a Likert scale was used to measure their response, ranging from 1 ‘strongly agree’ to 5 ‘strongly disagree’; the average response was 2.206. The results are detailed in table 8 and indicate that 58.3% of Brasov hotel managers are aware of the fact that their hotel could play a role of cultural ambassador. When asked how this role could be played, they indicated that architecture and interior design have almost the same importance, as the graph 10a shows. These responses are consistent with those presented in graph 9 and could be considered ‘desired elements’ for the same reasons mentioned

As the Law no.5/ 2000 in annex no.3 mentions.

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above. Hosting various events proved to be a challenge for Brasov hotels and was indicated in last place. When asked what kind of events they prefer to host, small and unspecified events surfaced in first place, as graph 10b shows, proving that promoting the hotel and enhancing its role of cultural messenger through hosting dedicated events requires major efforts. This kind of effort is considered too large and does not yield immediate results. As expected, it is no surprise that almost no attention is dedicated to these activities in Brasov’s hotels. Table no.8: The Likert scale for hotels in Brasov12 Valid Frequency Percent responds 1 2 17.7 2 7 58.3 3 2 17.7 4 1 8.3 5 0 0 Missing 0 0 Total 12 100 Source: own

12

Table 8 reflects how Brasov hotels perceived themselves as cultural messengers for their city. Two hotels (representing 17.7% of total responses) strongly agreed with the idea. Seven hotels (representing 58.3% of total responses) agreed with the idea. Two hotels (representing 17.7% of total) had an indifferent attitude and 1 hotel disagreed with the idea. The result presented above is a weighted average calculated as follow: 1*0.177 + 2*0.583 + 3*0.177 + 4*0.083 + 5*0 = 2.206. The same explanation is valid for the similar tables in the cases of Timisoara and ClujNapoca, presented in the pages to follow.

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Graphic no.10a Elements supporting the role of cultural messenger source:own

events hosted by the hotel 13.34%

architecture 46.66% interior design 40.00%

wine tasting & special food 13.00%

sponsor of events 13.00%

Graphic no.10b Type of events hosted by Brasov hotels source: own

hosting exhibitions 20.00%

hosting small events 54.00%

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The results of the study of Brasov’s hotels also reflect the following: the Brasov hotel market is characterized by the presence of small hotels, mostly classified at 3 stars; - despite the fact that Brasov is a town with a lot of potential for cultural and heritage tourism, reflected by the results of INCDT study (INCD 2005), the hoteliers are oriented mainly toward the business segment; this preference is understandable, as this segment grew steadily in the past 15 years; - Brasov hotels are positioned to serve both leisure and business tourist markets, but the hotels in the low-low quadrant of the positioning map (see figure 3) are there due to the lack of renovation, refurbishing or due to the lack of space for expansion, rather than due to strategic planning; - Brasov hoteliers are aware that their hotels could play the role of cultural ambassadors for their clients; - distinctive elements are also on the mind of Brasov hotel managers and owners, but less than 30% of the hotels have a logo or distinctive colours that can help clients to differentiate them. The attitude of Brasov hoteliers was understandable as long as the hotel market was not crowded. The situation is changing rapidly, and during 2006, nine new hotels entered the market, representing an increase of 64.3%. However, these hotels do not bring an increase in lodging capacity as they match the ‘profile’ of Brasov’s hotel market, the majority of those hotels have less than 50 rooms and are classified at 3 stars. This situation was triggered by the fact that the building of new hotels was prohibited in Poiana Brasov until the end of 2007 (Neda 2006). The prohibition came, mainly from the fact that the utility networks, especially water supply and sewerage had to be extended and modernized to support both the current hotels and the new ones. The prohibition was imposed also to decide where the new construction would be allowed, without destroying the forests in the area. The building prohibition in Poiana Brasov only transferred the preference for locating hotels to Brasov. To be able to survive in the increasingly crowded hotel market, Brasov hoteliers must take into consideration elements that can differentiate their hotels from their competition. Giving up the ‘me too’ attitude and offering more than simple accommodation and traditional services, could be the way for existing hotels to survive the market changes. -

PART IV: THE CITY OF TIMISOARA

Timis county, as the map in figure 1 shows, is located in the western part of Romania, having borders with Serbia and Hungary. The capital of the county is Timisoara, one of the most important economic, social and cultural centres of Romania. In the last 8 years, the number of local companies increased, as well as their sales. This growth placed the area into the second most attractive one for investors, after Bucharest Timis county is interesting for business tourism as well as transit tourism. It enjoys a favourable geographical location, being considered a gateway to other European countries. The area has great tourism potential due to beautiful landscapes, to its art and architectural monuments, picturesque villages, geological phenomena and precious flora. Having rich and diverse tourism assets, Timis county supports 4 types of tourism: 1. Business tourism, because of the economic development of the area and the city of Timisoara plays the most important role in the present development. 2. Spa tourism through two spas: Buzias and Lugoj, situated about 30 km (19 miles) from Timisoara. 3. Ecotourism – the county has 4 natural reserves: the ornithological reserve Mlastinile de la Satchinez, the dendrologous park at Bazos, the flower reservation Saraturile de la Dinas and the paleontological reservation Lacul fosilic Radamanesti. 4. Cultural and heritage tourism is concentrated in Timisoara and includes a large network of historical and archaeological sites, museums, churches, cultural performances and all types of exhibitions and festivals. Timisoara, the capital of Timis county, is a multicultural city with influential minorities, primarily Hungarians, Germans, and Serbs, as well as Italians, Bulgarians, and Greeks. Timisoara is the city where the events of December 1989 started, leading to the end of Ceausescu’s dictatorship.

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In recent years, Timisoara has enjoyed a significant economic boom as the number of foreign investments, especially in high-tech sectors, has constantly risen. It is frequently considered the second most prosperous city in Romania (following Bucharest). There have been frequent debates on whether the so-called "Timisoara Model" could be applied to other Romanian cities. In an article1 published at the end of August 2005, the French magazine L'Expansion called Timisoara "Romania's economic showcase", and referred to the increased number of foreign investments as a "second revolution". A similar idea was presented in September 2005 by Romanian Business Magazine which considered Timisoara ‘the wonder city of Romania’ (Ancutescu 2005). Strong and diverse, Timisoara’s economic activity is sustained by the location of the town, and by the high quality of its human resources. Timisoara’s important economic position was enhanced by the creation of a new industrial park. The main goal of this park: performance at European standards of a modern industrial infrastructure, in order to support the development of the regional sector of small and medium enterprises and to stimulate the interest of foreign companies. Apart from the several local investments, many substantial investments from the European Union were made in Timisoara, particularly from Germany and Italy, as well as from the USA. The German company Continental AG has been producing tires here for several years, and its activity was extended by the opening of a second plant. Linde company produces technical gas. Wiring moulds for BMW and Audi vehicles are produced by the company Lisa Draexlmaier. The US company Solectron operates a large plant in the west of the city for the production of mobile telephones and government inspection devices. Another American company, Procter & Gamble, manufactures washing and cleaning agents in Timisoara. Swiss company Nestlé produces waffles here, after buying the local brand Joe. Other multinational companies present in Timisoara are: Philips&Elba Street Lightining, ABB Rometrics, Alcatel NS, Siemens Automotive, Kromberg & Schubert and AEM Luxten Lighting. Being the most distant urban centre in the west of Romania, Timisoara has always been a place for favourable contacts and trade with Europeans. It is known as a city distinctive for its modern architecture, culture and conceptions. All historical epochs have left their mark upon Timisoara. Their joint influences create a remarkable sense of unity and equilibrium. Like many other medieval towns of Europe, Timisoara was born under the protection of a fortress. That is why, the city centre and the oldest part of the town bears the suggestive name: “The Citadel”. This was the nucleus from 1

The article title is: La deuxieme revolution de Timisoara, L’Expansion, August 31, 2005, www.lexpansion.com/art/134.0.133980.1.html

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which the development of the town started. The Citadel underwent important changes, especially under Habsburg (or Hapsburg) domination. At that time, it was considered one of the four most important citadels of the Habsburg Monarchy. Due to this growth, Timisoara now offers emblematically both cultural and heritage attractions: 1. Historical and cultural monuments 9 “Holy Trinity” monument 9 “St Mary” monument – Liberty Square and St Mary Square 9 The Statue of “Decebalus per Scorilo” 9 “Victory” – Neo-gothic memorial 9 Traian Square monument 9 “The Romanian Soldier” memorial The oldest architectural monuments date back to the 18th century. These are situated in the most important squares of Timisoara: Union Square and Liberty Square. In the center of Union Square, in accordance with the architectural style of the surrounding buildings, can be seen the “Holy Trinity” monument carved in stone. The statue is a reminder of the black plague which haunted the city between 1738 and 1739. The monument was carved in Vienna, in Baroque style. Placed near the Old city hall, Liberty Square contains the St Mary Monument, sculptured by Blim and Wasserburger in Vienna. The monument commemorates the end of the great plague. Others monuments sprang up during the 19th century, when Timisoara underwent an ample economic development and saw major changes in its structure and urbanization. In “St. Mary” Square there is St Mary’s monument; in 1865 a stone statue was placed there. The monument seen today dates from 1906. It is made of Carrara marble nesting inside a Roman granite chapel. 2.

Churches: 9 The Romanian Orthodox Metropolitan Cathedral; the monumental building is situated in the central part of Timisoara and benefits from an open view of the city centre. It was built between 1936 and 1946 in order to balance Victory Square dominated until then by the National Theatre. The unique architectural style is not exactly specific for orthodox ecclesiastical structures, which typically use more Byzantine and neo-Byzantine architectural elements. The result is a style which artisans from Moldavia and Constantinople brought to

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9

9

9 9 9 9 9 9 9

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this part of the country, with some modifications suitable to this individual church and the climate. Its crypt offers a valuable museum of religious art; The Roman-Catholic Episcopal Cathedral; it was built in the Baroque style by Viennese architect Fischer von Erlach, during 1737-1773. It’s cross-shaped design blends classic patterns and baroque decoration. The two altars bring together Baroque and Rococo elements. The painting of the main altar shows St. George riding on his horse and fighting the dragon; The Serbian Orthodox Church; the Serbian community plays an important role in city life. In the early 18th century a small wooden church functioned in Union Square, which in time was transformed into a beautiful Baroque style cathedral. Constructed between 1744 and 1748, and restored and completed with two towers in 1791, the Serbian Orthodox Church is decorated with Baroque sculptures and beautiful religious paintings; The Josefin District Catholic Church; The Franciscan Church; St Elias Orthodox Church; The Greco – Catholic Church; The Romanian Orthodox Church – The Old Cathedral; The Evangelic Church; The New Synagogue in the Fabric District is one of the most beautiful buildings in Timisoara, located in the Fabric district. It was built in 1899 by a Hungarian architect in a Moorish style. Its brick-face brings a special colour into the Baroque architecture of the area.

Museums and other cultural buildings 9 The Banat Museum – The Huniads’ Castle; it is the oldest monument in Timisoara and was built between 1307 and 1318 by Charles Robert Anjou. It was consolidated during 14431447, at the request of Iancu de Hunedoara, one of the most important leaders of 15th century Transylvania. During the epoch of Romanticism, the castle underwent modifications, following an older architectonic style, with Romanic and Gothic elements. An old part still preserves the original pre-Romantic stone vaults. Today it houses the History Museum of Banat; 9 The Baroque Palace – Art Museum; the building, called the President’s Palace, has a Baroque style and was built in several

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stages, beginning in 1733. The Baroque Palace was the official residence of Banat’s Austrian governors and Timis County rulers. The edifice was used for administrative purposes and transformed into a museum in 1872. The exhibits include works of Italian art from the 15th – 17th centuries (Donato Veneziano, Jacopo Bassano and other representatives of the schools of Venice, Florence and Rome); The Museum of Ethnography; The Old Museum; The Opera House and National Theatre; the National Theatre and the Orthodox Cathedral dominate the stately esplanade of Victory Square, one of the most beautiful intebelic architectural achievements. The National Theatre was built between 1872 and 1875, in the Italian Renaissance style. Renovated between 1920 and 1928 by a Romanian architect, it was superimposed with elements of neo-Byzantine architecture; The German Theatre; The Hungarian Theatre; The Puppet Theatre; The “Banatul” Philharmonic;

4.

Parks An important part in creating the urban unity of Timisoara was played by the chain of parks organized on both sides of the Bega river. The town is thus given a special charm thanks to the presence of the parks and countless areas covered with greenery and flowers. Timisoara has consequently won recognition as “the town of parks and roses”: People’s Park, Central Park, Plevna Park, Rosarium, Botanical Park and the Alpinet Park can be found in the city. 5.

Other points of attraction 9 The Citadel 9 The Old city hall 9 The Mercy Palace 9 The Dicasterial Palace 9 Prince Eugene de Savoy’s Residence 9 The Food Warehouse Barracks

Timisoara has a tourist information centre. Its presence, at least, reflects the fact that local authorities are aware of the city’s potential as a tourist destination and the tourists’ need for information.

PART V: THE HOTEL MARKET IN TIMISOARA

As of 2005 Timisoara holds, 71 accommodation establishments, representing 78.02% of total establishments in the county, and 3566 bed placess, 70.56% of the bed places in the county. In Timisoara a balance exists between hotels and urban pensions, both types amounting to 33 units, as of 2005. The other 4 accommodation establishments are: 2 villas and 2 youth hostels. As in previous case of Brasov and following the typical profile of the Romanian hotel industry, the hotels in Timisoara dominate the market, and concentrating the majority of bed places. The situation is presented in graps 11a and 11b; it is due to the presence in and near the city of the plants operated by both foreign and Romanian companies, generating an important inflow of business tourism. Graphic no.11a The structure of accommodation establishments by number others 5.71%

source: based on NAT data

hotels 47.14%

urban pensions 47.14%

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others 3.49%

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Graphic no.11b The bed places concentration by type of accommodation establishments source: based on NAT data

hotels 77.19%

With a total of 1277 rooms (2530 bed places) in 33 hotels, most of them developed in the last 10 years, Timisoara ranks second after Bucharest in a national chart based on two criteria: number of hotels and number of rooms, as presented previously in chapter 2, table 2. Using the year of construction as criteria, Timisoara hotels present the following structure in graph 12.

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Graphic no.12 The hotel structure by year of construction/ opening source: own

could not be established 9.09%

after 2000 51.52%

before 1989 15.15%

between 1990 and 1999 24.24%

Prior to 1989, the number of hotels in Timisoara was low, only 5 hotels existed, the oldest opened in 1954. The low number of hotels in a town near the border reflects the cautious attitude former communist authorities had toward tourists in this region. Eight hotels opened during the 1990s and represented a major growth. By the end of 1997 Timisoara had only 9 central hotels and a huge gap existed between the availability of accommodations and the demand for these services. The starting point of the boom was the year 1998 when 3 hotels opened in Timisoara, followed by another 18 between 1999 and 2005. The boom was triggered by the increasing number of foreign investment in branches and plants in Timisoara. The important increase in hotel numbers in the last 5 years reflects the attractive features this sector has in the eyes of business people. Around 40% of hotel owners surveyed2 declared that the hotel is not the only business activity for their firm. Another 25% of the companies that own hotels in Timisoara have main activities unrelated with hospitality, suggesting that they applied an uncorrelated diversification strategy The locations of Timisoara hotels are presented on the following map.

2

The same structured questionnaire as in the case of Brasov was used. The response rate in Timisoara was 90.9% (30 of 33 hotels responded).

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Figure 4 – Location map of Timisoara hotels As can be observed on the map, 9 hotels have central locations. Five of these have visible locations and can easily be found by tourists. The other 4 are considered hidden, on secondary streets with low visibility. Only one hotel is located near the railway station and was constructed before 1989. Due to development of the area no space is available for further hotel development. The remaining 23 hotels are located outside the city center. Five of them opened near the Timisoara international aiport within 5 km (around 3 miles) and have a good location for attracting clients. The remaining hotels are located mostly in the southern part of the city, where two industrial parks were opened and where the most important industrial plants are situated.

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Another hotel concentration can be observed near the university campus and near the the city stadium. The location of Timisora hotels is related to the types of guests targeted, particularly business tourists. Based on the responses of hotel managers and owners, 46% of them believed that their hotel has a convenient location. An analysis of Timisoara’s hotels based on classification, resulted in the dominance of 3 star hotels, as graph 13 shows. The situation is similar to Brasov and is also consistent with the nationwide situation, as presented in chapter 2. Most hotels developed since 2000 were 3 star hotels, considered to be a preference of business tourists. The level of investment required by a 3 star hotel, considered reasonable, was another reason why this type of hotel proliferated. The budget hotel category is represented only by hotels classified at 2 stars. The lack of 1 star hotels indicate that hotel owners and managers know that business people do not look for this kind of accommodation. The 5 star hotels are not yet present in Timisoara. The absence of luxury hotels is considered to cause missed opportunities in organizing events in which important figures or major stars participate (Ancutescu 2005).

Graphic no.13 The structure of hotels by stars source: based on NAT data

2 stars 21.21%

4 stars 24.24%

3 stars 54.55%

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Studying hotel lodging capacity, the Timisoara hotel market, similar to Brasov, is dominated by small hotels, which represent 79% of total hotels in the market. The majority of these hotels were built after 1998 and their small size was imposed either by limited financial resources of owners or by limited development space. In some cases, both causes were present. Graphic no.14 Hotel structure by number of rooms source: based on NAT data

50-149 rooms 15.15%

150 rooms and more 6.06%

less than 50 rooms 78.79%

In Timisoara’s hotel market, hotel ownership as of 2005 comprised 26 owners. Their structure was the following: 27 hotels are owned and operated by LLPs; one LLPs – Pen Tur Com Perla SRL - owns 4 hotels; another 2 LLPs own 2 hotels each; the remaining 21 hotels are independently owned and operated; one of the LLPs is a foreign company; 5 hotels are owned and operated by joint stock companies; one company, Bega Turism SA, owns and operates 2 hotels; 1 hotel is under the administration of the West University of Timisoara. One of the independently owned and operated hotels, the 4 star Ambassador Hotel is affiliated with Best Western since 2003. This hotel has only 40 rooms, so the hotel chain’s penetration rate in Timisoara, in 2005, could be considered negligible.

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The Romanian group Continental Hotels SA, also owns a hotel in Timisoara, North Star Continental, a 4 star property. As presented in annex 5, Continental can not be considered a hotel chain and the hotel it owns in Timisoara can not be taken into consideration to calculate a chain penetration rate. The 4 hotels grouped under the ownership of Pen Tur Com Perla SRL can not be considered a hotel chain or a brand because, setting aside the common name, no brand identity or features similar to a chain have been developed. With a total of 97 rooms, the group represents around 7.6% of total hotel rooms in Timisoara. Named Perla 1, Perla 2, Perla 3 and Perla 4, they are all small hotels between 16 and 31 rooms, located on 3 streets, Perla 2 and Perla 4 having the same location. Three of them crowd the mid-market hotels with 3 star classifications and one is in the upper-market, classified at 4 stars. This only indicates that the locations available did not allow the development of larger hotels. It is also consistent with the idea, expressed in the second chapter, that hotels were developed to follow a market trend which yielded an increased number of new hotels opened in Timisoara since 1998. The diversification of the hotel portfolio was not considered. The only joint stock company owning two hotels in Timisoara, Bega Turism SA, is also a company listed on Rasdaq under the symbol SCDE3. Through its two hotels, 2 star Nord Hotel and 3 star Timisoara Hotel, it controls 189 rooms, representing 14.8% of total hotel rooms in Timisoara. It holds a prominent position in the market. In April 2006 Bega Turism announced4 the modernization of both hotels and this could have been considered a declaration of further developments. Instead, the announcement made by the company continued with its intention to develop a residential complex with 22 rental apartments. Considering that Bega Turism SA is part of a group of 29 companies named Bega Grup SA5, its presence in real estate is a diversification trial of the group’s activities. The mix between hotel businesses and real estate, as is the case of Bega Turism, is not uncommon in Romania. It reflects a mixed attitude toward these sectors and the intention to make quick profits from either. It also shows that, despite declaring their main sector to be in the hotel business, the hotels are 3

SCDE is the symbol used for the former ‘Societatea Comerciala de Turism Banatul SA’, listed on the Rasdaq market since November 28, 1996. Bega Turism SA was created in 1991 and its main activity, for years, was a tour operator. When the privatization process allowed, Bega Turism integrated Turism Banatul under its name. The company’s website, www.begaturism.ro is under construction. 4 Ziua de Vest, 2005, April 5, “Bega Turism va revitaliza 3 hoteluri si va construi un ansamblu residential”, www.dnttm.ro/index.php?location=modules/new 5 www.begagrup.ro

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considered real estate investments, rather than a complex business which must be managed properly. Unita Turism SA, the 3rd Romanian hotel group, with 18 hotels and 1850 rooms, has its headquarter in Timisoara. The main shareholder is Mr. Josep Goschy. Unita Turism does not own or administer any hotel in Timisoara, while owning hotels scattered all over the country. This is explained by the fact that Unita Turism has not been involved in the construction of new hotels. Its portfolio of hotels was formed through the absorption of various hotel companies, the last one, in 2004, was Turism Transylvania SA from ClujNapoca. If Unita Turism has ever owned a hotel in Timisoara and sold it, could not be determined. The continuous changes in its portfolio, new hotels included, former hotels sold reflect its position of managing real estate rather than hotels. As mentioned in the second chapter, Unita Turism has not formed a true hotel chain, as no similar features uniting its hotels can be found, and it has not launched any brand. Among Brasov hoteliers the present study could find little interest regarding the affiliation with an international brand; no international hotel operator expressed interest to locate there. The situation in Timisoara is different. During 2004, rumours appeared that negotiations with Hilton and Sheraton were under consideration for at least on hotel opening, but were abandoned due to problems connected to location (Meirosu & Onica 2004). In February 2006, NH Hotels opened the 3 star NH Timisoara Hotel with 80 rooms. It marked the first major presence of an integrated hotel chain in a Romanian city, Bucharest excluded. This indicates that the Timisoara hotel market fosters interest for some international hotel operators. The study further concentrates on 30 hotels which responded to the above mentioned questionnaire. Based on the information gathered, the positioning map below was constructed, using the same technique as in the case of Brasov. The average number of services was 18, with a minimum of 6 and a maximum of 25. The average room rate was 61.66 EUR (78 USD)6, with a range between 36 EUR (45 USD) and 127 EUR (160 USD).

6

The average exchange rate for 2006 used was 1 EUR = 1.2584 USD (USD 1.2584/ EUR)

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Figure 5 – Positioning map for Timisoara hotels Eight hotels are positioned in the high-high quadrant; 6 of them are 4 star hotels and their position indicates that they tried to apply a differentiation strategy. This quadrant shows a relatively strong correlation between the room rate, number of services and hotel classification. The same correlation can be observed in the low-low quadrant, where 12 hotels are positioned. In this quadrant, as was expected, the 2 star hotels are found. The others are 3 star hotels for which their owners and managers identified that a relatively low room rate correlated with a low number of services represents a potential for their business development. Other 8 hotels are positioned in the low-high quadrant, offering low room rates and an increased number of services. A 4 star hotel could be found

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here, Boca Junior. Its position is not a surprise, because the foreign company owing it entered the Romanian market with a Western oriented services package and tried to create a stable market share. The other hotels are classified at 3 stars and their position is even better compared with the 3 stars hotels in the low-low quadrant, because they offer similar room rates and a higher number of services. Only two hotels have an unwanted position in high-low quadrant, selling their accommodation at a too high room rate compared to the number of services they offer. They can afford to have that position due to the competitive advantage generated by a good location – one in the city centre and the other visible from a main road and has direct access to this road. Both hotels are owned by companies that declared that their main activity is focused on hotels. The positioning map of Timisoara hotels is much more balanced than the case of Brasov. The spread of hotels in all the 3 quadrants can generate the potential for growth is closely correlated with the main segment of tourists, those who travel for business purposes. The fact that business tourism is the leading segment in Timisoara was highlighted by Meirosu & Onica (2004) and by Ancutescu (2005). Present findings, based on the perception of Timisoara’s hoteliers, showed that 52.70% of tourists are seen as business tourists. cultural 3.65% leisure 3.65%

Graphic no.15 Tourists visit purpose viewed by hotel managers/ owners source: own

personal 14.55%

business 52.70% transit 25.45%

From the questionnaires used in this study, the results indicate that the number of foreign tourists in Timisoara, 53.3%, slightly surpasses the number of Romanian tourists, 46.7%. This would be expected because the number of

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foreign companies located in Timisoara is high and correlated with foreign tourists travelling for business. The findings of the present study were also confirmed when comparing them with the research conducted by the Romanian National Institute for Research and Development in Tourism during 2004 (INCDT 2005, pag.129138)7. This study also showed the dominance of foreign tourists, 57.7%. A profile of foreign tourists was also obtained, being between 35 and 64 years old, mainly form Italy and Germany and travelling for business purposes. The profile of Romanian tourists revealed younger individuals, but travelling for the same purposes. Thus, the finding of this study must be regarded with care as the sample used at the city level has no statistical significance. Judging by numbers alone, the hotel market in Timisoara could be considered crowded compared to Brasov. Everything the public sees and hears about a hotel, its name and brand, its signs, its restaurants, public activities, creates a meaning and respectively an image of what the hotel means and offers. Due to the importance of these aspects for the hotels the present study attempted to discover the ways used by hotels to create awareness and stimulate demand. Many of the hotels under analysis do not think about their marketing process; they just engage in their activities by habit and tradition. Typically due to the pressure of competition and weak financial results, they consider marketing as a favourable activity, independent of the concepts and procedures applied. Because hotel marketing should start with a decision of what should be offered, the study tried to discover what elements are used to create an individual image or brand for Timisoara hotels. The results are presented in graph 16. Based on the answers given by interviewed managers and owners, the results indicated the ambiance and logo are considered the prime basic elements used for creating an identity and gaining a high market share for Timisoara hotels. Because the majority of Timisoara hotels were opened in the last 5 years, their managers and owners’ awareness regarding the importance of a logo is higher. Some timid attempts exist in the creation of a brand identity as several hotels, owned by the same company, utilize the name, such as the Perla 1 to 4 hotels. Royal Club and Royal Plaza hotels, along with Reghina and Reghina Blue hotels also lend support to the idea. Hotel ambiance and atmosphere are considered important too, because the age of the hotels, particularly new ones, is associated with newness and freshness. The design of the rooms and the furniture, that follow general trends 7

210 questionnaires were distributed and the response rate was 28.09%. While the sample is not significant from a statistical point of view, the results confirm the idea that Timisoara is mainly seen as a tourist destination for business.

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from overseas, are in tune with tourist expectations in Western hotels and supports a hotel’s atmosphere and ambiance perception. Graphic no.16 Distinctive elements for Timisoara hotels

elements of architecture and design 20.50%

source: own

logo 30.50%

atmosphere 33.80%

colors 15.20%

To analyse the possibility if hotels in Timisoara to play a cultural role in the market, a Likert scale was used for measuring their responses8. The resulted average was 2.234. As expected, the result illustrates that hotels in Timisoara have a relative interest in cultural tourism and in attracting this type of tourists. However, almost 44% of managers and owners surveyed did not believe that the hotel can play the role of cultural ambassador. The question addressed to them was general, so the results may not amply on every hotel. It can be concluded that in the Timisoara tourism market, cultural attractions do not play an important role in the decision of hotels to engage in this area.

8

As in the case of Brasov, the scale went from 1 indicating ‘strongly agree’ to 5 meaning ‘totally disagree’.

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Table no.9: The Likert scale for hotels in Timisoara Valid Frequency Percent responds 1 6 2 9 3 11 4 0 5 2 Missing 2 Total 30

20 30 36.8 0 6.6 6.6 100

Source: own

Despite this fact, 15 hotels have considered the possibility to play the role of cultural ambassador or messenger. The study tried to identify which were the most important elements supporting cultural activities offerings by hotels. The result was a relatively balanced spread among architecture, interior design, and cultural events. Surprisingly enough, the managers indicated, in small proportions, that cultural events organized by hotels, like exhibitions or local meetings, are not considered as a potential for the promotion of a hotel. Even if hotels are not interested in the cultural segment in general, they did indicate correctly that it could be an opportunity for increasing foreign guests for the hotel. Among the cultural activities chosen for promotion by hotels were: 1) to initiate and organize cultural events on a small scale important on a local level (30.8%); 2) the use of the hotel as a space for exhibitions (28.9%), and 3) to present inside the hotels some cultural activities like wine tasting or culinary shows (23.0%). These findings are presented in graphs 17a and 17b.

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Graphic no.17a Elements supporting the role of cultural messenger source:own events hosted by the hotel 32.00%

architecture 34.00%

interior design 34.00%

Graphic no.17b Type of events hosted by Timisoara hotels source: own wine tasting & special food 23.00%

sponsor of events 17.30%

hosting exhibitions 28.90%

hosting small events 30.80%

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The study of the Timisoara hotel market generated the following results: -

the market is dominated by small 3 star hotels; the majority of these hotels were opened in the last 5 years; no hotel with special architectural features was identified; the correlation between the main tourist segment, business tourists, and the hotel offering is strong and reflected by the hotel structure and by their positions in the market as presented in the positioning map; the branded hotel presence is marked by Best Western and, since February 2006, by NH Hotels; the role of cultural ambassador which contemporary hotels play is of lesser importance for Timisoara hoteliers; while no hotel in Timisoara operates in a historic building9, hotel managers and owners in Timisoara are focused on business tourists and do not anticipate any need for diversifying their offers; although they are aware of the importance of distinctive elements, Timisoara hoteliers are not very interested in creating an unique image for their hotels. For a crowded market it is an odd attitude. It can only be justified by the fact that, for now, the hoteliers consider they have found their niche of customers and hope to keep them. Worries developed in 2004 when for the first time, supply surpassed demand in Timisoara (Meirosu & Onica 2004). The idea arose again 15 months later when it was stated that the number of hotels oriented toward business tourism was too high and there was still time to shift focus toward both cultural and leisure tourism (Ancutescu 2005). The present study indicates that the majority of Timisoara hoteliers are not aware of these issues and they continue to concentrate their attention on business tourists. Instead of understanding the continuous changes in the tourism market and creating new opportunities for their businesses, they often think that once they have found a profitable segment, the segment will be there forever. This attitude supports the idea that many business owners entered the hotel market because it was trendy and they wanted their share of the available profits. Long term thinking is almost absent. 9

The only reference to an old hotel in Timisoara was found on: www.deepinside.ro/timisoara/cladiri.php. The website mentions the existence of ‘Hotel Trompeta’, a former inn open in 1747 under the name Trumpet Man Inn (in Romanian Hanul ‘La Trompetist’). It is not clear when it became the ‘Hotel Trompeta’. In 1807 the Austrian emperor, Franz Josef the 1st stayed there. There is no more information regarding the hotel or when it closed.

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During 2006, despite the demand shift presented above, 13 new hotels entered the Timisoara hotel market (representing an increase of 39.4%). The majority of them are being classified at 3 stars; have less than 50 rooms and target the same business segment. This demonstrates that the ‘herd behaviour’ is in place. The market naturally became more crowded; the consequences will be seen in the years to come.

PART VI: THE CITY OF CLUJ-NAPOCA

Cluj-Napoca is the county capital of Cluj, integrated in the North-West Region along with 5 other counties. It is located in the heart of the historic province of Transylvania. Cluj county represents 2.8 % of Romanian territory and is an important cross road for transportation infrastructure, particularly roads and railways. With a mix of Romanian and Hungarian population, it is no surprise that the main foreign investors in the Cluj county are Hungarian. Cluj-Napoca1 is the second city after Bucharest from economic and investment potential point of view, influencing entire Transylvania (www.clujonline.com/ro/economie_dezvoltare). Cluj-Napoca is one of the most important and biggest cities in Romania and is the only one in the North-West Region with over 300,000 inhabitants. The City of Cluj is considered the ‘capital of Transylvania’ because it is an important academic, cultural and business centre. These factors make Cluj-Napoca an important tourist destination for various types of tourists. The Cluj-Napoca city administration elaborated the tourism development strategy at the local level. The strategy considers tourism a potential source for increasing the total revenue of the city. Unfortunately the strategy was formulated late, only at the end of 2005. This could explain the absence of a tourist information centre in Cluj-Napoca. The city is an important cultural centre and it defined the historical evolution of Transylvania. ƒ Historical and cultural monuments: - The National Theatre and Opera combines Baroque and Rococo styles; the building was erected in 1906; - Tailors’ Bastion; the protective system of the city was built in the 13th – 14th century. The Tailor’s Bastion’s construction began in 1475. When the construction of the second wall was 1

The composed name of the city comes from a decision made during the 1970s to add to the city of Cluj its name from Dacian time, Napoca. During the medieval period the city was known by various names: Claudiopolis, Coloswar (or Koloswar) in Hungarian, or Clausenburg (Klausenburg) in German.

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ƒ

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finished it already protected an area of 45 hectares (111 acres). The wall contained 18 bastions and towers. The part of the wall that can be seen today as well had the name of Tailor’s Bastion as its protection and maintenance was ensured by the tailors guild; The Old City Hall was built between 1843 and 1848 in neoRenaissance style after the plans of Anton Kagerbauer. On this site once stood another Renaissance building that burned in 1789; Mihai Viteazul Statue and Square; Avram Iancu Statue and Square; The Statue of King Matei Corvin; St. George Statue.

Churches: - The Orthodox Cathedral was built between 1923 and 1933, after the union of Transylvania with the rest of Romania. Built in a Romanian Brancovenesc style, a synthesis of Renaissance and Byzantine architecture, it lies in Avram Iancu Square, facing the National Theatre. The Cathedral is the seat of the Metropolitan of Cluj, Alba, Crisana and Maramures. It is dedicated to the ‘Assumption of Theotokos’; - St. Michael’s Cathedral is one of the oldest and most venerated Transylvanian monuments of Gothic architecture. It was built between 1350 and 1487, and the altar is the oldest part of the current building, dating from 1390. The church is well preserved and outside, on the right there is the Statue of Matei Corvin. The statue dates from 1894, when Hungarian authorities decided to commemorate 450 years of his birth and 400 years of his death; - The Neolog Synagogue; Before the second World War ClujNapoca had a large Jewish community. The memorial church of the Deported Persons was built following the plans of Hegner Izidor. In 1944 it suffered serious damage due to the war. It was repaired in 1951 by the Romanian Jewish congregation. It is the only functioning synagogue in ClujNapoca - Franciscans’ Church; - Reformed Fortress Church; - The Church of the Piarists; - Minorits’ Church;

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-

Unitarian Church; Calvaria Church.

ƒ Museums: - the Ethnographic Museum of Transylvania (including its open air section); is the largest museum of this kind in Romania. It was founded in 1922. The Ethnographic Park, part of the Ethnographic Museum, is the first open-air museum in Romania and the sixth in Europe. It was founded on April 12, 1929. The park exhibits individual buildings from the regions of Maramures, Tara Oasului, Nasaud, Secuime, Campia Transilvaniei, Zarand, Podgoria Alba, Mocanimea Muntilor Apuseni, Depresiunea Calatele, Bran, Bistrita (sasi), Gurghiu. It also hosts 3 wooden churches and a cemetery gate. Among this array of exhibits, 19 date from 1678 to 1913; - the National Art Museum; Cluj-Napoca’s branch is located in the former Banffy Palace, built by a German architect between 1774 and 1785. It is the most representative Baroque building in Transylvania. Starting in 1951 the building hosts the National Gallery. The museum was developed from the original collections of the Transylvanian Museum, making it today one of the most valuable collection of the patrimony of The National Art Museum; - the History Museum; - the Zoology Museum; - the Pharmacy Museum. ƒ Parks – the most important are: - The Botanical Garden is a much appreciated place of recreation and a valuable research centre, having connections with 450 similar institutions in 80 countries. The garden spreads on 14 hectares and constitutes the largest green area of Cluj-Napoca. It displays a large variety of flora specific to every season. The Garden hosts the Botanical Institute, the Botanical Museum, a Herbarium, a Roman and a Japanese Garden; - Central Park; - Iuliu Hateganu Park.

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ƒ Other points of attraction: - Fortress Hill which got its name from the Austrian fortress built there, the oldest representation of Baroque architecture in Transylvania. Dominating the historical centre of the city, the fortress was built in the 18th century to ensure the control of the city, more than for defensive purposes. With an elevation of 405 meters (1329 feet), this place offers tourists one of the best panoramas of the city and the surrounding hills, Somes river and the mountains; - The Matthias Corvinus Memorial House the oldest lay building in Cluj-Napoca, well preserved and having many functions through time. Built between the 14th and 15th centuries in Gothic style, the outer walls were altered with Renaissance elements. For a while the house hosted the Ethnographic Museum. Since 1950, the building is owned by the University of Design and Fine Arts. The university organizes here temporary exhibitions showing the works of its students and professors; - Babes-Bolyai University was established in 1581. The university was named after two prominent Transylvanian personalities, the Romanian scientist Victor Babes and the Hungarian mathematician and poet János Bolyai. It is the largest university in Romania. With more than 45,000 students, the university offers 105 specialisations, of which there are 98 offered in Romanian, 52 in Hungarian, 13 in German, and 4 in English. The university has 21 faculties and over 1,700 faculty members. The University offers bachelor's, master's, and Ph.D. degrees, along with advanced postgraduate studies; - The Central Cemetery (16th century), Cluj-Napoca has a stable calendar of cultural events, festivals and other events of local or regional interest. Some of them have gained national and international attention. Occasionally, Cluj-Napoca hosts festivals or cultural events, like The 2006 MTV Music Awards Romania, the first edition organized outside Bucharest, which could eventually develop an influx of tourists.

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The main important cultural events are: Lucian Blaga2 International Festival; Toamna muzicala clujeana Festival (Fall Cluj Music Festival); The Transylvania International Film Festival (5th edition in 2006, one of the prime cultural events in Romania); The Puck-Animafest International Marionettes Festivals (5th edition in 2006 hosted 10 theatre companies from Romania and 7 from across Europe); Zilele municipiului Cluj-Napoca (Cluj-Napoca’s Days); Ziua Europei (Europe’s Day); Beer Festivals, there are usually two, one at the end of the Spring and one during October; Wine Festival; ManInFest Theatre Festival; Delahoya Rave Festival. Cluj-Napoca is an important cultural city, offering a wide range of cultural activities for interested tourists. The main problem remains the promotion of its cultural image and fostering the interest of tourism companies to develop additional activities and services.

2

Lucian Blaga, Romanian philosopher, poet and playwright who lived between 1895 and 1961.

PART VII: THE HOTEL MARKET IN CLUJ-NAPOCA

As of 2005, 163 accommodation establishments were registered in Cluj county. In Cluj-Napoca 57 were identified, representing 35.58% of the county total. They controlled 52.87% of the bed places available in the county. The structure of the accommodation establishments by number and by cumulated bed places shows that the market is dominated by hotels. It is not a surprise, because the perceived tourist market profile for Cluj-Napoca is that of business and transit. Four hostels and one motel are also located in Cluj-Napoca. The situation is similar to Timisoara, with a resembling profile of business tourist market. The main difference in Cluj-Napoca’s market is the consistent presence of villas. This can be explained by the same reasons for the development of urban pensions in Brasov: 1) lower levels of investment are required due to the smaller dimensions and 2) the different classification criteria, which are easier to fulfil. Cluj-Napoca is not situated in a mountainous area and leisure tourism is not perceived as being an important segment. This could be another reason to explain the presence of villas instead of urban pensions, as villas target business tourists. Another reason found for the strong presence of villas could be the desire of those involved in the hospitality business to attract a specific niche of business people who look for more stylish and intimate accommodations, combined with a higher level of personalized service.

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Graphic no.18a The structure of accommodation establishments by number source: based on NAT data

urban pensions 13.79%

others 8.62%

hotels 53.45%

villas 24.14%

urban pensions 4.79%

Graphic no.18b The bed place concentration by type of accommodation establishment source: based on NAT data

others 3.56%

villas 11.25%

hotels 80.40%

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As of 2005, the study identified 31 hotels in Cluj-Napoca and the graphs above included all hotels. At the end of 2005 one hotel, the Continental Hotel was sold and closed; it was eliminated from the study. Its unique situation will be presented subsequently. Cluj-Napoca ranks 3rd in number of hotels after Bucharest and Timisoara. With 30 hotels, the Cluj-Napoca hotel market could be considered crowded. The year of construction was taken into consideration for analysis. Over 50% of the hotels in Cluj-Napoca were constructed and opened after the year 2000 (a situation similar to Timisoara). The development was influenced by demand combined with easier access to bank loans after 2000. Graphic no.19 The hotel structure by year of construction/ opening source: own

befor 1989 23.33%

after 2000 53.33% between 1990 and 1999 23.33%

The hotel sector became trendy after 2000. In Cluj, 31% of the companies owning hotels have another main activity and developed hotels to diversify into this market. The locations of Cluj-Napoca hotels are presented on the following map:

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Figure no.6 - The localization map of Cluj-Napoca hotels The hotels marked with a rectangle are situated near the railway station. The hotels marked with a black point are situated in the city centre and those marked with a star are outside the city centre. No hotel is located near the airport. Almost all hotels in Cluj-Napoca have problems with parking. Of the 26 Cluj-Napoca hotels that answered the questionnaire (representing 86.67% of the hotel included in the research), 48% of their managers and owners considered that their location was a very good one. Their opinion is subjective because of the 8 hotels located in the centre of the city, 3 have hidden locations, on small secondary streets, with low visibility and difficult access. Of the remaining 5 hotels located on main streets in the city centre, 3 of them were built before 1989. One of the hotels situated in the center is located in the very heart of the vegetable and fruit market and this surrounding limits potential clients due to noise and crowdedness. If the vegetable market were to be moved, this location could become a competitive advantage.

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Only two hotels are located near the Cluj-Napoca railway station. This small number of hotels in a rather good location was limited by the lack of space available for building. The other 18 hotels are located in various parts of the city. The majority of these hotels could be considered hidden locations because they are not on main streets or highly visible. Thus, the Belvedere Hotel, built in the second half of the 1970s on Fortress Hill, has one of the most visible locations in Cluj-Napoca. Unfortunately, access to it is rather complicated for one who is not familiar with the city. A rather extreme example of a hidden location is that of Hotel Olimp which, until 2006, was scarcely visible behind a warehouse. During 2006, the warehouse was relocated and the hotel became more visible from one of the main streets. The locations chosen by hotels built after 1990 did not consider the idea of being visible. The availability of space for construction was a priority. The hotel sector was seen as an opportunity and hotels were built in a hurry where any space was available. The hotels built and opened between 1990 and 1999 could neglect location decisions due to the increasing demand for accommodations. Many of these hotels managed to keep their clients. The hotels built and opened after 2000 should have been more careful in choosing their location, but this did not happen. The issue of location arose only during 2006 when the construction of two hotels was stalled due to problems generated by their chosen locations. No hotel has been developed near the Cluj-Napoca international airport. The distance to the city is short, only around 8 km (5 miles) and the airport is not located near an industrial or commercial area3. The Cluj-Napoca hotel market is dominated by 3 star hotels. The budget segment and the upper market segment have equal shares of the market (see graph 20). The existing 1 star hotels are old hotels. The Vladeasa Hotel building was constructed in the 19th century, probably as an inn. The Pax Hotel was constructed during the first 40 years of the 20th century4. Half of the 2 star hotels were constructed during the 1970s, the other half were built after 1990. Only two of the 3 star hotels were in operation before 1989; all the others entered the market after 1990 targeting business tourists. The upper market 3

The situation is about to change. Nokia announced the opening of a plant near ClujNapoca in 2007. The city international airport will undergo further development to respond to this new demand. 4 The current hotel owners ignore any information about their hotel past. Being a small hotel in front on the railway station, it provides accommodation mainly for those who transit Cluj-Napoca. The hotel owners seem to think that nothing more has to be done to keep their hotel in the market.

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segment is similar with one exception: the hotels entered the market starting in 1990. It must be mentioned that until the mid 1990s, there was no 4 star hotel in Cluj-Napoca. The change in the classification system in 1993 explains the lack of 4 star hotels, and because the hotels that operated at that time did not fulfil the requirements to be classified higher than 3 stars. Graphic no.20 The structure of hotels by stars source: based on NAT data

1 star 6.67%

4 stars 26.67%

2 stars 20.00%

3 stars 46.67%

An analysis of the Cluj-Napoca hotel structure using number of rooms shows a very high percentage of small hotels, as graph 21 highlights. Only 3 of the hotels operating before 1989 are small hotels, indicating that they were operating in old buildings erected before the communist period. The other 22 hotels were constructed after 1990 and their small lodging capacity is a function of the investment required. Limited space for construction also played a role in the size decision.

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150 rooms and more 6.67% 50-149 rooms 10.00%

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Graphic no.21 Hotel structure by number of rooms source: based on NAT data

less than 50 rooms 83.33%

The ownership structure of Cluj-Napoca hotels was the following in 2005: -

21 hotels were independently owned and operated by 20 LLPs; one of the LLPs owns two hotels: Onix 1 and Onix 2; - 8 hotels were owned by 5 joint stock companies; 4 of these hotels are owned by Unita Turism SA after the company absorbed the former owner of the hotels, Transylvania Turism SA; - 1 hotel is owned by a state company, specialized in services supporting the public administration. Only one independently owned and operated hotel in Cluj-Napoca is affiliated with the Best Western hotel chain, the Best Western Topaz Hotel. Of the 26 hotel owners identified in Cluj-Napoca, 8 of them, representing almost 31%, have another main activity, other than hotels. This finding supports the idea that in Cluj-Napoca too, the hotel sector is perceived to be trendy. Going further with the analysis, the positioning map was constructed based on the data gathered through questionnaires and websites, where available. It is a 2 dimensions map plotting the number of services offered by Cluj-Napoca hotels on the x axis and room rates on the y axis. The number of

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services ranged between 7 and 27, with an average of 18.13 and the room rate varied between 35 EUR (44 USD)5 and 135 EUR (170 USD), with an average of 56.30 EUR (71USD).

Figure 7 – Positioning map of Cluj-Napoca hotels -

5

10 hotels are positioned in the high-high quadrant; only hotels classified with 3 and 4 stars are present here, as expected; in the high-low quadrant are 4 hotels. This is an unwanted position; two hotels (Pami and Victoria) can afford to be here due to their highly

The average exchange rate for 2006 used was 1 EUR = 1.2584 USD (USD 1.2584/ EUR)

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visible locations; the other two have hidden locations and are relatively new, opened between 2003 and 2004; that might explain their position; - there are 7 hotels in the low-high quadrant. These hotels are supposed to have more satisfied guests due to the better ratio between price and service; - 10 hotels are positioned in the low-low quadrant; six of them are 1 or 2 star hotels and their position here is normal. The other four are 3 star hotels and their position here reflects their managers and owners targeting the budget segment. The positioning map shows that a correlation exists between the room rate level, number of services offered and hotel classification by stars. It also shows that Cluj-Napoca hoteliers are targeting the business segment and have the capacity to meet demand. This is supported by the responses given by the hoteliers when surveyed about the visit purpose of their guests. Hotel managers and owners indicated tourists travelling for business as primary, as graph 22 shows. The results of this questionnaire are similar to the results obtained by the Romanian National Institute for Research and Development in Tourism in a study conducted during 2004 (INCDT 2005, pg.114-120). The study indicated, for Romanian tourists, the main purpose for their visit to be business and other professional reasons, on 80% of the cases. In Cluj-Napoca, only 15 Romanian tourists answered the questionnaire; 10 of the respondents travelled for business: 6 were managers and the other 4 were employees of various companies. It was almost logical that the answer would indicate a business purpose for travel in first place. It was also indicated that Romanian tourists are predominant, representing 76.9% of tourists arrivals in Cluj-Napoca hotels. Unfortunately, the sample used was not representative for Cluj-Napoca market.

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cultural 8.7% leisure 4.3%

Graphic no.22 Tourists visit purpose viewed by hotel managers/ owners source: own

personal 13.0% business 47.8%

transit 26.1%

The perceived dominant business profile of the Cluj-Napoca tourist market seems odd with the presence of 5 large state universities and 2 other private universities, and the large concentration of university hospitals. The study made by INCDT did not consider the students present in Cluj-Napoca and the individuals who visit this important category of institutions in the city. The authors believe that there is a wrong perception of the tourist market profile. A further study on demand conducted further research on a representative sample. The research revealed that the main purpose for visiting Cluj-Napoca is personal interest, followed by professional training and business. The “personal interest” category included the relatives and friends visiting those who are students in Cluj-Napoca and the relatives and friends of the city residents, most of them stay in the residents’ homes. The category also included individuals coming for medical services and, as in the previous case, they were accommodated by friends and relatives.

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Graphic no.23 Tourist visit purpose based on demand research

transit 7%

source: own

personal interest 24%

leisure 12%

cultural 13% business 18%

professional training 21%

Even if professional training is combined with business, the result is almost 10% below the figures generated by hotelier responses (see graph 23). This difference is accounted for by the personal interest category. Also, research on demand reveals an increase in leisure and cultural tourism, which had a rather discouraging percentage in graph 22. Tourists were surveyed about their perception of Cluj-Napoca as a tourist destination. Results are profiled in graph 24. The academic category is in correlation with the large number of universities concentrated in the city. The business category came in second place. The cultural profile of Cluj-Napoca as a tourist destination is strongly correlated with the percentage of respondents indicating culture as their main purpose for visiting the city.

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Graphic no.24 The profile of Cluj-Napoca as a tourist destination source: own

tourist 9%

commercial 6%

cultural 12%

academic 58%

business 15%

Tourist choices regarding their accommodation supports the information obtained from their visit purpose in Cluj-Napoca. Tourists prefer to stay with relatives and friends and only secondary would they choose hotels, as graph 25 reveals. The high percentage of personal interest visits is in correct correlation with accommodation by friends and relatives. Graphic no.25 Accommodation choice based on demand research source: ow n

others 35% friends & relatives 38%

hotels 27%

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The results on demand raise questions for Cluj-Napoca hoteliers. While in their eyes business tourism is dominant, demand shows otherwise. Hoteliers must diversify their offerings to be more in tune with the academic profile of Cluj-Napoca as a tourist destination. Culture can be regarded as a complementary product to the academic draw of the city. The study also tried to establish, through the use of questionnaires, if Cluj-Napoca hoteliers are aware of the cultural ambassador role they could play. Questions asked about the ways they try to differentiate from their competitors in a relatively crowded hotel market. Using the Likert scale for measuring the hoteliers’ responses on their perception of the role of cultural ambassadors, an average of 2.269 resulted6. This result can be interpreted as a display of interest manifested by Cluj-Napoca hoteliers toward the role of cultural ambassador. It is a positive sign that ClujNapoca’s hotel managers and owners are aware of this potential. Table no.10: The Likert scale for hotels in Cluj-Napoca Valid Frequency Percent responses 1 3 11.54 2 14 53.85 3 4 15.38 4 4 15.38 5 0 0 Missing 1 3.85 Total 26 100 Source: own

Further were identified the specific elements used by hotels to enhance the role of cultural ambassador. The result was a quite balanced spread among architecture, interior design and events hosted by the hotels. Nevertheless, cultural events were mentioned more frequently because they are viewed as dynamic elements which can increase the tourist flow. Even if the cultural events that a hotel organizes are small, like exhibitions or local meetings, hotel managers and owners know and understand the potential for their hotels by participating as supporters of large scale community events. Compared with the hoteliers of Brasov and Timisoara, those from Cluj-Napoca seem to be more focused on hosting various cultural events. This might be explained by the academic profile of Cluj-Napoca as a tourist destination, because the academic

6

The scales range between 1 ‘strongly agrees’ to 5 ‘strongly disagree’.

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world generates an increased demand for meetings and other types of cultural events. Graphic no.26a Elements supporting the role of cultural messenger events hosted by the hotel 45.71%

source:own

architecture 28.57%

interior design 25.71%

others 5.00% wine tasting & special food 31.67%

sponsor of events 16.67%

Graphic no.26b Type of events hosted by Cluj-Napoca hotels source: own

hosting exhibitions 23.33%

hosting small events 23.33%

The results were correlated with the information about the distinctive elements of Cluj-Napoca hotels. Almost equal importance was given to logos, colours, ambiance and elements of architecture and interior design, as graph 27 shows. These mixed feelings could have been generated by the fact that this kind of question was never asked before. The results also show that ClujNapoca hoteliers are not very interested in creating unique images for

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themselves. This can be explained by the fact that the business segment is solid and is expected to grow further.

elements of architecture and design 20.69%

atmosphere 25.86%

-

Graphic no.27 Distinctive elements for Cluj-Napoca hotels source: own

logo 31.03%

colors 22.41%

The following conclusions can be drawn: the Cluj-Napoca hotel market is dominated by small hotels, in the midmarket range, ranked at 3 stars and mostly constructed after 2000; the location chosen for many of the new hotels depended on available space and not on criteria of being visible and easy to reach; the hotels are positioned mainly to serve the business tourist segment and almost ignore the main category of the Cluj-Napoca tourist market, academic tourism; similar with the cases of Brasov and Timisoara, the luxury segment of the market was absent; hoteliers are aware that their hotels could play a role as cultural ambassadors, but they believe it is simpler to live from client demand rather than meet their guests’ latent expectations; there is much confusion regarding differentiation; while colour seems more important for Cluj-Napoca hoteliers, half of the hotels analysed use almost the same colours: orange, yellow and red. Only one hotel, Fullton, opened in an old building in a hidden location in the city centre, made an attempt to be different; through its name (rather odd) its owners tried to communicate that the ‘full tone’ of colours are used in decorating the hotel. Every room is advertised to be different.

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However, information is not available on the hotel’s website or in its printed materials. - several hotels in Cluj-Napoca already have distinctive features generated by their architecture, location and historical past. As in the case of Brasov, their owners ignore this or they are very ‘timid’ in presenting the unique elements: ¾ Melody-Central Hotel, located in the very centre of the city, next door to the National Art Museum operates in a historic building from the 19th century; previously the building hosted Pannonia Hotel (Glodariu 2004); but the hotel owners ignore the history of the building and do not promote the hotel in connection with its history; ¾ Vladeasa Hotel, located near the central shopping centre of ClujNapoca, also operates in an old building with architecture typical of the 18th and 19th century inns. Unita Turism SA, the hotel owner, did not mention anything about the hotel’s history; ¾ Napoca Hotel has a unique shape, reproducing a peasant home from the Apuseni Mountains area. The hotel won a prize for its originality during the 1970s. It is the only hotel which mentions its unique architecture on its website; however, the information is difficult to find; once found, it is available only in Romanian. The present owners of the hotel did not continue the theme inside the hotel; ¾ Belvedere Hotel, located on Fortress Hill and offering a panoramic view of the city, has also a unique shape; it reproduces the buildings of the Montreal Olympic village which hosted the 1976 Olympic Games. The present hotel owner, Unita Turism SA does not issue promotional material describing the special architecture, nor the special location of the hotel; despite this Belvedere Hotel is considered ‘the flagship’ of the group. A special mention regards the Continental Hotel, now closed. Located in the centre of the city, near St. Michael’s Cathedral, the hotel operated in a building erected in the second half of the 19th century in an eclectic style with Baroque influences (Glodariu 2004 and Iancu 2006). The building originally hosted the New York Hotel, one of the most important places for social elite in the city of Cluj-Napoca in the first half of 20th century. It must be mentioned that, before the present building was constructed in the same place, another hotel by the name National existed. During the 1990s, the hotel was owned by Continental Hotels SA. The decision to close and sell the hotel was a function of the very fact that the hotel operated in a historic building. The amount of investment required to modernize such a hotel, while respecting the restrictions

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imposed by building preservation, was significant. Continental Hotels SA chose this action due to the fact that it owns another historic hotel in Bucharest which is currently being modernized. The Continental Hotel in Cluj-Napoca was unique and considered an attraction of the city. The owners ignored this and concentrated more on their attempt to develop the Ibis brand. Continental Hotel has been closed for almost two years now. During 2006 the following changes appeared in Cluj-Napoca’s hotel market: - seven new hotels entered the market (an increase of 23.3%), crowding even more the segment of hotels targeting the business tourists; one of the new hotels is ranked at 5 stars, opening the door for the luxury segment in the Cluj-Napoca hotel market; - two Cluj-Napoca hotel owners started small hotel groups, owning 2 or 3 hotels each, with names that show some intention of launching a chain; - the Vladeasa Hotel was sold and changed its name to Transilvania Hotel. This transaction supported the idea that Unita Turism SA regards its hotels merely as real estate properties. Cluj-Napoca hotels must take into consideration the importance of academic tourism and adapt their offers to this demand. This means that they either should position themselves in the low-high quadrant or new hotels should be developed covering the budget segment. Cultural tourism can be seen as a supporting product, an extra product offered to add value to the core product of academic tourism. Those hotels that have a better understanding of this will have a competitive advantage. For now, the Cluj-Napoca hotel market is focused on the business tourism because this segment is easy to target and generates profit in a short period of time.

PART VIII: COMPARATIVE ASPECTS

Comparing the hotel markets in Brasov, Timisoara and Cluj-Napoca, common and distinctive features were discovered. The importance of every city at the county level is difficult when reviewing the number of accommodation establishments and beds. 9 Timisoara holds top position, concentrating over 70% of accommodation establishments and bed places in the county. While the tourist attractions exist in Timis County, they do not attract important lodging establishments. 9 Cluj-Napoca lies in the middle, concentrating around 36% of the accommodation establishments and 53% of bed places in the county. Having a mountainous area combined with several spa resorts of local interest, in the last 3-5 years a large number of rural pensions and villas developed (but with small lodging capacities). 9 Brasov has the lowest concentration of accommodation establishments and beds – only around 15% in both cases, of the total in the county. This can be explained by the presence in the county of two mountain resorts of national interest, Predeal and Poiana Brasov, both with a strong presence of accommodation establishments. When the picture is completed with the large number of rural pensions developed in Bran, Moeciu and Timisul de Jos, all three being resorts of local interest, Brasov’s low concentration of accommodation establishments can be seen as logical. In all cases, hotels dominate the markets holding of total number of bed places 60.51% in Brasov, 77.19% in Timisoara and 80.40% in Cluj-Napoca. The hoteliers in all 3 cities are oriented toward the business tourism segment7 and almost ignore anything else. Among the things ignored is the fact that all 3 cities are considered to have a high concentration of monuments and building included in Romanian national heritage8. With such a heritage, the cities could develop cultural and leisure tourism. 7

Currently this segment is considered the most important one due to Romania’s development trend. 8 Law no.5/ 2000.

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Every city has a unique situation when the correlation between the tourist market profile and the hotel offer are considered. As was mentioned, the offerings are almost exclusively oriented toward business tourists. However, in Brasov, a large part of incoming tourists are there for leisure and culture. Brasov hotels are positioned to serve both markets, but the hotels which offer a low number of services and a low room rate are function of the lack of modernization rather than a result of a strategic thinking. In Timisoara, the business tourist market is obvious and the hotels are positioned to serve this segment. However, the hotels oriented toward serving the business tourist are already too many and market saturation is present. Cluj-Napoca hotels, following the trend, are also oriented toward business tourism and their managers and owners completely ignore the fact that the city has a tourist market dominated by academic tourists. In this respect, their offer is not matched with the demand, as the budget hotel segment represents only around ¼ of total hotels in the city. Regarding the rate of hotel development, Timisoara and Cluj-Napoca each present similar features: both cities had a relatively low number of hotels built before 1989; between 1990 and 1999 the number of new hotels entering each market equalled or surpassed existing numbers. Since 2000, both cities witnessed a boom in the hotel market. Over 50% of hotels included in the current study were opened since 2000. Brasov is different. While the number of hotels built before 1989 is similar to Timisoara and Cluj-Napoca, the period between 1990 and 1999 witnessed the opening of only 2 hotels, while 4 others have entered the market since 2000. This could be explained by the fact that the Poiana Brasov mountain resort is 13 km (or little more than 8 miles) from Brasov and it is considered a more interesting place for hotel development. Thus, the Brasov hotel market had its boom during 2006, when 9 new hotels were opened, increasing the number of hotels by more than 60%. The year of construction/ opening influenced the hotel’s location. Most of the hotels that existed before 1989 had good or very good locations: in the city centre or near the city centre, in places that are highly visible. Because the hotels built during the 1970s and 1980s were state owned hotels, where available free space existed, land ownership was not discussed, it was presumed to be owned by the state. In other cases, old buildings were demolished to build the hotel. Hotels built after 1990 were forced to choose hidden locations, even if near the city centre, or far from the city centre. In these cases the problems regarding space availability, land ownership and approvals for construction were important issues. The concentration of hotels in city centres is relatively low in every one of the three cities. The buildings and street networks in the city centre do not

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allow the construction of new buildings. The investments for developing a hotel in one or several old buildings are not encouraged. Most of the new hotels are near the centre or outside the city centre, where space was available for construction. In many cases the visibility of the hotel was not taken into consideration, but the availability of land. This was combined with the trendy desire to enter the hotel market. Using classification by stars as criteria, in all three cities, 3 star hotels are dominant, representing 46.67% in Brasov and Cluj-Napoca, and 54.55% in Timisoara. Another common feature is that the majority of these hotels were opened after 1990 and their owners built them with the business tourist segment in mind. The budget hotel market almost equals the mid-market hotels in Brasov. As was highlighted previously, the situation is explained by the presence of old hotels in need of renovation and modernization. If the hotels will be kept in the same market segment is not clear because their owners do not offer information regarding future developments. Both in Cluj-Napoca and Timisoara, budget hotels have similar importance, but in Timisoara, no hotel is classified with 1 star. The upper market, 4 star hotels, is present in all the 3 cities, but in 2005 there was no 5 star hotel in any of the three cities. The dominance of small hotels, under 50 rooms, is obvious in all 3 cities. They represent 66.67% of hotels in Brasov, 78.79% in Timisoara and 83.33% in Cluj-Napoca. The majority of these hotels were opened after 1990 and classified at 3 stars. This choice was a function of both the lower level of investment required and the space available for construction. Another common feature is the fact that large hotels were all constructed during the 1970s and 1980s, with one exception in Brasov where one hotel, now split into two hotels, was constructed during the last years of the 19th century. Considered to be difficult to manage and requiring significant financial resources, large hotels were avoided after 1990. The 5 star hotels were absent until 2005 in all 3 cities. Since 2006, Brasov and Cluj-Napoca both have a 5 star hotel. It is too early to tell if they chose well when deciding to enter the luxury market segment. The following table summarizes information on all 3 cities from their respective positioning map: Table no.11: Comparative room rate per service ratio City Average room Average number of rate services Cluj-Napoca 56.30 EUR 18.13 Brasov 58.75 EUR 14.58 Timisoara 61.66 EUR 18.03 Source: own

Room rate/ services ratio 3.11 4.03 3.42

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A simple ratio between the average room rate and the average number of services was constructed. Using this criteria, Cluj-Napoca offers the best price/ quality ratio, followed by Timisoara. Brasov is in last place, with its hotels offering as an average the lowest number of services for the price charged. The average room rates represent between 23% and 25% from a net monthly average wage in Romania. This supports the idea that the hotel market is oriented toward business tourists. When the positioning maps were analysed, both Timisoara and ClujNapoca seemed to be relatively balanced, with a good hotel spread in the quadrants high-high, low-high and low-low. In the case of Brasov and Timisoara the number of hotels positioned in the worst quadrant, with high prices and low number of services, is lowest: 2 hotels in Brasov and 2 hotels in Timisoara. Either the opening year or the location, are the reason for this position. The positioning maps also showed the preference of hotels for business tourists. Every hotel market in the current study has a Romanian hotel group present in it. ARO Hotels SA owns 5 hotels in the city centre of Brasov. Pen Tur Com Perla SRL owns 4 hotels in Timisoara and Unita Turism SA owns 3 hotels in Cluj-Napoca (during 2006 it sold one of the initial 4 hotels). The Timisoara hotel group named its hotels Perla 1 to Perla 4, to generate the idea of a brand. It went no further to develop a true brand identity. ARO Hotels SA put the name ARO on two of its hotels, but this is not sufficient to create a brand or a hotel chain. Unita Turism SA distributes similar printed materials for its hotels, but nothing else indicates a coherent presence of a brand or elements of a hotel chain. The only positive thing that could be said about Unita Turism’s presence in Cluj-Napoca is the fact that it tried to act in every market segment, from budget to upper-class hotels. Neither of these groups is a symbol for the city where they operate. If these groups do not make significant efforts to differentiate their hotels, presuming they have financial resources which could be used for this, it is no surprise that independently owned and operated hotels are doing less. Most of the time, hoteliers are not aware of the historic past of the hotel, where it exists, and are not ready to capitalize on this asset. In Cluj-Napoca and Timisoara only one hotel in each city had clever enough owners to affiliate their hotels with an international hotel chain: Best Western. Since 2006, in Timisoara NH Hotels is present, too. The rest of the hotel owners did not want to lose control of the hotel, despite complaining about low occupancy rates.

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The answers given by hotel managers and owners to questions regarding elements used for differentiation generated mixed results. The results could be considered not conclusive because this type of questions was asked for the first time. The responses reflected mixed and confused feelings an opinions regarding elements of differentiation. It is true: it is easier to copy than to be original. Most of the new hotels are replicating their competitors. From the elements presented above, a general conclusion can be drawn: the growing business tourist segment triggered the development of hotels in all 3 markets. The delay in privatisation of existing hotels encouraged new hotels to enter the market. The trend of opening new hotels became similar to ‘herd behaviour’ after 2000 when it became trendy to open small 3 star hotels, and if possible 4 star hotels. Because the business tourist segment seemed to be profitable, every one with available resources wanted ‘a piece of the pie’ and crowded even saturated the market (the case of Timisoara), lowering profit margins. The budget hotel segment was ignored most of the time because it was not suited for the hotel owner’s social position. Friends and business partners might have a cold attitude toward an individual if a hotel of less than 3 stars opened. In a society where social status, measured by the amount of money owned, is important, opening a budget hotel would mean that the owner did not have enough money for at least a mid-market hotel. In every city included in this study a lot of work is needed to define the profile as a tourist destination. Once the profile is defined, it would be easier for hoteliers to focus on a segment or to diversify their products. The relationship goes both ways: determined hoteliers could shape the image of their city as a tourist destination. However, it is not the case in Brasov, Timisoara or ClujNapoca. Brasov and Cluj-Napoca hoteliers have the possibility through the historic hotels they own, to enhance the leisure and cultural image of their cities. In Timisoara, the lack of historic hotels could be overcome by the reopening, if possible, of the old Trompeta Hotel. Instead, the hoteliers from all 3 cities are saturating only one segment: business tourism. Diversification and differentiation is forgotten. The lack of market studies and other similar information is one factor for this behaviour. However, when information becomes available, the hoteliers tend to ignore this information‚ because ‘they know better’ attitude. If mistakes are highlighted, even in a diplomatic way, the information is rejected by the hotel owners. With such an attitude, the future of the hotel sector in the 3 cities is not very bright. Or could this just be the attitude of a sector in its teenage years?

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The hotel market in the 3 cities is still in its growth stage. This is the likely reason why the hoteliers followed the most obvious trend, that of business tourism, which led to relatively sure and quick profits. With a more diversified offering, correlated with demand, growth toward the maturity stage can be achieved.

References Amariei, R., (2006), ‘Cele mai scumpe orase din Romania’, Capital, no.9, March 2, pg.1, 8-9 Ancutescu, I., (2005), ‘Revolutia economica’, Business Magazin, September 2127, pg.15-21 Forsting, J., Bader, E., (2006), Bucharest Romania: where are the hotel investment opportunities?, www.hvsinternational.com/content/1895.pdf Glodariu, E., (2004), Cluj-Napoca, Noi Media Print, pag.24-30 Iancu, M., (2006), ‘New York-ul se poate intoarce la Cluj’, Foaia Transilvana, November 30, www.ftr.ro/index.php?cmd=d&id=58 Meirosu, F., Onica, S., (2004), ‘Timisoara nu crede in afaceri cu hoteluri mari’, Capital no.20, May 13, pag.30 Neda, M.S., (2006), ‘Constructiile au ‘inghetat’ in Poiana Brasov’, Capital no.21, May 25, pag.4 Oprea, M.,(2004), Brasov, Noi Media Print, pag.11, pag.27 Roibu, I., (2006), Geografie de integrare, Business Magazin, March 1-7, pag.36 L’Expansion, (2005), La deuxieme revolution de Timisoara, , August 31, www.lexpansion.com/art/134.0.133980.1.html Group of Applied Economics, (2005), The Index of European Readiness, December, www.gea.org.ro INCDT, (2005), Program de cercetare de piata privind analiza cantitativa si calitativa a cererii turistice, rezultatele economice si forta de munca in cadrul unitatilor de cazare din Romania, Faza V, pag. 114-120; 129-138; 139-149. National Institute of Statistics – NIS, (2003), Romanian Statistical Yearbook —. (2004), Romanian Statistical Yearbook —. (2005), Romanian Statistical Yearbook —. (2006), Romanian Statistical Yearbook Ziua de Vest, (2005), “Bega Turism va revitaliza 3 hoteluri si va construi un ansamblu residential”, April 5, www.dnttm.ro/index.php?location=modules/new http://en.wikipedi.org/wiki/Biserica_Neagr%C4%83 http://virtualromania.org/places/brasov.vr/places.vr www.brasov.ro www.brasovean.ro

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www.begagrup.ro www.cerbuldeaur.ro www.clujonline.com/ro/economie_dezvoltare www.deepinside.ro/timisoara/cladiri.php www.ici.ro/romania/orase/bv_bisericaneagra.html www.virtualtourist.com

CHAPTER FOUR: ROMANIA’S FUTURE AS A TOURIST DESTINATION

In September 26th 2006 the official announcement regarding the accession of Romania to the European Union was made. The country became a member of the union starting January 1st 2007. This new status generates new opportunities for the development of Romania as a tourist destination and also for the Romanian hotel industry. Especially the flow of European tourists incoming for business purposes is expected to grow. However the status quo registered during the last quarter of 2006 seemed to cast a grey shadow over the Romanian travel and tourism (T&T) sector due to, at least several obvious facts: 9 The National Authority for Tourism (NAT) had no appointed president, after the resignation of the former president at the end of July 2006. The beginning of December 2006 brought further developments when the NAT vice-president was dismissed by the prime-minister (www.realitatea.net, December 6th 2006). 9 The branding process appeared to be stalled for an undefined period of time; at least the media silence on this subject indicated a blockage. 9 Romania still has to struggle with a stained image in the eyes of foreigners. To date, when people say Romania in countries like France, Italy, Spain and Great Britain, the connection is made with illegal emigrants, beggars, prostitution, and other offenders (Iacob 2006a). The political crisis looming during the Fall of 2006 and the wave of restrictions announced by several EU member countries regarding Romania (and Bulgaria) workforce migration did not help the country’s image as a tourist destination. 9 In November 2006, TUI, the biggest European tour-operator, announced that the Romanian littoral no longer figured among its offering for 2007. This behavior was replicated by another important German touroperator, Neckerman (Capital no.46 2006, pg.14).

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Thus, the approaching celebration of the European Union accession brought the appointment of a new NAT president in December 28th 2006 (http://albaiulia.mconet.biz, December 29th 2006). Romania as a tourist destination has, in 2007, ‘an ace in the sleeve’: the municipality of Sibiu, together with Luxembourg, is the Cultural Capital of Europe. Sibiu reached such a position due to a favorable combination of events: first, starting with 2001 two European cities are nominated, every year, as cultural capitals, and second, the historical links existing between the Saxon population in Luxembourg and Sibiu. This was a happy coincidence. No other new EU member country had the chance to be represented in such manner during the first year of their membership. Sibiu’s position as a cultural capital already generated an important step ahead for Romania’s image as tourist destination: the country was ranked for the first time in The Guardian’s top published in The Observer Escape section from January 7th 2007 under the title: The Fabulous 50 for 2007. Sibiu is mentioned as a ‘new horizon’ (http://travel.guardian.co.uk/article/2007/jan/07/escape2). In February 2007, the Romanian Ministry for Foreign Affairs announced its intention to launch an image campaign for Romania. The advertising company GAV-Scholz & Friends was selected to create a framework (named FABULOUSPIRIT) which will be presented in the following pages. This process already generated criticism and comments. However, it proved that Romania’s branding process was not abandoned. Currently, there is no collaboration between Ministry of Foreign Affaires and the Agency for Governmental Strategies, which is in charge, since 2005, with the Branding Romania project. Those are positive developments, but they do not seem to be enough when Romania’s situation is put under scrutiny. In March 2007, World Economic Forum published the Travel and Tourism Competitiveness Report 20071. Romania’s ranked 76th out of 124 countries. When the country’s rank is compared to its main competitors, Romania has the lowest position, as reflected in table no.1.

1

The report was available for download at www.weforum.org/en/initiatives/gcp/Traveland during the month of March 2007. The report includes 124 countries.

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Table no.1: Comparative ranking generated by competitiveness index Country Overall index Sub indexes Regulatory Business Human, framework environment cultural, and natural resources Rank Score Rank Score Rank Score Rank Score Czech 4.75 40 4.80 37 4.13 22 5.32 35 Republic Slovakia 4.68 37 4.86 45 3.81 18 5.37 37 Croatia 4.66 58 4.37 40 4.06 11 5.55 38 Hungary 4.61 26 5.15 51 3.71 51 4.98 40 Slovenia 4.58 44 4.74 38 4.11 53 4.88 44 Bulgaria 4.31 66 4.17 56 3.64 41 5.11 54 Poland 4.18 63 4.22 62 3.50 60 4.81 63 Romania 3.91 87 3.86 74 3.20 71 4.68 76 Source: Travel and Tourism Competitiveness Report 2007, pg.10-11 Note: The ranking includes 124 countries

Romania’s low position, among least intensive tourist destinations, was also pointed out in the Spring 2006 WTTC report on the country. It ranked Romania 162nd out of 174, taking into account the travel and tourism sector contribution to GDP (WTTC Report 2006, pg.4). The information is complete by Romania’s ranking using the following criteria: the international tourist arrivals and the international receipts, presented in table no.2.

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Table no. 2: Comparative ranking using international tourist arrivals and international receipts Country Rank using the Rank using the international arrivals international receipts 1995 2000 2005 1995 2000 2005 Poland 8 11 15 15 20 28 Hungary n/a n/a 20 32 38 41 Czech Republic 29 33 33 33 35 38 Croatia 50 26 24 47 38 24 Slovakia 59 69 69 64 67 56 Slovenia 66 66 67 52 59 59 Romania 64 71 73 67 70 65 Bulgaria n/a n/a n/a n/a n/a n/a Source: Travel and Tourism Competitiveness Report 2007 pag.62 to 64 and UNWTO data available in November 2006

As painful as they are for the Romanian authorities, the reality of these rankings can not be ignored. Romania has the potential to become a destination with a higher rank. What should be done? One part of the answer lays inside the Travel and Tourism Competitiveness Report 2007 (TTCR 2007). On pages 52 - 54, a BCG2 matrix is presented taking into consideration T&T growth policy risk. Romania was included in the section ‘question marks’ or ‘problem children’. For all the countries in this group3 the recommended solution is a large amount of investments combined with policy attention, in order to improve their score. It is the time for Romanian authorities to recognize that only the declarations, and sporadic and uncoordinated actions are not enough for transforming Romania as a tourist destination. Some could argue that now Romanian T&T sector has the strategy elaborated in 2006. However, from that strategy the implementation part, including the responsibilities for central, regional and local authorities, is missing. Until now, Romanian authorities relied on the country’s availability as a tourist destination and expected tourists to choose it. As Zhang & Jensen (2007) study reveals, being available as a tourist destination is a necessary but 2

Boston Consulting Group Other European countries included in the ‘question marks’ group were: Albania, Bosnia and Herzegovina, FYR of Macedonia, Poland, Russian Federation, Serbia and Montenegro, and Ukraine. Only Poland is a direct competitor for Romania. The other direct competitors are either ‘stars’, Czech Republic, Croatia, Hungary and Slovakia, or ‘cash cows’, Slovenia and Bulgaria (Travel and Tourism Competitiveness Report 2007, pg.54). 3

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not sufficient condition for building a prosperous T&T sector. As a consequence, the reliance on this industry as a quick fix for economic prosperity could become a wrong strategy (Zhang & Jensen 2007). While Romanian media pointed out periodically the deficiencies in Romanian the authorities attitudes and actions, those signals were either ignore, or rejected, criticized, and declared untrue. The stronger voice and impartial position of the World Economic Forum, expressed through the above mentioned report, should not be any longer ignored. To develop further the analysis of what Romania can do to become a better ranked tourist destination, a list of destination attributes was used. The check list was proposed by Echter & Ritchie (1993) and adapted by Knowles, Diamantis & El-Mourhabi (2004). It includes 35 functional attributes considered physical and measurable. For the purpose of the present analysis, similar and/ or connected attributes were grouped and explained accordingly.

1. fame/ reputation and 2. extent of commercialization Romania’s reputation as a tourist destination must overcome the previous tainted image which still persists abroad. It is well-known that most people views regarding foreign countries are deeply rooted and cherished. Unfavorable and comical stereotypes outweigh positive news (The Economist 2006, pg.6869, November 11). The present slogan for the country as a tourist destination – Romania, simply surprising entered the market only in 2004. It was not promoted enough and had not the power to overcome more than 10 years of Romania’s image neglection and, as a consequence, its fame/ reputation. The effectiveness of marketing and branding for Romania was ranked 111th in the Travel and Tourism Competitiveness Report 2007 (pg.311). Due to a rather stained reputation, Romania’s extent of commercialization as a tourist destination is low even among domestic tourists4. However, Sibiu’s nomination as Cultural Capital of Europe in 2007 is an event that, if managed correctly, could bring in important improvements to Romania’s reputation. Another fact that could have an impact on the country’s reputation is the campaign of image launched by Romanian Ministry of Foreign Affairs, mentioned above. The chosen advertising company created the general framework and it was named FABULOUSPIRIT. Leaving aside the 4 As mentioned in chapter 1, the campaign to re-launch the domestic tourist started only in July 2006 and its results could not be quantified yet.

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controversies which arose after the concept was launched, it must be pointed out that it has the quality of being unique. It is also in tune with the existing strap line Romania, simply surprising and the idea of spirituality is connected with Sibiu’s position for 2007. FABULOUSPIRIT5 is a complex concept that combines interestingly though intriguing positive and negative elements. Due to its generous opening, FABULOUSPIRIT can incorporate also the controversial Dracula name and myth and make it more acceptable as tourist product. Only one problem still remains: if this framework would be further develop or not, as it was created under the patronage of the dismissed minister for foreign affairs, Mihai Razvan Ungureanu. At the beginning of April 2007, the Romanian government was restructured which could, once again, put the campaign on hold.

3. political stability Among the perceived major barriers of development in Central and Eastern Europe was the political instability (Johnson 2002). This affirmation is true for Romania too. While the democratic regime is unlikely to change, periodical political crisis generated by group and personal interests have a strong influence on the entire economic development. The regulatory framework is volatile, the fiscal policy is unpredictable and the political influences on economic decision are obvious. March 2007 witnessed to the dissolution of governmental coalition and during the first week of April a new government was formed. The message the Romanian politicians sent to the European Union and to the world was negative. This situation is expected to have an important negative impact at least on foreign direct investments in Romania. Despite the declarations regarding the importance of T&T sector in Romania, political struggles downgraded the Ministry of Tourism to the level of national authority, with a weaker position in planning and coordinating the forces needed for a proper development of the T&T sector. Romania’s situation represents a confirmation for the findings of Altinay & Bowen (2006) study which shows that the influence of political stakeholders groups is important in travel and tourism development. Travel and Tourism Competitiveness Report 2007 ranked on 107th place the Romanian government prioritization of T&T industry (pg.311). 5

One specialist in communications and public relations pointed out, during a TV show (Garantat 100%) in May 2007, that FABULOUSPIRIT is a concept which combines the colloquial fabulous with spirit, a word with a deeper meaning. It was also mentioned how difficult it is to work with such a framework.

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The extent and effect of taxation ranked Romania 108th (pg.311). This low rank only shows that the Romanian fiscal policy decision makers preferred to keep unknown the level of VAT for T&T from one year to another. In 2004, 2005 and 2006 the level of VAT for T&T stabilized at 19%6. For 2007, the VAT for accommodation services was reduced to 9%. However, discussions continued about increasing the level to 22% (Popa 2003, Radulescu 2005, Cosmin 2006, Nitu 2006). By the end of September 2006 a new VAT regulation was enacted in Romania. It specifies that a special VAT regime was established, starting with 2007, for T&T sector, reproducing EU models. For the services offered by Romanian tour-operators, VAT will be set to a maximum of 19% and for the accommodation services the reduced level of 9% will be maintained (Doicin 2006). These levels are expected to remain unchanged for several years. While VAT seems to be stabilized, the problem of a higher number of other taxes paid by the companies in T&T sector is still present: around 14 central and 3 local taxes are paid (Societatea Academica din Romania 2004, Moraru 2005, Moraru 2006a). Their level is considered too high and the impact of seasonal activity is not taken into consideration. On a more positive manner, the Travel and Tourism Competitiveness Report 2007 ranked Romania on 67th place from the rules and regulations point of view and the government expenditure for T&T also ranked 58th (pg.311). The fairs attendance placed Romania on 23rd place (pg.311). Unfortunately, the frequent presence at international T&T fairs and exhibitions did not yield the expected results. Romania is not the only country where political power struggles affected negatively T&T planning and development as studies of Hall (1994), Richter (1995) or Doorne (1998) revealed. Thus, this is not an excuse for politicians whose wrong involvement and/ or indifference transformed Romania, a destination with an important tourism potential into a ‘problem child’.

4. economic development/ affluence and 5. costs/ price levels The uneven development at the country level generates discrepancies between the economic situation and the level of services available in Bucharest and several other important cities like Timisoara, Cluj-Napoca, Constanta or Brasov, and the other parts of Romania. The cost and price levels could also be considered relative high inside the developed areas. 6

The VAT for accommodation services is 5% in Czech Republic, Estonia, Latvia and Lithuania; 7% in Poland; 8.5% in Slovenia; 15% in Hungary; 19% in Slovakia (Radulescu 2005)

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However, the economic growth registered by Romania during the last 5 years is likely to continue at a slower pace; it can generate even a more balanced development at the country level. This situation can create the conditions for an increase in tourist affluence. The prices for various products and services are at a similar level with the European Union. Thus, the prices for access to cultural events and other cultural or historical points of interest are low or very low.

6. degree of urbanization, and 7. cities In Romania, only the capital, Bucharest, has a population of 1.93 million. The gap between the capital and the next municipality is around 1.6 million persons, as table 1, chapter 3, shows. The total number of local communities, registered at the level of 2005, was of 16,112 (NIS 2005). The number of towns was 212 and the number of municipalities was 103. The difference is represented by communes and villages. The small dimension of Romanian towns allowed the conservation of historical centers. However, the uneven development affects these towns; there the banking network is weak, the availability of ATMs7 is low and the situation is the same for Internet access. The quality of medical services is also relatively low, in direct correlation with the level of development. From tourist point of view, the entertainment and leisure facilities decrease in number and quality in correlation with local community dimension.

8. accessibility and 9. local infrastructure and transportation Bucharest and the municipalities with over 100,000 peoples are relatively easy to reach by air and by train. Even the international connections are reasonable. This situation is confirmed by the Travel and Competitiveness Report 2007; the number of operating airlines and the railroad infrastructure ranked Romania on the same 54th place (pg.311). Despite this good ranks, Romania loses ground when the airport density is taken into consideration; here it ranked 97th (TTCR 2007, pg.311). The public transportation inside most Romanian municipalities is reasonable safe, affordable and frequent. Buses and local trains allow the connections with 7

Travel and Tourism Competitiveness Report 2007 ranked Romania on 50th place on what the ATMs accepting VISA cards are concerned (pg.311). This relative good place is due to the important number of ATMs existing in Bucharest and in cities with over 100,000 peoples.

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smaller towns and villages. Thus, the information regarding the frequency and the timetables for local buses and local trains are barely available on Internet; when available the information addresses mainly to Romanians and is not oriented to enhance tourist activities. Domestic transportation network situated Romania on 83rd place (TTCR 2007, pg.311). The Romanian road infrastructure is poor and highways/ motorways are absent. As a consequence, the time dedicated to travel by car is longer than in other neighboring countries, since the main roads are overcrowded. The streets network in most cities and towns is old and do not support the increased number of automobiles. Parking spaces represent a major problem. A strong correlation exists between the development level of a local community and its accessibility; for less developed communities the frequency of public transportation is low. However, the disadvantage of obsolete and underdeveloped road infrastructure generates a positive outcome: historical sites and natural areas remained relatively unspoiled by mass tourism. In Romania the number of these areas is still important. An intelligent approach can generate a balance and sustainable development of T&T sector in correlation with the level of accessibility.

10. shopping facilities and 11.nightlife & entertainment Important shopping facilities have been developed, during the last 5 years, in Bucharest and several other important Romanian cities. The shops offer international and local brands. The nightlife has an important dimension in Bucharest, where a combination of local and international shows can be seen. As the city dimension decreases, the variety of nightlife entertainment reduces also. At the country level the number of cinemas was only 85 in 2005 and the number of the total number of theatres, opera houses, and philharmonics was 146 in the same year (NIS 2005). Bucharest concentrates an important number of such entertainment facilities. While the number of these facilities is lower in other cities, the performances offered can be more diverse and interesting, but address mainly Romanian public.

12. sport facilities and activities Although Romania had important results in sport disciplines like tennis, gymnastic, athletics, handball or swimming, the tourism or sport authorities do not capitalize on this advantage.

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The number of sporting facilities which can host international competitions is very small. As a result, few international competitions are organized in Romania; they have a low profile, low promotion and, often, only regional public attended. The situation was generated by the high level of investment needed to maintain and modernize the existing facilities, combined with the neglecting attitude of local authorities toward sports competitions. However, in the last 3 years some modernization were made mainly to stadiums dedicated to football competitions. Several golf courses were also developed. Upper-class hotels offer tennis and other type of courts to their clients. If the existing sporting facilities will be modernized in the years to come, the number of sporting competition, including international ones, could increase, triggering a flow of tourists interested by sport events. During 2006 the situation changed slightly; a Champion’s League football match was hosted by Bucharest. In May 2007 a car race for Formula 3 was also organized in the Romanian capital.

13. facilities of information & tours and 14. ease of communication The situation of tourist information centers (TICs) in Romania was presented in chapter no.1 and a list of existing TICs is available in annex no.2b. The intention of National Authority for Tourism to establish a TICs network will only enhance the facility of information for tourists. However, currently TICs are absent from Bucharest and other important cities. Meanwhile, the educated population from those cities spoke at least one foreign language, which can facilitate the communication with foreign tourists. The number of people speaking a foreign language is lower in less developed cities or towns. The information available on the official website for Romanian tourism is rich and pertinent, but it needs a better structure and a more attractive presentation. The offer for tours in Romania is relatively limited. Where the offer exists, it targets mainly niche tourists, and is usually recommended by other tourists who already tested the product. As of 2005, the number of fixed phone subscriptions was of 4,391 thousands, while the number of mobile phone subscriptions was of 13,354 thousands (NIS 2006). The extent of telephone lines placed Romania on 59th place and the internet users placed the country on 49th rank (TTCR 2007, pg.311). In general Romania offers a relative ease of communication. In this case too, the correlation between the communication facilities available and the level of development of a destination exists.

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15. scenery/ natural attractiveness, 16. national parks/ wilderness activities, 17. beaches, 18. climate, 19. crowdedness, 20. tourist sites/ activities and 21. opportunity for adventure The Romania’s balanced and diverse landscape offers opportunities for a wide range of tourist activities: from sun or mountain tourism, to spa and wellness, and to adventure tourism. The climate is temperate and allows tourist activities all year round. At the level of 2005 a number of 26 natural parks, 617 natural reservations, 55 scientific reservations, 234 natural monuments and 3 biosphere reservations (two on mountain areas and the Danube Delta) were registered (NIS 2006). Romania also fosters half of European bear population, one third of continent’s wolfs and around 33% of Europe’s lynx population (WTTC Report 2006, pg.14). As a result, for its natural (and cultural) resources Romania ranks 46th in the Travel and Tourism Competitiveness Report 2007 (pg.16-17). Due to this fact most Romanian tourist destinations are neither appropriate, nor prepared for mass tourism. Therefore, Romania is well placed to develop a range of niche tourism products mainly within the mountain areas, in the segment of adventure tourism and eco-tourism, like: hiking, rafting, hunting, photo-hunting, etc. During the last 2 years a new trend became visible: the combination of team-building trips and adventure tourism. The trend was initiated by international companies with branches in Romania and followed by Romanian companies (Dumitru 2006b and Moraru 2006b). The development of niche tourism asks for investments in a range of special facilities, entertainment and leisure facilities. To the date, the number and quality of such facilities in Romania is inadequate, influences the quality of tourist products and put the destinations under the ‘dictature’ of seasonality (Iancu 2004). However, World Economic Forum evaluation ranked Romania only on the 80th place for natural protected areas (TTCR 2007, pg.311). The low level of business concern for ecosystems yielded the 87th place and the damage generated by carbon dioxide generated 95th rank (TTCR 2007, pg.311). All this information indicates that the Romanian authorities must make better efforts to protect the environment and to preserve the special characteristics of various areas, in order to develop sustainable forms of tourism. Romania should learn the lesson from Cyprus. In Cyprus, unplanned tourism development damaged and endangered indigenous flora and fauna, and created architectural pollution (Ioannides & Apostolopoulos 2000). Bulgaria struggles also with environment degradation in several mountainous areas and the situation should not be replicated in Romania (Gheorghe 2006). The traditional Romanian tourist destinations: Black Sea littoral and Prahova Valley are overcrowded during season peaks. Thus, a change in domestic

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tourists’ preferences was observed in 2006 when they chose mainly mountain areas where facilities for spa tourism were also available; these preferences increased the popularity of Olt Valley spa resorts, and the mountain and spa resorts form Covasna and Harghita counties (Roibu 2007a). While this trend is likely to continue, the rediscovered resorts are in danger to become crowded too.

22. historical sites & museums and 23. architecture & buildings Six out of 7 World heritage sites registered in Romania are historical and have unique architectural features. Add to these, all over the country historical sites or historical buildings could be found. The variety of architectural styles generated a portfolio of interesting attraction points. Already some of Romanian historical buildings were used as locations for films or TV series8. The drawback is represented by the neglection9 of historical buildings for years, generating a high degree of degradation. Due to this, the tourist potential of the areas where historical buildings were concentrated remained low (Amariei 2005, Iacob 2006, Rizea 2006). During the last 2 years, the collaboration between the local authorities and private investors in rehabilitating historical centres and buildings became stronger. The results are expected to appear in Bucharest, Timisoara, and Cluj-Napoca. They are already obvious in Sibiu and Brasov. The number of museums in Romania increased from 450 in 1990 to 667 in 2005 (NIS 2006) providing opportunities to increase knowledge for those interested. Despite this growth, the number of visitors remained almost the same: 10,511 thousands in 1990; 10,488 thousands in 2005 (NIS 2006). The Romanian museums are under the patronage of Ministry of Culture and the weak cooperation with NAT and local authorities is obvious. In several cities, the museums are trying to become more attractive by hosting temporary exhibits and small concerts.

8

One recent example is Huniazi Castle from Hunedoara which was used for the settings of a French historical TV series: Les Rois Maudits (The Cursed Kings). 9 The main motives for this neglect were the lack of funds and the fact that Romanian authorities had to give back many buildings to their owners. As a result, not even basic maintenance was provided.

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23. fairs, exhibits, festivals, 24. customs/ culture and 25. different cuisine/ food & drinks Fairs and exhibits are organized all year round in Bucharest and the other main cities. Their profile is mainly business and attract the tourists accordingly. A wide range of cultural festivals exists also. Some of these festivals, like: 9 Enescu Festival, for classical music (has its own advertising campaign in 2007); 9 Cerbul de aur (Golden Stag) Festival from Brasov, for modern music; 9 Transylvania Film Festival are already known at international level. Other festivals, mainly folk festivals, are organized in various locations, in all Romanian regions. The main problem with these festivals is that they are addressed mainly to local people, and are not explained and presented in order to attract a wider audience. The same problem was highlighted in the case of Poland by the study of Hugues & Allen (2005). For the Romanian folk festivals the promotional campaigns lack also. The event coordinators and NAT do not collaborate well on this subject. As WTTC 2006 report states, the Romanian culture is rich, with a folklore part well developed, harboring a variety of local and regional customs with ancient roots. The situation of local and regional customs is similar to that of folk festivals and they would present little interest even for Romanian tourists if better efforts to explain and promote them are not made. On what food and drinks are concerned, Romania is already known for its strong alcoholic drink ‘tuica’ or ‘palinca’. Several traditional dishes, among them ‘sarmale’ (stuffed cabbage), are also known. A number of Romanian wines are appreciated by connoisseurs. Currently, only one Romanian brand for ‘tuica’ or ‘palinca’ is known (Tuica de Zalau10). While several sorts of Romanian wines are known by small groups, no strong brand was developed by any Romanian wine producers. On top if it, the proposed tourist project ‘Wine route’ did not yield important results. The Romanian traditional cuisine can be seen by some as rich and heavy, not in tune with the actual trends for healthy and lighter food. However, the dishes in the country side use local agricultural products and can be very interesting for tourists in search of new experiences.

10

Zalau is the capital of Salaj county, situated in Transylvania and included in North-West region.

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27. opportunity to increase knowledge All the attributes presented above (from 22 to 26) represent opportunities to increase knowledge about Romania for every tourist. However, one problem is the absence of information about these attributes in English, German or French languages; another problem is represented by rough translations, not appealing to or difficult to understand by tourists. However, in the last 5 years, the number and variety of albums and books, presenting Romania, Romanian regions or various aspects of country’s culture, available in bookshops increased. It is a progress compared with the situation of the 1990s, but is still not enough to promote the Romanian cultural heritage. While cultural tourism always existed, it was identified as a new market in the last quarter of 20th century. Since then, it became a trend reflecting the changes in tourist needs and tastes (Richards 2001). The study of Williams and Balaz (2000) revealed the Central and Eastern Europe countries’ potential to capitalize on the shift from standardized mass tourism, to more individualize forms, like cultural and heritage tourism. The study of Hugues & Allen (2005) showed that Bulgaria, Croatia, Poland and Hungary targeted cultural tourism. These countries are Romania’s direct competitors in the tourism market. However, Romania can follow the same path due to the fact that cultural tourism allows every country to reveal its unique features as a tourist destination. Cultural features can also create the much needed differentiation, along with being a vehicle which can produce and promote a favorable image for a country (Hugues & Allen 2005). Romania poses attractive cultural resources, which represent the core of cultural tourism development. The opportunity to open a wide window on the Romanian culture also exists. It is represented by Sibiu, as Cultural Capital of Europe for 2007. Through cultural tourism Romania can improve its reputation as a tourist destination. Romanian authorities in charge with tourism should understand that cultural tourism can be both an independent product or a complementary product for other forms of tourism. The WTTC made also recommendations for developing cultural tourism in Romania. A diversified portfolio of cultural tourism products could be developed. It can include wine routes, religious tourism, festivals, UNESCO heritage site tours, or literary tours, even tours based on the Dracula theme. The development of these products needs imagination, flexibility and cooperation between various stakeholders involved in cultural resources management. Until now, Romania presented its cultural resources and historical heritage in a rather boring manner; this approach has to change.

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28. personal safety and 29. cleanliness For safety and security Romania ranked 72nd by Travel and Tourism Competitiveness Report 2007; the country was ranked even lower when health and hygiene criteria was considered, on the 99th place (pg.16-17). Despite these low ranks, in Romania the criminality rate does not affect foreign tourists or tourists in general if they stay in the areas considered safe by local people. The degree of cleanliness also increased during the past 5 years. The situation improved mainly in the big cities, but also in rural areas. However, isolated incidents can affect Romania’s image. The quality of medical services varies at the country level. The best medical services are offered in Bucharest and other university centres like Cluj-Napoca, Timisoara or Tg.Mures. One positive aspect is that emergencies, the patient can be relocated by air transport to the best hospitals in the country. Another positive aspect is represented by the low incidence of malaria, yellow fever and HIV prevalence, as showed in Travel and Tourism Competitiveness Report 2007. Romanian authorities should communicate better with the media in those situation that affect the personal safety. In 2006, the avian flu was detected in Romania. While the spreading of the flu was reasonable controlled, the official communications were made only under media pressure. When the crisis was over, by the beginning of the summer, the authorities forgot to announce that Romania is a safe tourist destination. As a result an important number of tourists was lost (Nitu 2006).

30. hospitality/friendliness/ receptiveness The spirit of hospitality exists and Romanians are proud to say they offer a ‘traditional hospitality’. Thus, in some cases the Romanian hospitality could be considered suffocating due to excessive attention dedicated to foreign guests. Other times, hospitality is spelled as large quantity of food and drinks for meals. In general, Romanians could be considered friendly and helpful. Usually a number of people are willing to try to help anyone in distress. Regarding the receptiveness, Romanians respond better to suggestions which have a direct impact on their own personal interest. If criticized, Romanians respond poorly, sometime they are even offended even if the criticism is justified. In such cases, a lots of excuses would be formulated but no responsibility will be assumed. The Romanians’ degree of receptiveness to feedback should improve for an increase in the quality of services.

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31. quality of services While the general quality of services improved gradually during the last several years, there is still a long way to go. Where franchising contracts or management contracts exist, the service quality is adequate. However, the quality of services in T&T sector was one of the main complains formulated by foreign tourists and revealed by NAT studies (Societatea Academica Romania 2004, NAT newsletters July 2004-June 2005). This situation is somehow contradictory with the declared spirit of hospitality. At a closer look, it must consider the fact that in Eastern and Central Europe the service sector was a ‘non-productive’ one and an indifferent attitude toward the quality was a logical consequence (Johnson 2002). The low quality of various services connected with the hospitality sector on the Romanian littoral determined TUI to eliminate it from its list of destinations for 2007. It is a statement which should not be ignored. Romanian companies from T&T sector must understand that the quality of services is a prerequisite for survival and success in today’s world (Ghobadian, Spellers and Jones 1999).

32. atmosphere (familiar versus exotic), 33. restful/ relaxing and 34. family or adult oriented The general atmosphere of Romania as a tourist destination could be defined as familiar for the European tourists who come for business, cultural and heritage tourism, and leisure. Some exotic elements can be highlighted for those tourists who come ‘in search of Dracula’ or for tourists from Southeast Asia coming to experience the seasons like autumn or winter, in combination with cultural tourism. The small number of entertainment facilities, the absence of amusement parks and other forms of leisure dedicated to children feature Romania, to the date, as a destination for adult tourists only. The level of relaxation or stress which can be experienced depends on tourist’s choice. The traditional Romanian destinations can be stressful during season’s peaks. At the same time, there are numerous spa and mountain resorts suited for relaxation in beautiful surroundings. Romania should capitalize on the combination it can offer based on around 1,300 registered sources of mineral water, either drinkable or available for cures (WTTC 2006, pg.40) and the position of these sources mainly in mountain areas. The tradition of some of these resorts could be traced back in the 19th century or even older. Spa treatments could, also, be combined with Ana Aslan geriatric products.

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Until now, Romanian spa resorts were sold mainly to domestic senior citizens or low income individuals, usually trade union members (Ciuraru & Iancu 2006, Tudor 2006b). The motivations lies in the communist past, when the accommodations in spa resorts were dedicated mainly to the members of trade unions and treatments were offered at reduced costs. The spa resorts ended up suffering from lack of investments. This phenomenon was common in almost all spa resorts existing in former communist countries as the studies of Baum (1995) and Johnson (2002) revealed. As presented in chapter no.2, the core of accommodations in Romanian spa resorts is owned by companies connected with trade unions. Further delay in investments occurred due to the late start of privatization, but also to the opaque process through which the access to mineral water sources was allocated for those operating the treatment facilities. For a better exploitation of the Romanian spa resorts potential, it is time to focus on spa & wellness products, to offer them to tourists with higher purchasing power. Of course, the present tourist categories should not be forgotten. The program for developing spa resorts and its dedicated budget was announced by NAT in 2006 and the money should be spent until 2008. However, it is still not clear how the money should be divided between numerous spa resorts (Ciuraru & Iancu 2006). Romania has competitive medical services in the spa resorts and it also has rich natural resources. These create the central point of the offer. Thus, in the creation process of new products, the present boom registered in the wellness sector and oriented toward wellness lifestyle should be understood. In combination with spa treatments, several subcategories of wellness surfaced, like: behavioral therapy, spirituality, traditional and alternative medicine, and nutrition and beauty (The Economist 2007). While the advances in international trends are important, Romanians are reluctant to embrace new trends which can bring a new life to the almost forgotten spa resorts. One case is that of Borsec resort in Harghita county, where a group of investors from Israel announced in 2006 their intention to develop a complex spa and treatment center. For now, the project is stalled because the local authorities declared there are no funds available for the development of road infrastructure, a request formulated by the foreign investors as a condition for their investment (Scarlat 2006). The development of spa & wellness tourism in combination with mountain tourism can enhance the relaxing features of Romania as a tourist destination.

35. accommodation/ restaurants The need for an appropriate accommodation base at every tourist destinations is obvious; it is also an important evaluation factor (Gennest & Legg 2001). More and more countries, especially in the developing part of the world, have realized

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that better hotel facilities and tourism infrastructure are important factors in attracting more arrivals (Zhang & Jensen 2007). The study of Johnson (2002) for Eastern Central Europe11 indicated that, at the beginning of 1990s, the hotel portfolio covered the lower and mid-market segment; the hotels also were not up to international standards. Romania’s situation was similar. There was only one exception: the presence of InterContinental brand in Bucharest since the 1970s, due to a temporary openness of the communist regime. As presented in chapter 2, the first half of the 1990s registered a stagnation in Romania’s accommodation base development. The reasons were, as mentioned, the delay in privatization which postponed the investments, and the important amount of funds needed for an accommodation development combined with the poor offer of bank loans for investments. The second half of the 1990s witnessed the apparition of the first private accommodations and the first hotels operated under an international brand name. The late entry of international hotel chains in Romania was similar with the situation in the countries mentioned in the footnote no.8 (below). The hotel international chains explained they considered the region as an uncharted territory. As a result, their entry method was a non-equity one, represented either by franchising contracts, or by management contracts (Johnson & Vanetti 2005). The total number of Romanian accommodations is satisfactory, as presented in chapter no.2 and confirmed in a study of Ariton (2006). The situation is evaluated accordingly in the Travel and Tourism Competitiveness Report 2007 where Romania ranks 50th from tourism infrastructure point of view and 51st when the hotel rooms are taken into consideration (pg.311). Thus, the spread of accommodations at the country level is uneven. They are concentrated mainly on the Romanian littoral and in Prahova Valley, reflecting the former traditional tourist products (WTTC Report 2006). In the past 5 years the accommodations started to develop in Bucharest and several cities with over 100,000 people. The cases of Brasov, Timisoara and Cluj-Napoca were presented in chapter no.3. The new small hotels and other types of lodging completed the obsolete portfolio of hotels and increased the overall lodging capacity. Another aspect of the accommodation base development became obvious since 2004. At least one study mentions the chaotic development of lodging establishments, based on wrong, strange or odd motivations (Bilant 2006). At the end of the 1990s, hotel industry was considered by many domestic investors 11 The countries included by Johnson (2002) in its study were: Czech Republic, Hungary, Poland, Slovakia and Slovenia.

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a sector with potential for growth. As a result, the development of accommodations started as a way to diversify those investors’ businesses. Too often, the decisions were based also on (Roibu 2007b): 9 The idea that it is trendy to own a hotel or another type of accommodation; such a position is considered to enhance the personal image of the owner/ owners; 9 The business partners would become the main clients of the new accommodation; 9 The availability of land; the location was not considered an important criteria; 9 The personal ‘competition’ with another hotel owner, generating a ‘star’ battle; the new hotel/ accommodation should be bigger and be classified higher (having more stars) than the rival’s hotel; these kind of decisions were taken regardless of demand and other factors influencing the efficiency. The same study (Roibu 2007b) states that only around 1/3 of the newly build hotels were done in a professional manner. All these elements confirm the findings presented in chapter 2 and 3. They reflect that already the accommodations for the economy markets segment are already decreasing in number in Bucharest (Ariton 2006) and other cities like Brasov, Timisoara and Cluj-Napoca. Due to the concept complexity, the segment of apart-hotels is also almost ignored due to unexploited demand. The accommodation development based on the motivations presented above generated another drawback: little or no attention was paid to differentiation features. While there are Romanian hotels functioning in historical buildings or in buildings with interesting architecture characteristics, those elements are either ignored, or forgotten in the promotional materials. The new built accommodations have the tendency to copy the competition as the study of Pop & Cosma (2005) revealed for Cluj-Napoca. The number of Romanian hotels which tried to be different is relatively small, but represents a beginning. Among these hotels is worth mentioning the boutique segment12 located mainly in Bucharest (Smadeanu 2007). Between January and March 2006 the idea of an ice-hotel was copied in Romania too. The hotel was opened in Fagaras Mountains and, as any new idea, generated a bureaucratic problem with the constructions authorities. However, it demonstrated that investors with a passion for fresh ideas in hotel development exist, even the dimension of this group is small. 12

The first boutique hotel opened in Bucharest during 2000 is Parliament Hotel; in 2003 Opera Hotel and Venetia Hotel were opened; in 2004 opened Tiny Hotel and El Greco Hotel, followed by Rembrandt Hotel in 2005 and by Moxa Hotel in 2006 (Smadeanu 2007).

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Another problem regarding Romanian accommodations is represented by rural pensions development. In the last several years, since the number of these lodgings increased rapidly, the idea of traditional elements was forgotten. Many new rural pensions look rather like modern houses in a city rather than a traditional lodging establishment. This architectural pollution (Dogaru 2006) will only drive away the tourists. Those tourists with an interest in rural areas are not looking for 4 or 5 stars accommodations, but for lodgings in harmony with the space they are located in and genuine rural services (Albacete-Saez, Fuentes-Fuentes and Llorned-Montes 2007). The Romanian hotel & restaurant sector can be considered fully privatized, as WTTC report from 2006 mentioned. This could be considered an advantage, creating competition among market participants. However, the wrong decisions on which accommodations were built and opened, generated the absence of a proper market strategy. Another unwanted situation is also frequent: owners without knowledge in hotel management are dictating to hired managers what and how to do (Ariton 2006). This attitude is often combined with a short-term orientation and inducing a high level of anxiety for hotel managers (Bogdan 2006), generating a low level of performance (Bilant 2006). The yield management is virtually unknown in Romanian hotels or accommodations. The absence of a market strategy implies the lack of a price policy. Romanian hoteliers establish their prices according to their competitors. The room rates are not flexible and do not encourage to increase the occupancy rate. Only a reduction of 10% can be obtained through negotiation at the reception desk. Other price reductions must be negotiated with hotel manager or hotel owner. Even so, seldom a higher discount is offered, despite a potential increase in occupancy rate. The rigid attitude toward prices keep the Romanian hotel room rates at a high level, situation mentioned mainly for Bucharest by WTTC Report from 2006. Starting with 2005 there is a pressure of competition for hotels represented by networks of private rooms and apartments for rent (Cojocaru 2006). It is expected to generate either a drop in hotel room rates, or an increased service diversity included in the accommodation price. The room rate level in Romanian accommodations is often not correlated with the quality level of services. The conditions for having quality standards are in place, as WTTC Report (2006) mentioned; the star grading/ classification for accommodations is imposed by law. NAT initiated also a program for Q label implementation. Thus, the classification criteria consider mainly physical aspects of the accommodations and do not evaluate the quality of service. Regarding the Q label implementation program, no official reports were available on its progress. The normal consequence is the low level of standardization regarding the quality of accommodation services (WTTC Report

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2006). Another cause for this situation is represented by the human capital. The attitude of ‘studied indifference’ manifested by hotel employees was dominant in all former communist states, as the studies of Hall (1998) and Johnson (2002) highlighted. Romanian makes no exception. Since 2000 to this problem, that of the migration of qualified workforce added (Bilant 2006). For the remaining staff, Romanian hotel owners and/ or managers failed to transmit their commitment to ensure the quality of services. Exceptions exist, but they are very few. Romanian hoteliers are either forgetting or ignoring the fact that quality in service brings positive word-to-mouth (Berry, Bennet and Brown 1989) which can differentiate their accommodation. It is also ignored the fact that courtesy and competence of hotel personnel is one of the most important attribute influencing the perception of quality (Akan 1995). All these can create custom loyalty, another element not taken into consideration by Romanian hoteliers. Due to Romanian managers and hotel owners short-sided vision, the hotel sector lacks complex services, like all-inclusive. This kind of services were the ‘key’ of success for the hotels located on Bulgarian littoral. In the last 2 years, they attracted an important number of tourists, being a tough competitors for Romanian hotels at the Black Seaside. Despite this, in 2006 only one hotel13 on the Romanian littoral offered all-inclusive. All the other hotels offered fragmented services with supplementary costs for the tourists (BBW 2006). The level of quality in accommodation services is expected to increase as the penetration rate of international hotel chain will grow. A positive change in attitude of Romanian hotel owners toward affiliation to an international brand was registered starting with 2005. Until 2004 the idea of affiliation was rejected due to the fear of loosing independence. By the end of 2006 the advantages of such an affiliation became obvious to many. Currently, Romanian hotel and restaurant sector proved to be one with a relative low rate of failure: only 2.3% of total number of bankruptcies registered in Romania in 2004; the same level was registered in 2005 (COFACE Romania 2005). In the years to come the transactions with hotel properties are also likely to grow, as some hotels still owned by the company in charge with State patrimony, will be sold. The intention to sell 3 such hotels was made public at the end of 2006 (Dumitru & Stamate 2006).

13

Tismana Hotel, classified at 3 stars, offered all-inclusive services in 2006. The reason behind this fact is the German nationality of the main hotel owner (Dumitru 2006).

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The transactions with hotel company shares are expected to increase at Bucharest Stock Exchange, on the main market. The second hotel company start listing in March 200714. The hotel & restaurant sector misses another ‘ingredient’ which could help improving the image of Romania as a tourist destination: a strong hotel brand. Some could argue that it is not true. The present study could find only one Romanian hotel group, Continental Hotels, which tried to launch a brand. For now, the results are not visible. To differentiate itself as a tourist destination, Romania could use the help of one or several national brands in accommodation sector. A hotel brand which combines history, tradition and quality will have an important impact on tourists’ choice. A voluntary hotel chain, similar to Logis de France, will be a good idea for affiliating at least the rural pensions with traditional features. This will be possible only if Romanian regulation framework regarding the classification of accommodation will become more flexible, will integrate special definitions for historical hotels or hotels developed in historical buildings, and must enhance the idea of authenticity in rural areas. The respective framework needs to include also standards for quality in accommodation services. The present study did not concentrate on Romanian restaurants. However, the number of food & beverage facilities of all types is growing. As in the case of accommodations, their classification is imposed by regulations, but NAT is understaffed and has problems tracking down and classifying these facilities, mainly in the big cities. For now, the restaurants opened in historical centres of Romanian cities or towns or within the green areas outside the cities proved to be successful. Similar to hotel sector, no visible brand occurred in restaurants segment. At the present moment, Romania is at an important crossroad. It can either capitalize on the chance Sibiu offers in 2007, change its reputation and construct a favorable image, or can lose the momentum again. Romania can count on 4 tourist products: ¾ Spa & wellness tourism; ¾ Geotourism, which embraces the conservation of natural environment, support the traditional products and culture and includes cultural

14

The only hotel company present on Bucharest Stock Exchange main market between 2003 and 2006 was EFO (Turism Hoteluri si Restaurante Marea Neagra SA). Since March 2007 the second hotel company on this market is TUFE (Turism Felix SA). Both companies are presented in chapter 2.

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heritage. In September 2005, Romania became the 3rd country in the world to sign Geotourism Charter with National Geographic; ¾ Cultural tourism; ¾ Business and MICE (meetings, incentives, conferences and events) tourism. This a growing segment, correlated with the Romania’s pace of development. While Romania’s main competitors in world tourist market develop similar tourist products, Romania can differentiate itself highlighting specific features. Romania can also offer a complex tourist product, including all the 4 components presented above or in any combination, depending on the region or area profile. If the regional or local authorities want to develop a village, a town or a city as a tourist destination, the example of Sibiu should be inspiring. The projects and programs might be stalled at central level, but Sibiu authorities demonstrated that determination, leadership, creativity and good personal relations can put a destination on the map. Once the official announcement that Sibiu was nominated as Cultural Capital of Europe for 2007, the foreign investors came in and funds from Romanian central budget were also allocated for the event. The creation of Romanian new tourist products must be supported by market research to ensure their success. The position of Romania as a tourist destination can be enhanced by a better correlation between the tourist products and the real situation of the country. Integrated efforts of all authorities are also needed. The time of declaration have passed and coherent actions, focus and willingness are necessary to improve Romania’s rank as a tourist destination. If all the lessons from the past will be learned, the Romanian T&T sector development should yield the results forecasted by WTTC.

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Baum, T., (1995), Managing human resources in European tourism & hospitality industry, Chapman & Hall, London Berry, L.L., Bennet, D.R., Brown, C.W., (1989), Service quality: a profit strategy for financial institutions, Dow-Jones IRWIN, Homewood, IL Bogdan, S., (2006), Inteligenta emotionala distruge mitul IQ-ului ridicat, Capital no.37, September 14, pg.42-43 Ciuraru, D., Iancu, L., (2006), Statiunile balneare sunt trimise la tratament, Capital no.41, October 12, pg.19 Cojocaru, O., (2006), Piata rezidentiala a intrat in regim de detentie hoteliera, Saptamina financiara, December 18, pg.23 Cosmin, M., (2006), Turismul, TVA-ul si scandinavii, Realitatea Romaneasca, February 20, 2006 Dickson, D.R., Ford, R.C., Upchurch, R., (2006), A case study in hotel organizational alignment, International Journal of Hospitality Management, vol.25, pg.463-477 Doicin, A., (2006), Turismului i se ofera TVA preferential, Capital no.39, September 28, 2006, pag.40 Dogaru, G., (2006), Craciunul se poate petrece la tara, Saptamina financiara, November 6, pg.42 Doorne, S., (1998), Power, participation and perception: an insider’s perspective on the politics of the Wellington Waterfront Redevelopment, Current Issues in Tourism 1, pg.129-161 Dumitru, E., (2006a), Litoralul romanesc invata sa pronunte “all-inclusive”, Capital no.40, October 5, pg.30 —. (2006b), Sporturile extreme ridica adrenalina, Capital, no.40, October 5, pg.43 Dumitru, E., Stamate, A., (2006), Protocolul de stat scoate la vinzare cladiri celebre, Capital no.48, November 30, pg.18 Echter, C.M., Ritchie, J.R.B., (1993), The measurement of destination image: an empirical assessment, Journal of Travel Research, 31, 4, 3-13 Elliott, A., (1997), Tourism: politics and public sector management, London, Routledge Genest, J., Legg, D., (2001), Premier-ranked tourist destinations: development of a framework for analysis and its self-guide workbook, http://bibemp2.us.es/turismonet1/economia%20%del%20turismo/demanda% 20turistica/premier%20ranked%20tourist%20destination.pdf Gheorghe, L., (2006), Bulgaria imbina turismul cu investitorii, Bilant, November, pg.74-75 Ghobadian, A., Spellers, S., Jones, M., (1994), Service quality: concepts and models, International Journal of Quality and Reliability Management, 11 (9), pg.43-46

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Hall, M., (1994), Tourism and politics: policy , power and place, Chichester, Wiley —. (1998), Tourism development and sustainability issues in Central and SouthEastern Europe, Tourism Management, vol.19, no.5, pg.423-431 —. (2000), Tourism planning: policies, process and relationships, Harlow, Prentice Hall Hugues, H., Allen, D., (2005), Cultural tourism in Central and Eastern Europe: the view of ‘induced image formation agents’, Tourism Management, 26, pg.173-183 Iancu, L., (2004), Anul acesta turismul mioritic a crescut in jos, Business Magazin, Nov.24-30, pg.63 Iacob, M., (2006a), Brandul de tara ramine un vis frumos, Bucharest Business Week (BBW), September 18-14, 2006, pag.2 —. (2006b), Potentialul turistic al Capitalei ramine putin vaforificat, BBW, December 11-17, pg.15 Ioannides, D., Apostolopoulos, Y., (2000), Political instability, war and tourism in Cyprus: effects, management and prospects for recovery, Journal of Travel research, 38, pg.51-56 Johnson, C., (2002), Locational Strategies of International Hotel Corporations in Eastern Central Europe, PhD thesis, Faculty of Economic and Social Sciences, University of Fribourg, Switzerland, http://ethesis.unifr.ch/theses/downloads.php?file=johnsonc.pdf Johnson, C., Vanetti, M., (2005), Locational strategies for international hotel chains, Annals of Tourism Research, vol.32, no.4, pg.1077-1099 Knowles, T., Diamantis, D., El-Mourhabi, J.B., (2004), The Globalization of Tourism and Hospitality, Thomson, US, pag.115 Moraru, V., (2005), Turismul – imaginea unei politici (ne) conturate: Strategia de a avea strategie, Piata Financiara, October 2005, pg.98-100 —. (2006a), Destinatia Romania, Piata Financiara, February 2006, pag.72-74 —. (2006b), Teambuilding cu adrenalina, Saptamina Financiara, Nov.27, pg.28 Nemec Rudez, H., Mihalic, T, (2007), Intelectula capital in the hotel industry: a case study from Slovenia, International Journal of Hospitality Management, vol26, pg.188-199 Nitu, M., (2006), Turismul romanesc in concediu, Gindul no.350, June 23, www.gandul.info/2006-06-23/turismul_romanesc Pop, C., Cosma, S., (2005), Cluj hotels’ distinctive features, Studia Negotia, no.1, pg.82-92 Popa, N.V., (2003), Turismul este tras pe linie moarta, August 27, www.pnl.ro/index.php?id=dp1246 Radulescu, L., (2005), Posibila majorare a TVA tine turistii acasa, Capital no.27, July 7, pag.24

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Richards, G., Editor, (2001), Cultural attractions and European tourism, CABI, Wallingford Richter, L., (1995), Tourism politics, what has changed?, Contours7, pg.20-27 Roibu, I., (2007a), Schimbare de traseu, Business Magazin, March 7-13, pg.2627 —. (2007b), Am hotelul meu, Business Magazin, March 14-20, pg.28-31 Scarlat, C., (2006), Evreii investesc la Borsec, Ziua, October 30, http://www.ziua.ro/display.php?id=210048&data=2006-10-30 Smadeanu, A-M., (2007), In Bucuresti, hotelurile boutique sunt ‘chic’, Capital no.10, March 8, pg.19 Stoica, G., (2006), Copos: valoarea societatilor noastre s-ar putea tripla in 2007, Saptamina financiara, December 4, pg.20 Tudor, C., (2006a), Ramada Bucharest North isi deschide portile, BBW, Oct.30 – Nov.5, pg.17 —. (2006b), Statiunile balneare asteapta noi investitii, BBW, Nov.6-12, pg.17 Williams, A., Balaz, V., 2000, Tourism in transition: economic change in Central Europe, I.B.Taurus, London Zhang, J., Jensen, C., (2007), Comparative advantage: explaining tourist flows, Annals of Tourism Research, vol.34, no.1, pg.223-243 Bilant, 2006, Turismul, eterna poveste, September 2006, pg.94-96 BBW (Bucharest Business Week), 2006, Sistemul all-inclusive atrage atentia hotelierilor, October 2 – 8, pg.17 Capital, (2006), TUI sterge Litoralul romanesc de pe harta turistica, no.46, November 16, 2006, pg.14 COFACE Romania, (2005), Studiu privind situatia falimentelor din Romania pentru anul 2005, www.coface.ro/cofro/studii_analize/coface%20studiu%20falimente%20Ro mania%202005.pdf The Economist, (2006), National branding, a new sort of beauty contest, November 11, 2006, pg.68-69 —. (2007), The wellness boom, January 6, pg.49-50 The Guardian, Observer Escape section, 2007, The fabulous 50 for 2007, January 7, http://travel.guardian.co.uk/article/2007/jan/07/escape2 NAT newsletters July 2004 – June 2005, available in Romanian at www.romaniatravel.com National Institute of Statistics - NIS, (2006), Romanian Statistical Yearbook, www.insse.ro Societatea Academica din Romania,2004, August Raport de analiza si prognoza - Policy Warning Report, www.sar.org.ro/pwr%20turism.pdf World Economic Forum, (2007), Travel and Tourism Competitiveness Report 2007 (TTCR 2007),

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www.weforum.org/en/initiatives/gcp/TravelandTourismReport/index.htm World Travel & Tourism Council Report, 2006, Romania: The impact of Travel&Tourism on jobs and the economy, http://www.wttc.org/publications/pdf/06WTTCRomania.pdf

ANNEX 1 PROGRAMS LAUNCHED BY THE MINISTRY OF TOURISM BETWEEN 2000 AND 2003

The programs launched by the Ministry of Tourism can be divided in two main categories: - social programs; - programs for tourism development The social programs, dedicated mainly to those persons with average or low incomes, included: - for the Romanian littoral: The Littoral for All with two components May 1st at the Seaside and One Week at the Seaside. Through these programs, tourism authorities and the National Association of Travel Agencies of Romania1 wanted to promote the idea that the season at the Black Sea Coast starts May 1st and ends September 30th. In both programs, special accommodation rates at 2 and 3 star hotels were offered. The program May 1st at the Seaside is dedicated to the 1st of May, labor day celebrated in Romania. It is popular among young people who want to spend 2-3 days at the Black Sea shore at the beginning of the season. The second component of the program offers special rates for a week of accommodation during the month of May or September. Both programs wanted to direct the following message to Romanian hoteliers, restaurant owners and the owners of other recreational facilities: the tourist can come starting with May 1st until September 30th, be ready to welcome them. However, for many business owners at the Romanian Black Seaside, the season begins mid June and ends August 31st. - for Romanian spa resorts: One week of recovery in spa resorts. The program is based on the same idea, a week with special accommodation rates at a 2 or 3 star hotels in a spa resort. The program 1 This association is known in Romania as ANAT (Asociatia Nationala a Agentiilor de Turism) and its official site is www.anat.ro.

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was considered necessary to increase tourist interest in spa resorts. Many Romanian spa resorts need investment, so tourists must be careful what they choose. Another social program, based on Romanian state subsidies, is available for the retired people with low pensions and for those suffering from chronically diseases. This social program has been in place before 1995. - for rural tourism: Holiday in the countryside. This program was launched initially for promotion of rural tourism; a social component has been added, with special offers at low prices for one week or for weekends. This program is offered by Romanian authorities in collaboration with the National Association of Rural, Ecologic and Cultural Tourism2. There are no official statistics or reports on how many tourists used these social programs. Despite the political power change at the end of 2004, these programs are still in place because they were popular, fact supported by AnatMedia from November-December 2005. The main programs launched for tourism development were: Superski in the Carpathian Mountains. No information was available on the launching date. By far, this program was considered the most important program of all. In November 2003, a special regulation regarding this program was issued and enforced: the Law no.526/ 2003. The national importance of this program is stated in one of the regulation entries. In the text of the law, 3 stages of development were established: - the first one included the rehabilitations of ski slope in and around Prahova Valley (numbers of targeted resorts: 8); - the second stage should have included the rehabilitation and development of other resorts popular mainly at local level but with potential to attract more tourists (number of targeted resorts: 26); - the third stage should contribute to the development of new resorts (number of resorts to be developed: 39) The program was targeted to end in 2007, or at least this was declared in August 2004 (Programele Ministerului Turismului 2003/2004). The law did not establish any timeframe. It also conflicted with other regulations regarding environmentally protected areas by encouraging the development of ski slopes inside such regions. It was one of the reasons the project was stalled starting with the second stage. 2 This association is known in Romania as ANTREC (Asociatia Nationala de Turism Rural, Ecologic si Cultural) and its official site is www.antrec.ro.

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Between August 2004 and February 2006 no official announcements were made regarding advances on the Superski project. In February 2006, a very timid announcement was made that some works were in progress, but only regarding first stage projects. Additionally the name of the program was about to be change (Neacsu 2006). In March 2006, it was announced that from the total funds of 325 million EUR3 dedicated for tourism development, 130 millions4 would be allocated to the Superski program. The money should be spent until the end of 2008 and resorts in 4 (geographical) regions became eligible for these funds (Budin 2006): - ski resorts in the Prahova Valley: Sinaia, Busteni, Azuga, Predeal and Poiana Brasov; - ski resorts in the Jiu Valley, near Petrosani: Straja, Lupeni, Paring, Pasul Vulcan; - ski resorts in the Maramures: Borsa, Cavnic, Mogosa - Cimpulung Moldovenesc, ski resort in Moldavia The idea promoted through this program was a good one. Romanian ski resorts need a lot of improvement. The law mentioned public-private partnership (PPP) between local authorities and entrepreneurs. However, the law regarding PPPs is very complicated. This is one reason why the project was stalled. The other cause was connected to funding. It was not clear from which sources the program would be financed: funds from the central budget, from local budgets, or both. The problem was partly solved in March 2006 when the 130 million EUR came from the central budget. In May 2006 an official report on Romanian government programs declared Superski among projects with high priority. No other information could be found regarding the progress of this program. Salvamont. As in the previous case, the launching date could not be found. This program too has a special dedicated regulation: Government Decision no.77/ 2003. The goal of this program was to improve tourist security and rescue capacity in the mountains. Funds were available for the rehabilitation of rescue bases and alpine refuges. The tourist circuits with a high level of risk were to be consolidated. The program included 15 counties and 20 local territorial administrations. No official reports on the progresses made on Salvamont programs are available. However, the Salvamont services are improving and are working together with medical services in the Romanian mountains in the last 3 years.

3 4

Approximately 409 million USD. Approximately 164 million USD.

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This program is very important for the development of mountain tourism and for Superski program as well. Romania, Country of Wines. The program was launched in 2002 at the Berlin International Tourism Fair. The goal was to promote the Romanian wine regions and the best Romanian wines. The pilot region was Prahova county. The program was based on cooperation with Romanian associations for wine exports and specialized tour-operators. One component of this program was the development of Wine Routes or Wine Trails. The intention was to include here: - the Arad winegrowing region and Minis wine brand; the main attractions were considered: a wine research centre from the 19th century and a small electric train from 1906, allowing original tours inside the region; the program received the support of the European Community; - the ‘Old Roman Wine Route to Rome’ including Tohani with tours extended to Sinaia and Poiana Brasov, and the presentation of wine types like Feteasca Neagra, Cabernet Sauvignon, Merlot or Pinot Noir, through tasting trips. Immediate results were announced at the end of 2002. In 2003 the same officials were forced by the facts to recognize that the program did not yield the expected results (Budin 2006b). In August 2003 criticism expressed concerns that the money for this program was spent on road indicators/ signals. After that the program just stopped. (Budin 2006b). Why did the program failed? As usual, after being launched major results were expected in a short period of time. Neither thorough evaluation, nor strategy for a campaign was conducted. A protocol with the Romanian Professional Association of Producers and Traders of Wine5 existed on the paper but, without clear indication of funding. The money needed for special catalogues for cellars; vineyards and wines were yet to come. Several local initiatives exists: one in Prahova County where the local entrepreneurs took the problem into their own hands and advertise for their cellar; another one in Alba county promoted Jidvei vineyards and cellars, included the involvement of local authorities (Budin 2006b). As with the Superski program, this program stalled. Cruises on Danube. The program resumed during 2002, after 10 years since it had been stopped. One of the goals was to improve the infrastructure of tourist harbors along the Danube and the construction of new ones. Another goal was 5 This association is known in Romania as APEV (Asociatia Producatorilor si Exportatorilor de Vinuri din Romania).

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to reintroduce cruises on the Danube to tourists. The program had two components: one for the foreign tourists attracted by the lower Danube, and the second one for Romanian tourists for short cruises, during weekends, to the Danube Delta from Giurgiu, an important Danube harbor at 60 km (around 37 miles) south of Bucharest (Programele Ministerului Turismului – 2003/2004). In August 2003 the first criticism appeared regarding this program, questioning its results. Official reports on the number of tourists benefiting from cruises on the Danube do not exist. As in previous cases, officials remained silent on the advances of this program. A study made by Stefan (2006) revealed the followings: - the town of Medgidia, a small tourist harbor on the Danube, counted on this program for its strategic development; - a May 2006 report on the Romanian government programs declared the Danube Delta and the Danube among priority programs (Guvernul Romaniei, 2006); - general opinion regarding the failure of the program was that Romanian tourist harbors on the Danube have a poor infrastructure which does not allow them to receive tourists. Quality recreational facilities are also absent. No other information could be found. The lack of strategy and associated actions generated the failure of another good idea which, ironically, would have not required much spending or promotion. This situation is due to the fact that Romania (together with Germany, Austria, Slovakia, Hungary, Croatia, Serbia and Bulgaria) is part of Die Donau – The International Association for Danube Tourism. Die Donau promotes Danube tourism under the slogan ‘The Danube – A River’s Lure’ and for 2005 and 2006 the themes were (Buletin informativ December 2004): 2005 – Danube Landscape of Passion 2006 – Nature and Culture Blue Flag This program was launched during 2002. The announced goal was to obtain international recognition of Romanian beaches. The program has a special dedicated regulation: Government Decision no.335/ 2002. A pilot project was launched during 2003 for 6 beaches in Mamaia and Neptun-Olimp resorts. Romanian government announced in 2006 the continuation of this program (Guvernul Romaniei, 2006). The site of NAT (www.mturism.ro) announced, during July 2006, that 5 resorts at the Black Sea received Blue Flags for their beaches: Mamaia, Eforie Nord, Neptun, Venus and Saturn. This is the only program which yielded measurable results and those results were officially announced.

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Q Mark (Seal) Program was promoted in the first half of November 2002 and launched in 2003. The general goal was to improve the quality of services in tourism, mainly in accommodation, through Q Seal, similar to programs in Spain, France and Switzerland. A secondary goal was to issue quality standards for 20 hotels located in Bucharest, on Romanian littoral and in the Prahova Valley. A regulation supporting this program was issued and enforced: Government Decision no.668/ 2003. In May 2006 the continuation of this program was announced (Guvernul Romaniei, 2006). Casinos program was launched during 2003. Its goal was the modernization of 5 famous casinos in Romania, built between 1900 and 1940. The casinos are located in Constanta (Sea Side); Sinaia (Prahova Valley); Herculane (spa resort since Roman times); Slanic Moldova (spa resort) and Vatra Dornei (spa resort). No other information was available regarding this program since 2004. Infotourism In December 2002 the minister of tourism, D.M.Agathon, publicly recognized the need for the creation of tourist information centres in every county and in every important tourist destination. One regulation regarding this process was promised. In 2003 tourism was declared ‘a national priority’ and the project for opening tourist information centres became part of this priority. The goal was the creations of a larger number of tourist information centers in Romania. A draft for a regulation regarding tourist information centers exists, but was not yet enacted. The positive aspect is represented by the fact that the regulation dedicated to Romanian resorts requires the presence of at least one tourist information centre in every resort. During the 1990s the only tourist information centers created were based on private initiative and were to be found in small towns. After 2000, a number of tourist information centers opened due to increased central and local authorities’ efforts. The list in annex no.2 shows the situation as of September 30, 2006. In May 2006 was announced that the tourism information centers became priority projects for the Romanian government (Guvernul Romaniei, May 2006). This program has yielded some of the expected results. However, the development of tourist information centers must continue. Unfortunately Bucharest, the Romanian capital, has no tourist information centre, thus the opening of 3 such centre was promised for 2006. No further development followed. Other program ideas, which were not included on the NAT official list, but presented in the media, were the followings:

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Mamaia – Riviera of the East The idea to transform Mamaia into a ‘Riviera of the East’ was formulated during 2003. One odd initiative at that time was formulated by the minister D.M.Agathon and was quickly put into practice: palm trees were planted for a more exotic look. Unfortunately it was only a ‘cosmetic’ solution; a part of the palm trees did not survive the Romanian weather conditions during the winter and were replaced next spring, giving the press a lot of reasons to criticize this decision. Further development of recreational facilities was made. A water park, named Aqualand, was opened in 2003. A ‘Telegondola’, a cable car installation allowing an aerial view of the littoral, was functional in 2005. However, with only such facilities Mamaia is still far from being the ‘Riviera of the East’. Europa Resort The project was launched in 2000-2001 by the former minister of tourism, D.M.Agathon, and backed by his follower, Miron Mitrea. The resort was supposed to be located in the Danube Delta on 500 hectares (1236 acres). The location study and its environmental impact were to be finished in December 2001. No further information was available on this matter. During the summer of 2006 it was stated that Grindul Chituc was chosen as final location, despite the fact that it is part of the environmental protected area of the Danube Delta Biosphere Reservation (Manea 2006). It was stated that this project initiated to hide occult and doubtful real estate transactions in the Danube Delta made by politicians (Manea 2006). For now, the project was abandoned; but it could be resumed at any time if the political influence would be used. National tourist parks The amount of official information available on this program is not substantial. The idea was formulated in September 2003 by the minister of transportation, construction and tourism: Miron Mitrea. He wanted to develop tourist parks following the model of industrial parks. Three examples were given (Novaceanu 2003): – the Arieseni region in Apuseni Mountains (a ski resort of local interest at that time and with the same status now); – the Lotru Valley; – Sulina region in the Danube Delta. The Government Emergency Ordinance no.62/ 2004 was issued followed, in December 2004, by Law no.536/ 2004. No other information on the progress of this program is available. The rehabilitation of burnt lodges located in high mountain areas. The program was developed after several fires destroyed lodges in the mountain areas. The program is mentioned once in a NAT list and no other information is available so far.

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Old Trains The official starting year for this tourist product was 2003 when, through a spin-off, the Railway Tourism Company was created. The company manages the historical patrimony of the Romanian rail-ways. It is a state owned company through MTCT and it has a fleet of steam engines unique in Europe. Under its administration are (www.turismferoviar.ro/en/oferte_turism.php): - 3 historical trains – included in Romania’s patrimony – used for tourist trips with departure from Bucharest: 9 the Royal Train, Ferdinand the First, used by the Romanian royal family, and also by N.Ceausescu; 9 the Calugareni Train, in service between 1869 and 1918, with 68 seats; 9 the Moldovita Train, in service between the end of 19th century and during the beginning of 20th century, with 4 cars and a total of 51 seats; - one train, the Mures Train, for narrow gauge line, with departure from Tg.Mures. For the 3 trains departing from Bucharest the most wanted destinations are: Snagov, Sinaia, Calimanesti (Olt Valley), Sibiu, Brasov, Risnov, Sighisoara, Tg.Mures. Those trains are used mainly by multinational corporations for teambuilding, product launching, meetings and conferences. Other events these old trains are used for are weddings. When promoting its products, the Railway Tourism Company uses the idea that ‘every trip is a unique event’. (Vaschi 2005). Tourism using old trains started in 1992 on the route: Brasov-Zarnesti (Popa 2004) but no important developments followed until 2003. The success of the old trains seems to be limited. It did not bring any profit for the Railway Tourism Company since 2003 (Stoica 2006). Other old trains are under the management of the Timisoara Branch of the National Railway Company and are presented for tourists separate from the 4 trains mentioned above. Another narrow gauge train departs from Viseu to the Vaser Valley in Maramures. It is not clear which company manages this train. All these old trains could be promoted and presented on the same website despite different management for better promotion. Cultural and religious tourism During 2002, an idea was to develop the monarchal tourism. The Ministry for Culture, the Ministry of Tourism and Romanian Patriarchy in collaboration with Ministry of Tourism from Greece wanted to include Romanian monasteries in the foreign tourist tours and to identify the areas or the destinations where the interest for pilgrimage is expressed (source: HoReCa Profit, 2003).

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No further information exists in this respect. It is not clear if the idea became a tourist product or not. The only information that could found was about the existence of the program for development of cultural/ religious tourism on NAT list (AnatMedia, November-December, 2005). The number of programs launched between 2000 and 2003 was too large. Setting aside the lack of strategy for tourism development, no project or program management existed. The excitement of a new idea disappeared quickly and in many cases no relevant results could be identified. No efficient teamwork existed for the implementation and for monitoring these programs. The responsibilities were also too numerous. The lack of communication between central and local authorities was another reason for poor or no results. To launch an idea is not enough. Implementation depends on combined efforts. Many of these efforts stopped when funding problems developed. Without dedicated budgets, many of the programs and ideas stalled. For such programs to be successful, more efforts are needed, and they should be distributes more efficiently among fewer programs.

References Budin, L., (2006), Superfinantare pentru Superschi, Saptamina financiara, March 6, 2006, pag.33; 42 —. (2006b), Drumul Vinului post-Agathon: placarde si bune intentii, Saptamina financiara, July 17, 2006, pag.34 Manea, S., (2006), Statiunea Europa, rezervatie pentru fauna politica, Saptamina financiara, July 17, 2006, pag.1 and 4-5 Neacsu, C., (2006), Supreschi in Carpati scos de la naftalina la terminarea sezonului, Gardianul, February 27, 2006, www.gardianul.ro/2006/02/27/economie-c1/_sup Novaceanu, A., (2003), Parcuri turistice dupa modelul celor industriale, Ziarul Financiar, September 17, 2003, www.zf.ro/articol_31523/parcuri_turistice_dupa_modelul_celor_industriale. html Popa, B., (2004), Turism de lux cu trenuri de epoca, Capital no.50, December 9, 2004, pag.49 Popa, N.V., (2003), Turismul este tras pe linie moarta, August 27, 2003, www.pnl.ro/index.php?id=dp1246 Rusu, C., (2003), Marca Q pe coordonate spaniole, HoReCa Profit, no.8, September-Octomber 2003, pag.19-21

252

Annex 1

Stefan, A.,(2006), Jocuri si socuri in turism, Romania Libera, June 24, 2006, www.romanialibera.ro/editie/index.php?url=arti Stoica, G., (2006), Trenul regal nu plimba si profituri la CFR turism, Saptamina Financiara, August 7, 2006, pag.30 Vaschi, M., (2005), Plimbarile cu trenurile de epoca tind sa devina o moda, Capital no.46, November 17, 2005, pag.53 Adevarul, (2003), January 22, Pregatirile pentru sezonul estival au debutat cu rotatia cadrelor, www.adevarulonline.ro/2003-01-22/Societate/pregatirile-pentru-sezonulestival-au-d AnatMedia, November-December (2005), ANT merge pe incoming si turism intern, www.anat.ro/index.php?p=events&OID=EVE0 Buletin informativ, December 2004, www.romaniatravel.com/newsletter/006/bi_activi HoReCa Profit, (2003), no.8, September-Octomber, news, pg.6-7 Guvernul Romanien, (2006), May 15, Raport-sinteza asupra indeplinirii prevederilor programului de guvernare in anul 2005 si primul trimestru 2006, www.guv.ro/obiective/200606/guvernare2005-012006.pdf Programele Ministerului Turismului – 2003/2004, www.infotravelromania.ro/programemt.html, August 2004 Saptamina financiara, (2006), March 6, Interview with Ovidiu Iuliu Marian, NAT president: Niciodata Romania nu se va compara cu Alpii, pag.33 and 42, www.turism.home.ro/croaziere.htm www.turismferoviar.ro/en/oferte_turism.php

ANNEX 2A THE LIST OF OFFICIALLY DECLARED ROMANIAN RESORTS

Resorts of national interest 1.Amara, Ialomita county – spa resort 2.Azuga, Prahova county – ski resort (potential all year) 3.Busteni, Prahova county – ski resort (potential all year) 4.Buzias, Timis county – spa resort 5.Baile Govora, Vilcea county – spa resort 6.Baile Felix, Bihor county – spa resort 7.Baile Herculane, CarasSeverin county - spa resort 8.Baile Olanesti, Vilcea county – spa resort 9.Baile Tusnad, Harghita county – spa resort 10.Campulung Moldovenesc, Suceava county – ski resort (potential all year) 11.Cap Aurora, Constanta county – Black Sea resort 12.Calimanesti-Caciulata, Vilcea county – spa resort

Tourist information centre

Presented on the official website www.romaniatravel.com

TIC present

Short description section Short description section

in

spa

in

spa

Short description section

in

spa

Short description section

in

spa

254

Annex 2A

13.Costinesti, Constanta county – Black Sea resort 14.Covasna, Covasna county – spa resort 15.Eforie Nord, Constanta county – Black Sea resort 16.Eforie Sud, Constanta county – Black Sea resort 17.Geoagiu Bai, Hunedoara county – spa resort 18.Gura Humorului, Suceava county – mountain resort, (potential all year) 19.Jupiter, Constanta county – Black Sea resort 20.Mamaia, Constanta county – Black Sea resort 21.Mangalia, Constanta county – Black Sea resort 22.Moneasa, Arad county – spa resort 23.Neptun-Olimp, Constanta county – Black Sea resort 24.Poiana Brasov, Brasov county – ski resort (potential all year) 25.Predeal, Brasov county – ski resort (potential all year) 26.Pucioasa, Dimbovita county – spa resort 27.Slanic, Prahova county – spa resort 28. Saturn, Constanta county – Black Sea resort 29.Sinaia, Prahova county – ski resort (potential all year) 30.Sangeorz-Bai, BistritaNasaud county - spa resort

Short description section Short description section

in

spa

in

spa

Short description in spa section and in archeological site section

TIC present

TIC present

Romania as a Tourist Destination and the Romanian Hotel Industry

31.Slanic Moldova, Bacau county – spa resort 32.Sovata, Mures county – spa resort 33.Targu Ocna, Bacau county – spa resort 34.Techirghiol, Constanta county – spa resort at the Black Sea 35.Vatra Dornei, Suceava county – spa and ski resort 36.Venus, Constanta county – Black Sea resort 37.Voineasa, Vilcea county – mountain resort Resorts of local interest 1.1 Mai, Bihor county – spa resort 2.Albac, Alba county – mountain resort 3.Albestii de Muscel, Arges county – mountain resort 4.Arieseni, Alba county – mountain resort 5.Balvanyos, Covasna county – mountain resort/ spa resort 6.Bazna, Sibiu county – spa resort 7.Baltatesti, Neamt county – spa resort 8.Baile Homorod, Harghita county – spa resort 9.Baile Turda, Cluj county – spa resort 10.Baile Baita, Cluj county – spa resort

Tourist information centre

255

Short description section Short description section

in

spa

in

spa

Short description section

in

spa

Presented on the official website www.romaniatravel.com

Short description in connection with fortified churches (strengthened churches – as in the website)

256

Annex 2A

11.Borsec, Harghita county – mountain/ spa resort 12.Borsa, Maramures county – ski resort 13.Bran, Brasov county – mountain resort 14.Breaza, Prahova county – mountain resort 15.Calacea, Timis county – spa resort 16.Cheia, Prahova county – mountain resort 17.Crivaia, Caras-Severin county – mountain resort 18.Durau, Neamt county – mountain resort 19.Harghita Bai, Harghita county – spa resort 20.Horezu, Valcea county – mountain resort and UNESCO site 21.Izvorul Muresului, Harghita county – mountain resort 22.Lacu Rosu, Harghita county – mountain resort 23.Lacu Sarat, Braila county – spa resort 24.Lipova, Arad county – spa resort 25.Moieciu, Brasov county – mountain resort 26.Ocna Sugatag, Maramures county – spa resort 27.Paltinis, Sibiu county – ski resort 28.Paraul Rece, Brasov county – mountain resort

TIC present

Short description in connection with wooden churches Short description in rural section and in the castle section

Short description in castle section

Romania as a Tourist Destination and the Romanian Hotel Industry

29.Praid, Harghita county – spa resort 30.Sacelu, Gorj county – spa resort 31.Sarata Monteoru, Buzau county – spa resort 32.Secu, Caras-Severin county – mountain resort 33.Semenic, Caras-Severin county – ski resort 34.Snagov, Ilfov county – spa resort 35.Stana de Vale, Bihor county – ski resort 36.Starja, Hunedoara county – ski resort 37.Soveja, Vrancea county – mountain resort 38.Tasnad, Satu-Mare county, spa resort 39.Timisu de Sus, Brasov county – mountain resort 40.Tinca, Bihor county – spa resort 41.Trei Ape, Caras-Severin county – mountain resort 42.Valenii de Munte, Prahova county – mountain resort 43.Vata de Jos, Hunedoara county – spa resort 44.Zona Fantanele, Cluj county – mountain resort 45.Zona Muntele Baisorii, Cluj county – ski resort

TIC present

Sources: HG 867/ 2006; www.mturism.ro/fileadmin/mturism/centre_informative.pdf (for tourist information centers) and www.romaniatravel.com

257

ANNEX 2B THE LIST OF TOURIST INFORMATION CENTERS

No. 1.

Town Alba Iulia

County Alba

2. 3.

Girda de Sus Arad

Alba Arad

4.

Oradea

Bihor

5.

Bran

Brasov

6.

Brasov

Brasov

7. 8. 9.

Predeal Prejmer Bacau

Brasov Brasov Bacau

10.

Resita

11.

Constanta

CarasSeverin Constanta

12.

Sfintu Gheorghe Tirgu Jiu

Covasna

Harghita

15.

Miercurea Ciuc Orastie

16.

Petrosani

Hunedoara

13. 14.

Gorj

Hunedoara

Observations Alba Iulia – administrative capital of the county Rural tourism Arad - administrative capital of the county Oradea - administrative capital of the county Mountain resort of local interest Bran Castle and rural tourism Brasov - administrative capital of the county 2 tourist information centres Mountain resort of national interest Small town near Brasov with a citadel Bacau - administrative capital of the county Resita - administrative capital of the county Constanta - administrative capital of the county 2 tourist information centres Sf.Gheorghe - administrative capital of the county Tg.Jiu - administrative capital of the county Miercurea Ciuc - administrative capital of the county Town near the Dacian fortress, UNESCO heritage site Petrosani - administrative capital of the county

Romania as a Tourist Destination and the Romanian Hotel Industry

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17.

Slobozia

Ialomita

18.

Iasi

Iasi

19.

Maramures

20.

Sighetu Marmatiei Tirgu Mures

21.

Piatra Neamt

Neamt

22. 23. 24.

Prahova Prahova Prahova Prahova

Mountain resort of local interest

26. 27. 28.

Azuga Sinaia Valea Doftanei Valenii Munte Cisnadie Rasinari Sibiu

Tg.Mures - administrative capital of the county Piatra Neamt - administrative capital of the county 2 tourist information centres Mountain resort of national interest Mountain resort of national interest Mountain resort

Sibiu Sibiu Sibiu

29.

Suceava

Suceava

Rural tourism Rural tourism Sibiu - administrative capital of the county Suceava - administrative capital of the county

30. 31.

Sucevita Timisoara

Suceava Timis

32.

Tulcea

Tulcea

33. 34. 35.

Sulina Crisan Rimnicu Vilcea

Tulcea Tulcea Vilcea

25.

de

Mures

Slobozia - administrative capital of the county Iasi - administrative capital of the county

Timisoara - administrative capital of the county Tulcea - administrative capital of the county The most important town in the Danube Delta 2 tourist information centres Town in the Danube Delta In the Danube Delta Rimnicu Vilcea - administrative capital of the county

Source: http://www.mturism.ro/index.php?id=43

ANNEX 2C THE LIST OF ROMANIAN TOURISM BUREAUS ABROAD AS OF JUNE 2006

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

City Vienna Bruxelles Beijing Paris Berlin Munich London Tel Aviv Budapest Rome Tokyo Chisinau

13. 14. 15.

Moscow New York Stockholm

Country Austria Belgium China France Germany Germany Great Britain Israel Hungary Italy Japan Rep.of Moldova Russia USA Sweden

Web-sites

www.rumanien-tourismus.de www.rumanien-tourismus.de

www.romania.it www.romaniatabi.jp

www.romaniatourism.com

Source: www.infotravelromania.ro/birou.html

Srebarna Nature Reserve

Danube Delta (since 1991)

Pirin National Park

Bulgaria

Romania

Czech Republic Plitvice Lakes National Park

Croatia Hortobagy National Park

Hungary

Bialowieza National Park (or Bialowieza Forest – common with Belarus)

Wieliczka Salt Mine

Poland

Caves of the Aggtelek and Slovak Karst (common with Hungary)

Slovakia

In the following table we compare the types of UNESCO World Heritage sites in those countries with the seventh existing in Romania.

THE UNESCO HERITAGE SITES IN ROMANIA AND IN THE COUNTRIES CONSIDERED AS ITS MAIN COMPETITORS IN THE TOURISM MARKET

ANNEX 3

Painted Churches of Northern Moldavia (since 1993) Arbore Humor Moldovita

Villages with fortified churches in Transylvania (since 1993) Biertan Cilnic Dirjui Prejmer Saschiz Valea Viilor Viscri Monastery of Horezu (since 1993)

262

Boyana Church

Rila Monastery

Rock-hewn Churches of Ivanovo

Piligrimage Church of St.John of Nipomuk at Zelena Hora

Holasovice Historical Village Reservation

Annex 3

Episcopal Complex of Euphrasian Basilica in the Historic Centre of Porec Cathedral of St.James in Sibenik

Millenary Benedictine Abbey of Pannonhalma and its natural environment

Holloko (Old Village of Holloko)

Churches of Peace in Jawor and Swidnica

Muskauer Park/ Park Muzakowski Vlkolinec Reservation of Folk Architecture

Patrauti Probota Suceava Sucevita Voronet Wooden churches of Maramures (since 1999) Birsana Budesti-Josani Desesti Ieud Sisesti-Plopis Sisesti-Surdeni Poienile Izei Tirgu Lapus Historic Centre of Sighisoara (since 1999)

Ancient city of Nessebar

Old City of Dubrovnik

Historic City of Trogir

Historic Centre of Prague

Historic Centre of Cesky Krumlov Historic Centre of Telc

Budapest, including the Banks of the Danube with the district of Buda Castle

Romania as a Tourist Destination and the Romanian Hotel Industry

Old City of Zamosc

Historic Centre of Warsaw

Historic Centre of Krakow

Wooden Churches of Southern Little Poland

Bardejov Town Conservation Reserve

The Historic Town of Banska Stiavnica

263

Dacian Fortresses of the Orastie Mountains (since 1999) Blidaru Capilna Costesti Luncani Piatra Rosie Sarmisegetusa RegiaGradistea de Munte

264

Thracian Tomb of Sveshtari Madara Rider (bas-relief of a horseman)

Thracian Tomb of Kazanlak

Gardens and Castle at Kromeriz

Litomysl Castle

Kutna Hora – the historical town centre

Annex 3

Historic Complex of Split with the Palace of Diocletian

Castle of the Teutonic Order in Malbork

Medieval Town of Torun

Tokaji Wine Region Cultural Landscape

Centennial Hall in Wroclaw Kalwaria Zebrzydowska - cultural landscape

Holy Trinity Column in Pecs (Sopianae) Early Olomouc Christian Cemetery The Jewish Quarter and Auschwitz St.Procopius’ Basilica in Trebic Concentration Camp Source: UNESCO World Heritage List, http://thesalmons.org/lynn/world.heritage.html and www.romaniatravel.com/index.php?lng=eng&tree=9 for details concerning Romania

Lednice-Valtice Culturak Landscape

Tugendhat Villa in Brno

Romania as a Tourist Destination and the Romanian Hotel Industry

Spissky Hrad and the cultural monuments in its environs

265

ANNEX 4 TERMS USED FOR TRANSLATION OF ROMANIAN ACCOMMODATION ESTABLISHMENTS

The term used in the book Hotels Apartment hotels Motels Inns Hostels Villas Lodges Bungalows Campsites and cabins in campgrounds Dwellings in rest areas Holiday dwelling complexes Urban pensions Rural pensions Accommodations on cruise ships or on docked ships

The translation provided by NIS1 (source: NIS) Hotels n/a Motels Tourists/ touristic inns Hostels and hotels for youth Tourists/ touristic villas Tourists/ touristic challets Bungalows Campings and houselet-type units Tourists/ touristic halting places Holiday villages Urban tourists/ touristic boarding houses Rural tourists/ touristic boarding houses Ship accommodation spaces

The word tourists was used in NIS publications before 2005 and touristic in the publications from 2005. For the present study the word lodges was used instead of challets due to the fact that this type of accommodation in Romania does not have much to do with rather refined style of a chalet.

1

Romanian National Institute for Statistic, www.insse.ro

ANNEX 5 ROMANIAN HOTEL GROUPS IDENTIFIED AT THE LEVEL OF 2005

In all cases only the hotels owned by the companies were considered. The presence of motels and/ or villas in their portfolio of accommodation types was excluded from the study. The biggest hotel group in Romania is Turism Hoteluri si Restaurante (THR) Marea Neagra SA. Its former name was Eforie SA. The company was created in 1991 but its actual development started somwtime between 2000 and 2002. In 2003 the company grew further merging (through absorbtion) with other 4 companies and buying several hotels located on Romanian littoral. The current name exists since January 2005. Starting from August 15th 2002 the company is listed at Bucharest Stock Exchange under the symbol EFO. In the past 3 years it was the only company in the hotel sector traded on the Romanian main capital market. In 2005, the group THR Marea Neagra SA owned a number of 42 hotels with a capacity of 7,470 rooms and 14,935 bed places (NAT). All ot its hotels are located in Romanian littoral resorts: 16 of them are concentrated in Saturn and other 13 in Eforie Nord. The remaining 13 hotels are located in: Venus – 7; Eforie Sud – 5 and Neptun – 1. The structure by rooms of the hotels was the following2: - 3 small hotels, with less than 50 rooms; - 16 medium hotels, between 50 and 149 rooms; - 23 large hotels with more than 150 rooms; 8 of them have less than 200 rooms; 7 have between 200 and 299 rooms and 8 have between 300 and 399 rooms. The hotels owned by the group are mainly budget/ economy hotels with a total of 37 in the category of 1 star and 2 stars. Only 5 are in the mid-market category being classified at 3 stars.

2

Source of data: based on NAT information

Annex 5

268

The official website – www.eforienord.ro – offers information in Romanian only. Financial data is available and a brief description of the company. No logo and no strap line are present. No intention or no step toward a brand launching could be identified. This development might occur in the future, after the renovation and modernization of company hotels. The majority of the group’s hotels was built between 1970 and 1985. Other big hotel groups concentrating hotels on Romanian littoral were: - Olimp Estival 2002 SA; it is traded on Rasdaq under the symbol OLIP; the company resulted from the spin-off in 2002 of NeptunOlimp SA3; 9 it owns 3 hotels with 764 rooms and 1528 bed places; all hotels are situated in Olimp; 2 hotels have over 200 rooms and one over 300 rooms; 9 classified at 2 stars all the 3 hotels could be considered budget hotels; 9 the results on renovations and modernizations allowed the company to present during the summer of 2006 a spot on Romanian TV channels; 9 no intention of launching a brand for the 3 hotels could be identified; 9 the group has no website and its strategy, if existing, is not made public. -

3

Steaua de Mare SA; the company was created in 1991 and is traded on Rasdaq under the symbol STST; 9 it owns 3 hotels, all situated in Eforie Nord next to each other; every hotel has 231 rooms and 462 bed places; 9 one hotel is classified at 2 stars, one at 3 stars and one at 4 stars; the 4 stars hotel has the name Britannia and the 3 stars hotel has the name Britannia II; 9 the simple common name for the hotels could be considered an attept to present them as being in the same group; 9 the company has no website; 9 during the summer of 2006 the company was suspended from trading due to a restructuring process.

The number of hotels owned by this company could not be established. The spin-off from 2002 was decided for privatization reasons. From the process at least 15 new companies emerged, based on the information available on Rasdaq. Now the company still exists with one hotel under its control.

Romania as a Tourist Destination and the Romanian Hotel Industry

-

269

Perla Majestic SA is traded on Rasdaq under the symbol MAJE; 9 it owns 3 hotels and concentrates 655 rooms and 1312 bed places; 9 all hotels are situated in Mamaia and are large hotels, between 200 and 249 rooms; 9 they have different classifications: one is in the category budget with 2 stars; one is a mid-market hotels with 3 stars and an upper-market hotel with 4 stars; 9 no intention for a brand development could be identified; 9 the company has no website.

The following hotel groups concentrate hotels located in Romanian spa resorts: - Tratament Balnear si Recuperare a Capacitatii de Munca (TBRCM) SA is a company created in 2003; 9 it replaced a former state owned company; 9 while it can be a private incorporated company, it has a single shareholder – the Romanian National House of Pensions and Other Social Insurance Rights; 9 through this company, reduced prices could be offered for retired people with low pensions and for those who needs to improve their health due to chronic diseases; 9 the company concentrates 13 hotels with a capacity of 1586 rooms and 3168 bed places; 9 one hotel is situated in a county residence, Iasi; the other 12 are all situated each in different spa resort; 9 one hotel has less than 50 rooms and 3 are large hotels with more that 150 rooms; the other 8 are medium hotels; 9 all the hotels are budget/ economy hotels of 1 and 2 stars and this shows a correlation with the main goal of the company: to offer accommodation at low prices for old and/ or ill persons; 9 while the name CERES appears on 6 of its hotels, the name is inherited; due to its primary goal (to offer accommodation at low room rates for those needing spa treatments) it is very unlikely that this company would have the intention to launch a brand; 9 no website exists. -

Turism Felix SA is a company traded on Rasdaq under symbol TUFE; it was transferred to main market, Bucharest Stock Exchange, in March 2007 unde the same symbol; 9 it concentrates 9 hotels of 1675 rooms and 3058 bed places all situated in the spa resort Baile Felix, Bihor county;

Annex 5

270

9 7 hotels are large with more than 150 rooms; the other 2 are medium hotels between 50 and 149 rooms; 9 6 hotels are classified at 1 and 2 stars being in the budget segment; the remaining 3 are mid-market hotels with 3 stars; 9 for now, no intention to launch a brand for its hotels could be identified; 9 the company has no web site. -

Calimanesti-Caciulata SA is traded on Rasdaq under the symbol CALU; 9 it owns 5 hotels with a capacity of 818 rooms and 1608 bed places; 4 hotels are situated in the spa resort Calimanesti-Caciulata, Vilcea county, on Olt Valley; 9 one hotel (the smallest one, with 20 rooms) is located in Sinaia, on Prahova Valley; the hotels in the spa resort are all large hotels with 150 rooms or more and ranked at 2 stars; 9 no clear intention to create a brand for them exists; 9 the company has a website – www.calimanesti-caciulata.ro – and an unattractive logo; the site presents only the tourist attraction in the region and gives several data about the 4 hotels located in the spa resort; 9 no corporate information is available on the website.

-

Hercules SA is traded on Rasdaq under ERCA symbol; 9 it concentrates 4 hotels with 761 rooms and 1424 bed places, located in the oldest Romanian spa resort – Baile Herculane, Caras-Severin county; 9 the hotels are medium and large and could be considered in the budget segment since they are classified at 1 and 2 stars; 9 no intention to create a brand was identified; 9 the company has no website.

-

the following companies: Balneoclimaterica SA, Turism Covasna SA and Tratament Balnear Buzias SA have 3 hotels each, with a capacity 300 and 400 rooms; in each case the hotels are concentrated in one spa resort: Sovata, Covasna and respectively Buzias; all three companies are traded on Rasdaq under the following symbols: BALO, TUAA and BALN; only Balneoclimaterica SA branded one of its hotel through the alliance with the Hungarian chain Danubius; during 2006 the other two hotels owned by the company were branded under the same name; only one company has a website: Turism Covasna – www.turismcovasna.ro;

Romania as a Tourist Destination and the Romanian Hotel Industry

271

it has a logo and information on the tourist attractions in the region, but no corporate information. The following hotel groups have mixed portfolios of hotels: - SIND Romania SRL – was created in 1992 and concentrates 23 hotels with a capacity of 5,554 rooms and 10,964 bed places; 9 being a LLPs, the information about its associates is not public; 9 its hotel portfolio includes hotels which were under the trade union control before 1989; the connection with the most important trade unions created after 1990 is strong and their members form the most important part of its clients (Enache 2007)4; 9 all the hotels are in the budget category, being ranked at 1 and 2 stars; 9 14 of the hotels are situated in spa resorts, other 7 are in mountain resorts and the remaining 2 on the Romanian littoral; 9 16 hotels are large, with 150 rooms or more; among them there are 3 of the six largest hotels in Romania (presented in table 7, chapter 2); two hotels have over 500 rooms and one has 728 rooms; the presence of those hotels in this company portfolio only enhance the idea of the connection with the portfolio of former trade unions; these 3 largest hotels were build during communist period for the trade union members with the money gathered by the union under communist regime; the company has no official website; 9 the strap line identified for the company in 2004 was ‘the destination of your holidays’ and was possible due to the presentation material made for the company’s participation to the national tourism fair5. -

4

Unita Turism Holding SA was created during 1990s but the actual company exists since 2000; 9 until 2004 its development took place through the absorption of several hotel companies; their number and their names could not been established; 9 Unita Turism Holding owed in 2005 a number of 18 hotels with a capacity of 1850 rooms and 3554 bed places; 9 9 of its hotels are located in county residence, but none in Bucharest; the remaining 9 hotels are located as follows: 4 on the littoral; 2 in a spa resort and 3 in a mountain resort;

Enache, S., (2007), “Noi ne odihnim pentru tine”, un logo pentru turismul sindical, Saptamina financiara, March 19, pg.1 and pg.7 5 www.romwin.ccir.ro/ift2004/liste/r0022.htm

Annex 5

272

9 12 hotels are of medium size with a capacity between 50 and 149 rooms, 4 are small hotels with less than 50 rooms and 2 are large, over 150 rooms; 9 the majority of Unita hotels are in the budget segment, classified at 1 star and 2 stars and only one – considered the flagship of the company – classified at 4 stars; the remaining 5 are in the mid-market segment with 3 stars; 9 Unita Turism Holding headquarter is in Timisoara; there the company owns no hotel; it can not be considered a company specialized in hotel management because the hotels do not have management teams working in hotels in an established framework; instead, for any decision – important or less important – the headquarter must give permission; 9 the company split its hotels in two categories: those for business tourism, located in county residences and those for leisure, located in spas, mountain and seaside resorts; no brand was initiated or launched for any of these two hotel categories; on the company website6 (www.unita-turism.ro) a logo is present and a strap line: ‘arta de a spune bun venit’ (roughly translated: the art of saying welcome) can be seen; in the printed materials for its hotel properties other there is another strap line: ‘one philosophy’; all these only indicate the fact that Unita Turism Holding does not see its name as a brand; 9 a lot of rumors exist that Unita Turism Holding regards its hotels rather like real estate investments; the changes in its hotel portfolio during 2006 indicate that at least 2 hotels were sold; for other 4 it is not clear if the name was changed or they were sold too; and at least 3 hotels were added to the portfolio; in the case of 2 of these hotels, Unita Turism was the majoritar shareholder in the companies owning the hotels; since no corporate information is available on the website, these assumptions could only be confirmed by comparing the old and new list of hotels. -

6

Continental Hotels SA was created in 1991; since then it underwent many changes; 9 the name Continental Hotels is relatively recent – since 2005, after the company absorbed the smaller LLPs through which controlled its hotels; 9 during 1990s it branded its hotel through the affiliation to the voluntary chain Minotel but this fact was not well known in Romania; at the level of 2005 the company owned 13 hotels with a capacity of 1,649 rooms and 3,152 bed places;

The English version of the site does not work.

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9 3 of these hotels are Ibis branded and are operated under management contract; 9 Continental Hotels, through its partnership with Accor, obtained the exclusivity of developing Ibis hotels in Romania; it seems that the partnership was extended to Novotel brand too; 9 of the remaining 10 hotels, one is situated in Bucharest, the other 9 are situated in county residences; 9 with the exception of Continental Hotel in Iasi, classified at 1 star, Continental owns 5 hotels classified at 3 stars and 4 hotels classified at 4 stars; 9 Continental has developed a logo which is present on its website (www.continentalhotels.ro) and on all the printed materials issued by the company; a strap line also emerge: ‘once Continental, always Continental’7; 9 the name Continental is present on all its hotels, except those under Ibis name; 9 no coherent brand emerged due to the fact that at least 3 hotels from the portfolio were in historical buildings and could not be leveled with the other hotels functioning in buildings erecterd between 1970 and 1985; 9 during 2006 the following facts – regarding the hotels in historical buildings - occurred: the historical building of Continental Hotel from Cluj-Napoca was sold; the situation of Continental Hotel from Iasi is uncertain and the Continental Hotel from Bucharest is under extensive renovation and modernization works, delayed by special approval for historical buildings; 9 if Continental will become a true brand, it remained to be seen – but with historical buildings sold or under modernization, chances to create a distinctive atmosphere and ambiance are high; 9 during September 2006 on the company website appeared an announcement regarding the intention of launching a new chain – Continental Express – with two hotels in Bucharest; no further information were available on this matter; Continental Hotels also stated its intention to re-open a Continental Hotel in Cluj-Napoca and to extend the network of Ibis and Novotel hotels all over Romania.

7

Seems that this strap line copy a strap line launch for Hilton hotels in the past.

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8

-

Ana Hotels SA exists since 1996; 9 it is integrated in the Romanian group of companies Ana Holdings and it has no connections with Ana Hotels International8; 9 the group owns 6 hotels with a capacity of 683 rooms and 1,373 bed places; one of this hotel is branded – Crowne Plaza Flora from Bucharest; 3 hotels are located in the mountain resort Poiana Brasov and other 2 are situated on Romanian littoral; 9 to these hotels on the company website: www.anahotels.ro a 7th hotel was added – the Athenee Palace Hilton; the situation is generated by the fact that Ana Hotels SA is an important shareholder in the company owning the hotel building operated under Hilton name; 9 4 of its hotels are of medium dimensions and 2 are large, with more than 150 rooms; 9 4 of them are mid-market hotels classified at 3 stars and 2 are upper market hotels classified at 4 and 5 stars; the company has a logo for its hotels, but no strap line; 9 the hotels have different name and the group name, Ana Hotels, does not show often; a logo exists but is similar with the logo of Unita Turism Holding; 9 for now, no intention for a brand development could be identified, while the website does not give any corporate information.

-

Aro Palace SA exists since 1991 and concentrates a diversified portfolio of 6 hotels concentrated only in Brasov city; 9 the hotels have a capacity of 662 rooms and 1267; 9 2 hotels are of medium dimension, between 50 and 149 rooms; the other 4 are large hotels; 9 the hotels are classified from 1 to 4 stars, covering all the market segments; 9 a particular situation exists for Coroana and Postavaru hotels – while considered separately, they function in separate wings of the same building, have a common lobby and a common front desk; 9 the company does not present on its site – www.aro-palace.ro – a logo; the printed materials are different for every of its hotels; the name ARO

ANA Hotels International (or ANA Hotels & Resorts Co., LTD is a Japanese hotel company, part of All Nipon Airways (ANA). In October 23rd 2006 the joint venture with InteContinental Hotel Group (IHG) was announced. The joint venture has the name IHG ANA Hotels Group Japan and officially commenced on December 1st 2006. Through this joint venture it was created the leading hotel operating company in Japan (www.ana.co.jp/eng/aboutana/press/2006/061023... )

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appears in the name of 3 hotels; the line: ‘Tradition. Professionalism. Refinement’ could be considered a strap line; 9 the website does not provide corporate information and no clear intention for a brand development could be identified; 9 during 2006 the following development occurred: Aro Palace Hotel was completely renovated and modernized, classified at 4 stars and the Aro Business Hotel was integrated in Aro Palace. From the information presented above several conclusions can be highlighted: - with the exception of Continental Hotels which made some important steps toward a brand development and is even considering a second brand, the other Romanian hotel groups are ignoring the idea of a brand for their hotels; - logos and strap lines are relatively rare; - the web sites, when they exists, are mainly concentrated on hotel presentations – even if the companies are traded and financial information should be made available on line; two exceptions exists: in the case of THR Marea Neagra SA which offers financial reports and in the case of Continental Hotels SA which, without being a listed company, offers information about its evolution and future developments. Special situation could be considered for the followings: - the 13 hotels under RA APPS control. This company is state owned and provides support services for public administration; those hotels concentrate 943 rooms and 1806 bed places. One hotel is situated in Bucharest; another one is near Bucharest – at Buftea – in a former palace. Other 3 are located in county residences. The remaining 8 are located in mountain, seaside and a spa resort. They are classified at 2 and 3 stars and, while receiving all kind of tourists, seem to be preferred by those working in public administration when traveling; - the 4 hotels under Romanian Ministry of Defense control; their capacity is of 259 rooms and 521 bed places and are located in the same mountain resort, in Neamt county. It is fairy probable that the state will continue to own those hotels in the future. Other companies – while not registered as direct owners of the hotels – control hotels which, for now, are considered independently owned and operated. Two cases are best known:

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-

-

9

the Micula brothers control 12 hotels9 on Romanian littoral through the companies they own through European Drinks Holding; for 11 of these hotels the indirect control – due to majoritar shareholders positions – could be verified; these 11 hotels are owned by listed companies or companies eliminated form Rasdaq listing, but for which public information regarding the shareholder structure is available; for 1 hotel which is own by a Limited Liability Partnership, the indirect control could not be established; under Micula brothers control exists at least for another hotel, located in the mountain resort Stina de Vale, Bihor county10; Micula brothers consider the hotels mostly as a real estate investment and were accused that they obstructed or stalled other shareholders’ desires to modernize the hotels. SIF Transilvania SA11 which has the position of majoritar shareholder in 6 companies owing and operating hotels; among those companies 3 were presented above: Turism Felix SA (TUFE), Turism Covasna SA (TUAA) and Tratament Balnear Buzias SA (BALN). It also has minoritar shareholder positions – between 10% and 40% of shares – in other 16 companies which own and operate hotels and are all traded on Rasdaq.

The source: Savaliuc, R., (2005), Fratii Micula au cumparat 12 hoteluri pe litoral in ultimii ani, Ziua, April 2, www.hotnews.ro/articol_18983-fratii-micula-au-cumparat-12hoteluri-pe-litoral-in 10 In this mountain resort is located the water spring which supplies the refreshment drink plant owned by Micula brothers is located. 11 SIF Transilvania SA is an investment company, similar to a closed-end fund and has a diversified portfolio of assets. It is traded on the main market at Bucharest Stock Exchange under the symbol SIF1.

ANNEX 6 THE RESORTS OF NATIONAL AND LOCAL INTEREST IN THE ANALYSED REGIONS

Center region Baile Tusnad, Harghita county – spa resort Poiana Brasov, Brasov county – ski resort (potential all year) Predeal, Brasov county – ski resort (potential all year)

North-West region Resorts of national interest Baile Felix, Bihor county – spa resort Sangeorz-Bai, BistritaNasaud county - spa resort Sovata, Mures county – spa resort

West region Buzias, Timis county – spa resort Baile Herculane, CarasSeverin county - spa resort Geoagiu Bai, Hunedoara county – spa resort Moneasa, Arad county – spa resort

Albac, Alba county – mountain resort Arieseni, Alba county – mountain resort

Resorts of local interest 1 Mai, Bihor county – spa resort Baile Turda, Cluj county – spa resort

Balvanyos, Covasna county – mountain resort/ spa resort Bazna, Sibiu county – spa resort

Baile Baita, Cluj county – spa resort

Baile Homorod, Harghita county – spa resort Borsec, Harghita county – mountain/ spa resort

Ocna Sugatag, Maramures county – spa resort Stana de Vale, Bihor county – ski resort

Borsa, Maramures county – ski resort

Calacea, Timis county – spa resort Crivaia, Caras-Severin county – mountain resort Lipova, Arad county – spa resort Secu, Caras-Severin county – mountain resort Semenic, Caras-Severin county – ski resort Starja, Hunedoara county – ski resort

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Bran, Brasov county – mountain resort

Tasnad, Satu-Mare county, spa resort

Harghita Bai, Harghita county – spa resort Izvorul Muresului, Harghita county – mountain resort Lacu Rosu, Harghita county – mountain resort Moeciu, Brasov county – mountain resort Paltinis, Sibiu county – ski resort Paraul Rece, Brasov county – mountain resort Praid, Harghita county – spa resort Timisu de Sus, Brasov county – mountain resort

Tinca, Bihor county – spa resort Zona Fantanele, Cluj county – mountain resort Zona Muntele Baisorii, Cluj county – ski resort

Trei Ape, Caras-Severin county – mountain resort Vata de Jos, Hunedoara county – spa resort

ANNEX 7 THE LISTS OF HOTELS ANALYSED IN BRASOV, TIMISOARA AND CLUJ-NAPOCA

List of Brasov hotels used in the study Nr. Hotel name Stars 1 Aro Palace 5 (includes Aro Business) 2 Bella Muzica 3 3 Capitol 3 4 Coroana 2 5 Postavarul 1 6 Aro Sport 1 7 Ambient 3 8 Ada Belle 3 9 Brasov 3 10

Oasis

3

11

Oliver

3

12

Helis

2

13

Timpa

1

14

Trifan

1

Source: own combined with NAT data

Location City centre City centre City centre City centre City centre City centre Near city centre Near city centre Outside city centre – on a main street Outside city centre – hidden location Outside city centre – on a main street Outside city centre – hidden location Outside city centre – hidden location Outside city centre – on a main street

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List of Timisoara hotels used in the study Nr. Hotel name 1 Timisoara 2 North Star Continental 3 Banatul

Stars 3 4 2

4

Casa Politehnicii

2

5 6

Central Eurohotel

2 3

7

Boavista

3

8

Perla I

3

9

Silva

3

10

Strelitia

3

11

Senator

3

12

Boca Junior

4

13

“2000”

3

14

President

3

15

Best Western Ambassador

4

16

Perla II

3

17

Perla III

3

18

Perla IV

4

19

Tresor

4

20

La Residenza

4

Location City centre City centre City centre – hidden location City centre – hidden location City centre City centre – hidden location City centre – on a main street City centre – hidden location City centre – on a main street Outside city centre – near the airport Outside city centre – near the airport Outside city centre – near the airport Outside city centre – near the airport Outside city centre – visible from a main access road Outside city centre – on a main street Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – on a main street

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Reghina

3

22

Reghina Blue

4

23

Tristar

3

24

Roma

3

25

Royal Plaza

3

26

Royal Club

3

27

Excelsior

3

28

Imperial

3

29

Neon

3

30

Appolo

3

31

Do Stil

3

32

Arizona

2

33

Nord

2

Source: own combined with NAT data

Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – hidden location Outside city centre – on a main street Outside city centre – hidden location Outside city centre – hidden location Outside city centre – on a main street Near the railway station

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List of Cluj-Napoca hotels used in the study Nr. Hotel name Stars Location 1 Victoria 3 City centre – on a main street 2 Melody Central 3 City centre – on a main street 3 Meteor 3 City centre – on a main street 4 Cristian 2 City centre – near the fruit and vegetable market 5 Vladeasa 1 City centre – on a main street 6 Agape 4 City centre – hidden location 7 City Plaza 4 City centre – hidden location 8 Fullton 3 City centre – hidden location 9 Belvedere 4 Near city centre – on the Fortress Hill 10 Sport 2 Near city centre – at the end of Central Park 11 Napoca 2 Near city centre – on a main street 12 Pax 1 In front of the railway station 13 Beta 2 Near the railway station 14 Opal 4 Outside city centre – on a main street 15 Premier 4 Outside city centre – on a main street 16 Confort 3 Outside city centre – on a main street 17 Liliacul 3 Outside city centre – on a main street 18 Olimp 3 Outside city centre – on a main street 19 Pami 3 Outside city centre – on a main street 20 Zimbru 2 Outside city centre – on a main street 21 Stil 3 Outside city centre – visible from a main access road 22 Athos 4 Outside city centre – hidden location 23 Onix 1 4 Outside city centre – hidden location 24 Rimini 4 Outside city centre – hidden location 25 Best Western 3 Outside city centre – hidden location Topaz 26 Capitolina 3 Outside city centre – hidden location 27 Cristal 3 Outside city centre – hidden location 28 Onix 2 3 Outside city centre – hidden location 29 Paradis 3 Outside city centre – hidden location 30 Univers T 2 Outside city centre – hidden location Source: own combined with NAT data

CONTRIBUTORS

Sotiris Hji-Avgoustis, PhD Chair and Professor of Tourism, Conventions and Event Management IU School of Physical Education and Tourism Management Indiana University Purdue University Indianapolis Dr. Mark J. Okrant Professor of Geography & Tourism Development Past President of the Travel & Tourism Research Association Plymouth State University Elisa Rinasti Muresan, Ph.D. Associate, Standard & Poor’s Thomas G. Sears, C.P.A Professor of Accounting/ Management Hartwick College Oneonta, New York Douglas G. Ohmer, Ph.D. Associate Professor of Management Director - Center of Excellence in International Business School of Business Northern State University