“It is still early, but I can tell you that at the end of the first quarter, results will be 15-20 percent lower than those in 2008. Due to the crisis, demand has dropped, and we have tried to adjust and become more flexible: we lowered tariffs by 20-25 percent, and the occupancy rate in January-February was slightly below 50 percent,” Niemann told Business Standard.

Experts say the hotel market is certain to decline in 2009, in spite of measures such as cutting tariffs. Estimates indicate a six percent drop in the market this year.

“Lower tariffs will raise the occupancy rate but, at the same time, the revenue per room will slide, and vice versa. So, the best way to maintain revenues is to maintain prices,” said Ali Yilmaz Yildirimlar, General Manager of the Radisson SAS hotel.

Niemann retorts by saying that this is a good theory but “we must consider market fluctuations and especially the human factor. Clients will opt for other hotels if we maintain tariffs, because travel budgets have decreased and supply is higher than last year.”

“The hotel occupancy rate has dropped due to a rise in supply of accommodation spaces in Bucharest. In 2008, a total of 3,500 new rooms became available on the market, to reach 10,929 accommodation spaces in 158 hotels,” said Sorin Ionescu, Managing Partner of the Fivestar Hospitality consultancy company.

The Bucharest five-star hotel market is divided among eight players: Radisson SAS, JW Marriott, InterContinental, Athenee Palace Hilton, Howard Johnson Grand Plaza, Crowne Plaza, Casa Capsa, and Carol Parc.