Sofia Hotel Benchmark Survey 2019

The upscale hotel market in Sofia experienced an exceptional 2018, mostly due to the EU Presidency in the first half of the year. The strong travel and conference activity during the presidency resulted in growth of Average Daily Rate (ADR) outpacing several times the previous years.The latter reinforced the effect of the consistently strong business and economic activity in Sofia in the post crisis period.

Actually, 2018 added to the series of years of economic development which resulted in gradually improving hotel market. This effect was particularly strong in the last couple of years when the increasing airport traffic and the rising popularity of Sofia as tourist destination gave strong impetus to the hospitality sector, as well.

With the EU Presidency in 2018, some performance indicators, such as room rates, posted record growth while occupancy rate remained almost unchanged. Traditionally, the accommodations in the city center show the best results and the last year didn’t make an exception, with the 5 star hotels in the area leading the pack in terms of prices. In this regard the 4 star category in the city center witnessed a significant improvement in 2018, posting the highest price growth, compared to the other segments.

The positive effect of the hosting of the EU Council in the first half of 2018 was evident mostly in the Business and the MICE
(Meetings, Incentives, Conferencing, Exhibitions) segments, since series of high level meetings, conferences and seminars
took place in Sofia over the period. The improved market indicators were expected to last in the following years. However, this could be a challenge, considering the rather limited event calendar following the end of the EU Presidency.

Development activity is another factor that is expected to strongly influence the hotel market in the coming years. After a period of limited new completions, the upscale segment is becoming increasingly competitive with more than 780 new rooms scheduled for delivery by 2021. This will increase market volatility while the new stock will be fully absorbed. On the other hand, the entry of global brand, such as Hyatt, will underpin the position of Sofia in the luxury segment and is expected to bring new customers to the market.

The short term market outlook remains positive, although some fluctuations in the performance indicators may occur. Compared to previous years, the market demonstrates limited growth potential but growth boosting factors, such as business and travel activity are still present.

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