16.4.2007

Small hotels feel brunt of Bulgaria coastal overdevelopment

Scores of small hotels on Bulgaria's Black Sea coast have been listed for sale or are being revamped into holiday condos in the run-up to the summer tourist season.

The main reasons for the decision of the hotel owners to get out of the properties are poor infrastructure in some coastal areas, bad location and overestimated profit targets, Dnevnik learned from entrepreneurs and realtors.
Some of the hotels are facing injunction measures imposed after their owners defaulted on bank loans taken out for their construction.
The number of injuncted hotels in the Varna area exceeds 20, Slavi Serbezov, co-ordinator of the Chamber of Private Enforcement Agents in North-eastern Bulgaria, said last week.

The Union of Varna Hotel Keepers said the injuncted properties are mainly family-run hotels along the Northern Black Sea shoreline.
In addition, over 70 other hotels have been put up for sale in the Varna area, including 16 in sea resort Golden Sands, and a dozen hotels in SS Konstantin&Elena.

The average price is 2.3 mln euro per hotel. The most expensive listing is for a 55 mln euro six-storey hotel.
Most of the sale listing in the Varna area are either small family-run hotels or facilities with bad location.
There are no listings for any of the large-scale hotel complexes that have popped up around the Sunny Beach and Golden Sands resorts over the past couple of years.

In the rare case that such a property is placed on the market it is due to the intentions of the owner to cash out of the hotel business and not due to financial or loan repayment woes, said realtors.
Although the supply of hotel properties for sale is slightly down on the year-ago period, it still outpaces demand several-fold, shows data of major real estate brokerages like Address, Yavlena and Foros.
Increased competition, shortage of skilled staff and mismanagement are also behind some of the hotel listings, commented Varna area realtors.

The easiest way to dump a loss-making hotel property would be to dismember it into separate holiday homes although that would taker longer than selling it as it is, said the real estate brokers. This trend is especially evident at the moment along the Southern Black Sea coast. (Dnevnik)