Axa Construct brings "spa" Hotels in Romania

Axa Construct Company will invest some $11 million in the first business mini-hotel chain in Romania, planning to raise part of the money through an issue of company shares listed on the Bucharest Stock Exchange.

The hotels will be equipped with health rehabilitation and maintenance centres, organised according to the Spa model, a kind of healthy tourism that traces its roots back to the classical thermal baths.

The first mini-hotel of the four in Bucharest, to be completed by July 1, was supposed to be an office building at first.

“I already had major real estate agencies wooing me for the spaces I had to offer, mainly since the area, that is near Herastrau, is one of the best in Bucharest,” says Dumitru Simion, Axa Construct owner.

However, in December last year, just a little while before the completion of the building, Simion was persuaded by Cornelio Weiss, a Hebrew who had left Romania 31 years ago and had a solid background in hotel and Spa centres industry, to change the destination of the building.

Weiss, who concluded a management contract for the future hotel network with Axa Construct through his own company, Planning&Consult, places all his bets on the Spa concept: “We want to “service” the businesspeople, as they are working under constant pressure,” he explains.

The future network will position itself on the market by three features: the exclusive dedication to businesspeople, the small dimensions (14-15 apartment hotels) and the Spa reconditioning/rejuvenation centre.

Axa Construct will become a joint-stock company with at least $2 million in share capital effective June 1, planning to go public by the end of the year. “We are trying to raise some $2-3 million through the Stock Exchange, where we will put out some 40% of our stock,” Simion says.

The mini-hotel chain will be the centrepiece of the issue prospect. “We will enter the market with the business already tested: the first hotel will be ready in June, so that the first results should start showing by October/November,” Simion explains.

The competition for the business as it is now, consists in some 200 apartments in Bucharest, ranging from $75 in two-star hotels to $361 in four-star ones. Since the network is planned in have about 55 apartments in the four hotels, the supply on this segment will increase by about one quarter.

Is this not too much? “No way,” Weiss feels, who is very optimistic: “we are counting on a circa 90% occupation rate, compared with 40% in the other Romanian hotels on the average.”