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Danubius Group in Sovata

Danubius Group in Sovata

Danubius Hotels Group in Sovata
2000- 2012

1.    Privatisation

The privatisation contract concerning Balneoclimaterica Rt. in Sovata was signed on 16 May 2000 which granted ownership right to Danubius Hotels hotel chain for three hotels in Sovata; Hotel Sovata (later Danubius Health Spa Resort Sovata), Hotel Bradet and Hotel Faget, some villas, and the beaches of the Medve and Mogyorós lakes. With this step Danubius Hotels has increased the number if its hotels in yet another country, undertaking, as the first one, a decisive investor’s role in the Romanian health spa tourism.
Sovata located in the heart of Transylvania became famous for its salty watered Medve lake, a salty lake of helio-thermal endowments, unique in Europe.
The salty water and mud taken from the Medve-lake has been applied successfully for the treatment of rheumatic and locomotor disorders as well as gynaecologic diseases and infertility.
The Danubius hotel chain has come first out of four applicants in the course of the privatisation process, fully undertaking the conditions subscribed in the tender and lived up to its obligations in the following years too. This shows that the Sovata privatisation in Romania has proved very successful and - against several negative examples - it turned out that by involving professional investors of great experience spa hotels and resorts built in the years of communism but neglected during the period of the change of the system can be reconstructed with success.
In the privatisation the Danubius group undertook to increase the capital of Sovata Balneoclimaterica Rt. by USD 5.1 million, out of which in case of a hotel reconstruction of USD 5 million to improve the rating of at least one hotel by one star compared to the original rating, (all three hotels were rated two star in 2000) and to carry out environment protection investments to the tune of USD 100 thousand. The company acquired the concession of Lake Medve from the Romanian state for 20 years, which also brought along certain obligations that are to be regularly met. Danubius has entirely fulfilled its obligations undertaken both in the privatisation and the concession contract, to become a respected and serious player of the Romanian tourism market, decisive in the field of spa tourism.

2.    Investments

To meet the obligations assumed in the privatisation contract, the reconstruction of Hotel Sovata was launched in October 2002. With more than USD 5 million investment, the company succeeded in turning the hotel, that was built in 1974 but became dilapidated by the beginning of the year 2000, into something quite new.
In the summer of 2003 the reconstructed Danubius Hotel Sovata welcomed its guests with 168 three-star rooms and a brand new wellness area. With this investment a new era started for the former spa company, which thanks the Danubius hotel chain has developed into the most modern hotel of Sovata and the region.  
Following the inauguration of the hotel, several smaller investments had to be implemented between 2003 and 2006 primarily to enhance the attraction of Sovata through refurbishing the Medve-lake beach. With the total reconstruction of the Mogyorós- and Medve-lake beaches the company managed to ensure quality beach facilities meeting today’s requirements. Since the beaches mean the biggest attraction in the spa town, this investment did not only strengthen the company but Sovata as a destination, too.  
The Danubius Conference Centre, the second significant investment concerning a hotel following the privatisation of the company was opened in 2007. Demand for a modern conference centre was already voiced directly after the renewal of the hotel, but the growing number of guests experienced between 2005 and 2006 and primarily the strengthening of the business tourism made it necessary to increase the capacity of the conference rooms.
The investment saw the completion of a conference centre of 6 rooms furnished with state of the art technical facilities, with the largest room seating 300 and the smallest 30 persons. All rooms have air conditioning, natural lights and built in sound system. In wake of the investment the original three star category of Danubius Health Spa Resort Sovata was up rated to four-star.
The financial crises started in 2009 have handicapped significant reconstructions, but the company managed to get started certain works as laying new carpets and decorating, painting the hotel rooms even in the crises period, retaining the renewed character of the rooms.
The second most important investment following the hotel refurbishment started in 2010 was the building of the new wellness centre. As a result of the reconstruction completed in 2011 the original bathing capacity of two pools was enlarged to 4 pools, 4 new saunas were opened, a Danubius Emporium beauty salon was added and a play room was created to the pleasure of the children. The completed wellness level meant the finalising of the first two phases of the investment, the third phase is expected to be finished in 2012, in the course of which a sun terrace will be added to the pool area.
In addition to the above mentioned, large scale capital expenditures and investments of moderate extent were also executed, the goal of which was to carry out quality developments (kitchen, restaurant, lobby bar, smoking area) and technical type implementations  (laundry, heating systems, heat exchange system for hot water).
Elevators were replaced in the two-star Hotel Bradet and Hotel Faget and the room levels were white washed and new carpets were laid.
Following the reconstruction of the hotel, all further refurbishments were managed by the Sovata subsidiary from own sources due to the excellent performance achieved.

3.    Results, achievements

In the first years between 2003 and 2005 following the reconstruction, significant improvement in the results of the company were already perceptible, projecting a definite growth for the coming years. The superbly renovated hotel was awarded the title “Hotel of the Year” already in 2003 and it received further recognition in the continuing years.
The subsidiaries of Danubius Hotels Sovata managed to substantially increase their revenues and profit between 2005 and 2008 (the revenues of the company went up to more than one and a half in 3 years).
The crises year of 2009 unfortunately left a black mark on the Romanian economy as well as that of the other countries with hotels serving the guests and the entire reconstruction of the Sovata spa resort took place the very same year when because of the construction works the visitors of Sovata had to endure dust and noise. Despite the difficulties they did manage to minimise the fall back and close the year with a profit.
The revenues of the company showed a growth already in 2010 and due to the improving economic circumstances the Sovata subsidiary was able to close a successful year.   
Growth continued in 2011 thanks to which Danubius could record last December to be the best year in Sovata following the privatisation.  
Owing to the good performance, the continuous growth and investments, the company managed to preserve the leading role in Sovata achieved in the field of Romanian spa tourism, which was reflected by the guest satisfaction too.     
In 2011 Sovata and Danubius received two prestigious recognitions, it was granted the award for the most popular and most stylish spa town of Transylvania.  

4.    Objectives

Already after the privatisation it was clear that Danubius would have to reconstruct further hotels in Sovata. To meet this target the plans for the renewal of Hotel Bradet were prepared in 2008, after the execution of which the currently two-star hotel would be rebuilt into a four-star superior hotel.
The 2009 crises and the uncertainty following it as well as the wellness investment pushed the refurbishment of Hotel Bradet to the background, however, the renewal works are expected to be started in the near future (2012 or 2013).
The reconstruction of Hotel Faget, the third Sovata based hotel of the company was set as a medium-term goal to becoming a three-star unit, while the utilisation of the villas and other facilities owned by the company is a long-term target.  
Danubius Hotels Group, celebrating its 40th anniversary this year, has been present in Sovata for 12 years, which is a definite success story. The Sovata subsidiary has become one of the leading business undertakings in the town and the second largest employer in Sovata.
The company managed to receive the professional recognition of all those who were against or disputed acquiring the spa company throughout the privatisation, the Sovata implementations serve as a good example to the tourism developments of other regions.   


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