Dunarea Group is one of the leaders in tourism services in Galati County.  They own and operate 3 hotels, a travel agency and a club.  In 2006, the owners of Dunarea decided to undertake an aggressive expansion plan which they had prepared for several years prior to contacting us.   They had bought 7 sites across Romania, to develop a four-star hotel chain.  Total project cost was EUR 20 million.

Dunarea SA commissioned Bridge Europe Consulting, in September 2006, to help with their expansion.  We worked with them to define the most appropriate strategy, for a unitary concept.  Their hotels would include both city type and holiday resorts.  We drafted the business plan and developed the financial model for a new four-star chain of boutique hotels.  We enabled Dunarea’s management to define the correct pricing strategy and to establish the right economic parameters for the investment.

In addition, we were mandated to raise the finance for the entire project.  We simulated various funding options and stages for the development of the entire chain.  It was clear that Dunarea, with its current business, would not be able to sustain the development in one go, unless heavily subsidised by grant financing.  There was a program that would potentially fund the entire project; however this type of project was not really the focus of that funding program.  So we prepared financial projects for each hotel, individually and independently, and then we simulated several development strategies with various types of funding.  We even had discussions with financing institutions for the financing of the project.

We agreed with the client that the safest, yet most aggressive, way forward was to start with the construction of 2 hotels.  We negotiated with several Romanian and British Banks, and we selected the bank that offered the best financing terms.  We completed a fund-raising exercise of EUR 10.8m, which included both development capital for 2 hotels of the new chain, and refinancing of an existing loan facility.  We consider obtaining this financing to be a real success, the loan bearing an interest of only 2.25% over EURIBOR.  The financing contract was signed in August 2008.  However, the financial crisis becoming obvious, the owners decided to postpone the investment.

www.galtour-dunarea.ro