In terms of yields, Sofia ranked second after Moscow, where returns on hotel investments averaged 9.25 per cent, and was the best-performer among the capitals of the countries across Central and Eastern Europe (CEE).
Despite the low occupancy, Moscow's hotel segment is still very attractive, registering the highest levels of revenues fetched by an available room, an indicator called RevPAR, for 2007. Four and five star hotel rooms in the Russian capital are among the most expensive, with prices reaching 483 dollars a night.
Bucharest comes third in terms of returns on hotel investments with yields standing at 8 per cent. The number of four and five-star hotels in Bucharest will grow by 50 per cent this year - after the opening of Radisson Bucuresti and Turist Ramada hotels.
About 4,000 new hotel rooms are expected to spring up in Romanian capital within the next three years, according to the CB Richard Ellis analysis, cited by the Property Magazine.
All in all, RevPAR in CEE was steadily growing and this accounted for the considerable volume of pipeline projects in the region, CB Richard Ellis consultants said. A large number of entrepreneurs still view the CEE market as an interesting investment opportunity. The current dominating trend is for developing hotels as a part of mixed-use schemes.
Transactions in CEE are getting more transparent and accessible to international investors, which results in a boosted investment activity across the whole region.
Generally, in developing markets like CEE, there is a strong correlation between the growth of the office and hotel segments. Most large cities rely primarily on corporate tourism rather than on recreational one, with the exception of Prague and Bucharest, the report said.