Bulgarian hotels intend to create their own bank

Bulgarian hotels intend to create their own bank

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Hotel owners in Bulgaria are going to create their own bank in order to effectively counteract the global financial crisis. Hotels in Bulgaria, as the global hotel industry as a whole, have recently faced a severe shortage of investment and expensive loans. In order to avoid high loan interest rates creating their bank seems to many Bulgarian hoteliers as the best solution of the problem.

According to the Sofia News Agency, hotel owners in Bulgaria hold negotiations on a project for establishing their own bank with Bulgarian Construction Chamber. One of the results of these negotiations can be the creation of joint inter-industry bank. Not so long ago, representatives of the construction business in Bulgaria have also informed of the intention to create their own banking institution.

The author of the idea of the bank for the hotel sector was one of the largest owners of tourist properties in Bulgaria Georgi Shterev, to whom, in particular, belongs the resort in the region of Golden Sands. His initiative was supported by many major hotel owners in Bulgaria, whose hotels are situated today in key tourist areas of the country: the capital of the country - Sofia, the architectural jewel of Bulgaria - Veliko Tarnovo, Bansko ski resort, sea resorts of Sandanski, Golden Sands, Velingrad.

In an interview, which the President of the Association of Hoteliers in Bulgaria Blagoi Ragin gave the Bulgarian press, he said that now the amount of down payment is being reviewed. It is expected it will be about 40 000 dollars from each of the participants. In order to open a bank project proponents intend to accumulate about $ 8 million.
The main objective of the bank created by the hotel owners would be a financial activity on the acquisition of loans and their subsequent resale to the participants of the association with more profitable interest rates than commercial banks offer.

As a result of the global financial crisis, Bulgaria hotels according to various estimates have lost up to 30% of their profits. In addition to the low business activity, among the main causes of the declining profitability of hotels in Bulgaria are: reduced cost of hotel rooms in order to avoid the fall of occupancy of the hotels, excess of hotel rooms and high competition from neighboring Turkey and Greece.

Date: 26/11/2009