Boutique hotels deeply affected by crisis (Eastern Europe)

Boutique luxury hotels, especially those with capacity under 20 rooms have seen their sales drop by 60% during the first 6 months of 2009. The majority of such hotels were opened during 2006-2008, during the economic boom, benefiting from extensive financing especially from the banks.
The latest victim of crisis seems to be CAROL PARC HOTEL Bucharest, a small luxury hotel close to the downtown of the Romanian capital. The owners have invested more than EUR 10 million in a 17 room property, with high end furniture and interior decorations. Carol Parc and other such hotels have failed to adapt their rates to the crisis and make their offers more flexible. Another issue which has added on the effects of crisis is the compromise Carol Parc has made on services, employing less qualified staff with lower salaries. Market sources indicate the Carol Parc hotel is currently up for sale.
In Budapest, the most affected are Zara Boutique and the newly opened Lanchid19 Hotel. The top luxury boutique hotel NEW YORK PALACE seems to have adapted faster to the new market conditions, dropping rates from an average of EUR 300 to EUR 140, in a direct price war with its competitor FOUR SEASONS Budapest, which has maintained an average rate of EUR 250.
Only those luxury boutiques which adapt their rates to market conditions and offer more flexibility, without compromisig on the quality of services will survive the current economic crisis, especially due to the fact that, in comparison with the large 5 star hotels do not offer extensive conference facilities to compensate for room sales.