RUSSIA Around 2,200 branded rooms are to be delivered this year to the Moscow market, compared to only 757 branded rooms completed last year, according to JLL. The increase can be partially attributed to preparations for the 2018 World Cup and attempts to accommodate new demand patterns, which are shifting towards the mass market. Half of the announced projects are in the midscale segment. Some of the most notable ones that are expected this year include a triple-brand by Accor and Patero Development (Novotel, Ibis, Adagio) near Kievskiy railway station (701 rooms) and the first internationally managed hotel near Vnukovo airport – Four Points by Sheraton.
Decent market performance
The hotel market in In 2015, the average hotel occupancy in Moscow grew by 2.7 percentage points y-o-y, reaching 67.5 pct, while in St Petersburg it grew by an impressive 7.3 percentage points, reaching a solid 64.3 pct for the year, according to JLL. At the same time, the revenue per available room (RevPAR) increased significantly in ruble terms on both markets, with St Petersburg breaking its RevPAR records with 26.3 pct growth, compared to 2014. Moscow recorded a more modest gain of 7 pct and had an average daily rate growth (ADR) in rubles of 2 pct, up to RUB 8,000, while ADR in St Petersburg grew by almost 9 pct – to RUB 6,200. The key drivers of the growth were the higher level segments: luxury, upper upscale and upscale. “The Russian hotel market in the last year saw a number of changes: a complete switch to ruble cash flows (both for income and expenses), a demand shift to high-volume price-sensitive markets, a significantly increased number of guests from the Russian regions – including businessmen and tourists, a shift in foreign demand sources from West to East and robust occupancy growth,” commented Tatiana Veller, the head of JLL’s hotels and hospitality group in Russia and the CIS.
Future unclear
And yet, in 2015 out of 5,200 rooms scheduled for opening on Russian market, only 3,700 were actually completed. “The reasons are mainly economic: finance is either expensive or unavailable, while the outlook even for the immediate future is unclear. In such conditions many developers feel uncertainity over the returns on invested funds, and are not ready to take the risk of pursuing new projects. Furthermore, many players consider that bringing additional room stock to the market is not the wisest thing to do in such turbulent conditions,” explains JLL.
In the near future hotels of all segments should have the possibility to start building the rates back up on the back of stronger demand, but also stimulated by further attempts at the localisation of the economy. The stabilisation of the geopolitical situation and the rebuilding of Russia’s external image would also help to increase the number of foreign guests and partially recover the Western demand that has greater spending power. If the national currency is strengthened, which will result in the gradual growth of hotel asset values in hard currency terms, the transaction market should start to move.”
The top Russian 25 best hotels
Online travel portal Trip Advisor has published a list of the world’s best hotels based on their user reviews. The Best Hotels of 2016 – TripAdvisor Travelers’ Choice Awards ranking alsolisted the top 25 Russian hotels. The five-star State Hermitage Museum Official Hotel in St Petersburg was ranked as Russia’s best hotel. The five-star Lotte Hotel Moscow was ranked as the second, followed by the five-star Four Seasons Hotel Lion Palace St Petersburg. The remaining 22 places were taken by: Hyatt Regency Ekaterinburg in Yekaterinburg, Ararat Park Hyatt Moscow, Swissotel Krasnye Holmy Moscow, Hyatt Regency Sochi, Domina Prestige St.Petersburg, Grand Hotel Vidgof in Chelyabinsk, The St Regis Moscow Nikolskaya, The Ritz-Carlton Moscow, Radisson Royal Hotel Moscow, Schloss Hotel in Yantarny, Radisson Blu Hotel, Chelyabinsk, Rodina Grand Hotel and Spa Sochi, Sheraton Moscow Sheremetyevo Airport Hotel in Moscow, Belmond Grand Hotel Europe in St Petersburg, InterContinental Moscow Tverskaya Hotel, Swissotel Resort Sochi Kamelia, Astoria Hotel in St Petersburg, Pullman Sochi Centre in Sochi, Radisson Blu Paradise Resort & Spa Sochi in Adler, Radisson Blu Resort & Congress Centre in Adler, Four Seasons Hotel Moscow and in 25th place, the Trezzini Palace Hotel in St Petersburg.
