Hotels - Russia

Published by: Mintel International Group Ltd.

Published: Jul. 1, 2008 - 61 Pages

Table of Contents

Introduction

Key findings

Data Sources

Overview

Population trends

Figure 1: Forecasted trend in Russia’s population, 2006-13

Economy

Figure 2: Recent performance and outlook for the Russian economy, 2006

Currency undervalued

Inflation rears its ugly head

Government regulation and taxation

Higher taxes and nationalisation

Foreign ownership limited

State control risen to 50%

Production begun to contract

‘Rule of law’ has improved…

Outlook for spending on travel and tourism

Figure 3: Russian spending on travel and tourism, 2003-18

Figure 4: Russian spending on travel and tourism, 2003-18

Arrivals and Overnights

Figure 5: Incoming tourist arrivals by purpose, 2000-07

Figure 6: Arrivals from selected non-CIS countries, 2001-07

Hotel arrivals and overnights

Figure 7: Arrivals and overnights in hotels and similar establishments - incoming and domestic guests, 2002-06

Visa requirements

Market Size and Trends

Figure 8: Value of service sector output by category in 2006 and as a % of total, 2001-06

Hotel revenue performance

Figure 9: Hotel performance for Russia compared to the European average, 2006-07

Figure 10: Hotel performance for Russia compared to the European average, 2007/2006

High profitability and low wages…

A ‘virtuous circle’ coming to an end?

Figure 11: Average monthly wages (in Roubles) of employees in selected economic sectors, 2000-06

Lack of staff for growing international chains

Russian GMs underpaid

Figure 12: Average compensation* levels for hotel general managers in selected major cities worldwide, 2005-06

But GM salaries still relatively high compared to other staff

Figure 13: Comparative salaries by position within Russian hotels, 2005-06

Hotel Financing in Russia

Supply structure

Figure 14: Russian lodging capacity in hotels and similar establishments, 2002-06

Hotel stock by region

Moscow

350 new hotels by end 2010?

Upscale and luxury projects

Figure 15: Selected upscale and luxury hotel projects in Moscow, 2008

St Petersburg

Upscale and luxury projects

Figure 16: Selected upscale and luxury hotel projects in St Petersburg, 2008

Yekaterinburg

Chain Penetration and Development

Accor

Kaliningrad

Volgograd

Nizhny Novgorod

Amaks Grand Hotels

Figure 17: Amaks’ hotel portfolio by location, 2008

Azimut Hotels

Serving the midscale business traveller market

Foreign expansion

Heliopark

60% operating margins

Standard operating procedures

Controlling costs

Heliopark’s portfolio

Figure 18: Heliopark’s hotel portfolio, April 2008

Kaliningrad

Pipeline

Nizhny Novgorod

Dubna

Penza and Tolyatti

Hilton

Current Hilton pipeline

Figure 19: Active Hilton pipeline in Russia , 2008

InterContinental Hotels Group

An InterContinental in Moscow

Beyond Moscow

Clover Group partnership

Staybridge to enter Russia

Interstate

Figure 20: Interstate’s portfolio of managed hotels in Moscow, 2008

Kempinski

Kempinski Hotel (Nizhny Novgorod)

Kempinski Hotel Nikolskaya (Moscow)

Kempinski Hotel Berezki (Moscow region)

Marriott

Park Plaza Hotels

Rezidor

Figure 21: Rezidor’s current hotel capacity in the Russian Federation, June 2008

Figure 22: Rezidor’s pipeline in the Russian Federation, June 2008

A representative office in Moscow

New hotels in Moscow

Chelyabinsk

Rezidor and Paulaner

Scandic - IKEA

Starwood Hotels and Resorts

TUI

Hotel Property Trends

Figure 23: Trend in hotel values in Moscow (€ per room), 2000-07

What Next?

Forecast arrivals and inbound receipts

Figure 24: Incoming arrivals (TF*) and receipts in Russia, 2002-20

Supply still to catch up with demand

International brands in secondary and tertiary cities?

Intourist to make a comeback

Zheldoripoteka to build train station hotels

Resort development

Sochi

Sistema is moving in

Golf

A Méridien

Abstract

Over the last two decades, since the crumbling of the Berlin Wall, Russia has embarked on a massive upgrading of its hotel stock from Soviet-style Intourist hotels to modern facilities that meet international standards. Up until the present day, this evolution has mainly impacted the upscale hotel offering in the country’s two principal cities, Moscow and St Petersburg. Meanwhile, major secondary cities, with populations of 500,000 to over a million, remain woefully under-supplied. Throughout Russia, the most severe shortages exist in quality budget and midscale capacity, which is virtually non-existent across most of the country.

Key findings

• The Russian hotel market is largely dominated by domestic guests, who account for 87% of arrivals and overnights. However, foreigners are a significant factor in upscale properties in Moscow and St Petersburg. Business travellers constitute the principal client base for Russian hotels.
• Less than 10% of Russia’s 5,000-odd hotels are managed by professional operators and only around 30 hotels in the whole country are branded by an international hotel chain. Of these, just five are outside Moscow and St Petersburg.
• Rezidor, with its Radisson and Park Inn brands, is the leading hotel chain in Russia, followed by InterContinental Hotels Group (IHG) and Marriott.
• Small but growing Russian chains such as Amaks, Azimut and Heliopark have gained a foothold in secondary and tertiary cities and are targeting the domestic business traveller market.
• Moscow and St Petersburg alone account for around 30% of the country’s hotel capacity.
• There is a severe lack of quality midscale accommodation, due in part to the closure of many Soviet-era properties, which are being renovated to be reopened as upscale hotels.
• The high profit margins enjoyed by Russian hotels, particularly in Moscow and St Petersburg, are likely to be reduced in the future due to rapidly rising wages and increasing supply.
• Russian hotels are often part of mixed-use developments, which can include retail, office space and apartments, since hotels have generally been considered to be less profitable than other forms of real estate.
• Resort development is just getting underway and is concentrated along the Black Sea coast (Sochi) and in golf complexes, some of which are located near major cities.

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