International hotel operators enhance their expansion in Russia

02 August 2012
Knight Frank released the international hotel operators’ activity review since the moment of emergence of the professional hotel property market until now. According to the research, the activity of the operators has risen during the last 3 years.

And namely:

  • For the first 15 years of the international operators’ presence in Russia, there had been only 7 500 rooms put into service, and in the period between 2006 and 2011 the hotel room capacity tripled.
  • More than 75% of the international brand operators’ rooms are located in Moscow and Saint-Petersburg
  • Only 4 international hotel operators control more than 10 hotels in Russia
  • Only 5 operators, represented on the Russian market, control hotels with total room capacity of more than 1,000
  • More than 27 international brand hotels with the total room capacity of more than 6,500 rooms are planned to be opened solely in Moscow.

International operators explore actively the Russian market, announcing annually more than 15 new projects. Mercure Arbat (4*, 109 rooms), the first hotel in Russia, representing this brand of the French Company Accor, opened its doors to its guests in February 2012 in Moscow, and in May the hotel Domina Prestige (4*, 108 rooms) of the cognominal hotel chain, which hadn’t been represented in Russia until recently, was opened in Saint-Petersburg.

Today, practically all Russian ‘million cities’ have international brand hotels functioning or under construction. The resorts like Sochi, Gelendzhik, Astrakhan, and others, with a high annual number of visitors, became interesting for such hotel companies. The interest of the operators towards the ancient Russian cities has also increased lately. For example, for the last two years there were hotels opened in Veliky Novgorod and Yaroslavl, and the construction of a hotel is on the final stage in Pereslavl-Zalessky.

Nevertheless, more than 65% of international brand hotels and 75% of the hotel room capacity (the difference is caused by the smaller capacity of the regional hotels) today are situated in Moscow and Saint-Petersburg. The reason for such disproportion is the choice of these cities as the entrance to the market by the majority of international operators. Unlike Moscow and Saint-Petersburg, where international hotel operators are mostly concentrated in the high- and mid-range segment, in the regional cities the most developed projects represent the economy-class. There still can be observed the blurring of boundaries: 2 Hyatt hotels are expected in Vladivostok and a few hotels under the low-cost Ibis brand of Accor Company are planned to be built in Moscow.

Nearly all large hotel chains present on the Russian market are planning to increase the project portfolio in the future. More than 27 international brand hotels with the total room capacity of more than 6,500 rooms are planned to be opened solely in Moscow.

Olga Yasko, Research Director, Knight Frank Russia &amp CIS, commented, “The Russian hotels market has a rather high development rate due to international operators’ activity. They set high standards of service quality, and become an example for domestic hotel operators. The frequently used franchising scheme and the growth in number of the independent hotels becoming parts of international brands show the increasing appreciation of the Russian companies and the whole market by the international operators».