How the development of the tourist complex has changed the hotel market in the capital. Market Overview: Hospitality Hotel Market
The hotel business showed growth due to the transfer of demand to a lower price segment, as well as due to the weakening of the ruble, which is why many tourists replaced foreign holidays with traveling around the country
According to data prepared by BusinesStat in 2019, in 2014-2018, the market volume in the country grew by 29.7% and reached 129.6 million overnight stays. Despite the crisis economic processes, the hotel business showed growth due to the redistribution of demand to a lower price segment, as well as the weakening of the national currency, which is why some tourists replaced foreign holidays with travel in Russia. A number of significant international events in the country also had a positive impact on the market: the 2017 FIFA Confederations Cup, the 2018 FIFA World Cup, etc.
In 2014-2018, the number of hotel establishments in the country increased by 94.4% and reached 20.8 thousand by 2018. The implementation of the federal program "Strategy for the development of tourism in the Russian Federation for the period 2015-2020" contributed to the growth of industry establishments. thanks to which the infrastructure of the industry has developed. Growth was also supported by an increase in the number of economy-class institutions: for example, the share of furnished rooms in 2014-2018 increased from 12.7% to 17%.
The average cost of staying in a hotel over the past 5 years decreased by 16.7% and amounted to 4416.2 thousand rubles in 2018.The decrease in the average cost of hotel services was due to a decrease in real incomes of the population, an increase in the popularity of economical types of accommodation, as well as a decrease in the average length of stay in hotel establishments.
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The domestic hospitality market is going through hard times. The development problems voiced by industry analysts are considered to be a weak involvement of professionals in the field and a tangible run with the tourism industry. The main catalyst for supporting the hotel business in Russia is the placement of rooms in high-traffic areas. You don't need to go far to confirm such data. According to official data, hotels and hotels of two federal cities - Moscow and St. Petersburg - take over 70 percent of the industry.
Problems and catalysts for the development of the Russian hotel business in infographics:
General trends
According to official data, Russia continues to lag behind its European partners in terms of overall room availability per capita. At the same time, most entrepreneurs complain about the low level of customer demand. Low consumption results in a sharp reduction in hotel maintenance costs and, as a result, deterioration in the quality of service.
According to experts' forecasts, the ratio of the hotel market turnover in the coming years will noticeably change towards regional consumption. The interest on the part of investors is due to the attractiveness of large industrial cities, which are able to host significant conferences, stages of world-scale events. According to the hotel market analysis carried out by rating agencies, the regional hotel business has serious potential to attract business activity in a highly competitive environment.
Key analysis parameters
Most of the research conducted on the Russian hospitality industry is based on the performance of Moscow and St. Petersburg. Analysis of the Moscow hostel market allows you to form real key indicators that can be used as a basis for decision-making among developers and potential investors. To help the service sector in 2010, the program “Development of domestic and inbound tourism in russian Federation (2011 - 2018). The actual results of the implementation of the seven-year plan can already be assessed today:
As can be seen from the analysis of the hostel market, at the beginning of the launch of the targeted development program, the potential of the hotel business to accommodate the internal flow of tourists was 70 percent of the maximum possible level. It is noteworthy that the market share of cities of federal significance is at the same level. In their assumptions, the experts note that the greatest success was achieved precisely in the development of the hotel business at the regional level.
Similar growth rates have been achieved in increasing the capacity to receive foreigners. And this is how we managed to achieve an increase in the quadrature of the room fund. The diagram clearly shows that the active growth in construction fell on 2016-2018, in the period ahead of the World Cup.
The most active rate of growth in the area of \u200b\u200bthe room stock took place before the World Cup, which once again confirms the industry's dependence on significant events. According to surveys of tenants, the cost of living in apartments located in the area where the host stadiums are located increased tenfold in the summer. There have been cases when permanent tenants were sharply denied accommodation in favor of fans from among tourists.
With regards to Moscow and St. Petersburg, the development of facilities for accommodating a tourist flow is somewhat limited housing stock and objects of cultural significance. In the regions the situation is somewhat different, since the potential for the construction of a new room stock by developers remains.
Loading room stock
When analyzing the hotel market, it is worth taking into account one of such indicators of the level of demand for hotel services as occupancy. The industry average is no more than 49 percent. With the introduction of the targeted development program by 2018, this figure was increased by no more than 5 percent. It should be noted that, according to statistics, the hotel business in Russia is developing much better in the regions. Everything is explained again by the activity of the mayors, who today focus on the development of tourism. With the influx of new visitors to the regions, the need for room stock also increases.
Despite the fact that there is a shortage of middle class rooms in the industry as a whole, developers continue to build hotels of 4-5 classes. Following the trend is due to the fact that the average payback period for a room stock, especially a new one, is at least 10 years. There is a direct relationship here - the higher the class of the hotel, the faster investments will begin to return to the capitalists.
* Special attention among industry representatives is focused on the seasonality of the business. St. Petersburg remains especially sensitive in this regard, and the more southern regions benefit most of all, where the tourist flow can persist for at least 5 months.
Attracting capital to the industry
If the demand in the industry on the part of the consumer is generally understandable - there is a sensitivity in cost and quality, then investors are even more capricious. In focusing on the development of the hotel business, capitalists are guided by the industry's profitability indicators. According to research and statistics of the hotel market, the profitability of this service sector can reach the level of the niche of rented real estate for the needs of corporate parties (placement of offices, warehouses).
For example, profitability in Moscow, regions and Europe:
The results of the study of profitability clearly show the attractiveness of hotel real estate for placing not only residents, but also serious investments. This is not surprising, since Moscow is considered one of the most expensive cities in Europe.
Among the latest trends that give a real impetus to the maintenance and development of the industry is the construction of complexes of wide functionality. Among the areas that such centers will cover is the creation of accommodation facilities for vacationers.
Market in the classical sense, there is a sphere of commodity exchange, this is a place (territory) where trade (exchange) of goods and services takes place.The market can be considered as a system of economic relations between production and consumption, all links of the social economy, based on the sale and purchase of goods, services, capital, labor, technology, etc. The market sphere is the sphere of direct commodity-money exchange, in which the interests of producers and consumers, sellers and buyers are coordinated. Any market is characterized by a combination of supply and demand.
A clear understanding of the hospitality market is extremely important for businesses that are going to enter it or are already working in it. Hospitality market is a collection of all enterprises working in this area.Research of the hotel services market is necessary to identify potential competitors, intermediaries, consumers, which is very important for the marketing activities of the enterprise.
Hotel services market can be defined as a socio-economic phenomenon that combines supply and demand to ensure the sale and purchase of hotel products and services at a specific time and place.
When characterizing the market for hotel services, it should be borne in mind that:
The main object of purchase and sale is services;
There are intermediaries and structures between producers and buyers of services that provide a link between supply and demand;
The demand for hotel services is distinguished by a number of features (a variety of consumers in terms of material capabilities, age, values, motives);
The offer of hotel services is characterized by a variety of types of accommodation facilities, price parameters, and the level of quality of services offered.
Demand for hotel services is a solvent need for hotel products and services.This demand is characterized by high elasticity, a high degree of differentiation, and high substitutability.
The demand for hotel services is influenced by a variety of factors that can be defined as price and non-price. Price is the main factor that determines the amount of demand. As a rule, the choice of accommodation facilities, duration of rest, living conditions depend on the price factor.
Non-price factors include motivational and behavioral factors.
Offer of hotel services is a collection of the capabilities of hospitality businesses to market hospitality products and services.
Hotel product from the point of view of production, it is a combination of a certain quantity and quality of services that can satisfy the needs of people for recreation, entertainment and comfortable living.
Like any other product market, the hotel services market is heterogeneous and is classified according to regional, target and other criteria.
From the point of view of marketing activities, the hotel market is characterized as:
potential market, consisting of a set of consumers with related needs for hotel services, sufficient resources and purchasing opportunities;
target market, consisting of consumers, united by common needs and characteristics, to which the company's activities are aimed;
main market , consisting of consumers - the main buyers of services;
additional market , consisting of consumers who are buyers of a certain volume of services;
strategic market , consisting of consumers of services on which the firm relies in the future.
The study of the hotel services market is determined in two directions: the assessment of certain parameters at a given time and the receipt of forecast data.
First of all, it is necessary to assess the current market situation (market conditions), and then determine the size of the market capacity.
Market conditions - it is the economic situation in the market at a certain point in time as a result of the interaction of factors and conditions that determine the state of supply and demand for hotel services, as well as the level of prices for them.
The conjuncture of the hotel services market is characterized by :
- the ratio of supply and demand of hotel services;
Price level;
The state of competition;
The degree of government regulation;
Availability of seasonal fluctuations in demand for hotel services;
Trends and prospects for the development of the hotel services market.
The study of the conjuncture of the hotel services market is carried out in stages.
Stage I. Conducting ongoing monitoring of the supply of hotel services, demand, price dynamics.
Stage II. Analysis, systematization and generalization of the information received.
Stage III. Development of market reports, reviews and forecasts.
One of the main objectives of the hotel market research is to determine its capacity. This indicator makes it possible to quantify the fundamental possibilities of working in a specific market.
Market volume - the potential volume of services sold on it within a certain period of time (per year).It is measured both in physical terms (the number of consumers of services) and in value terms (the volume of proceeds from sales in monetary terms).
Knowing the market size and trends in its change, it is possible to assess the prospects of a particular market in its development. The most objective indicator of the firm's performance is market share.It reflects the performance of the firm and is defined as follows:
An increase in market share indicates an increase in the economic stability of the firm, as the rate of profit received by the firm increases.
* Calculations use average data for Russia
This market analysis is based on information from independent industry and news sources, as well as on the basis of official data from the Federal State Statistics Service. The interpretation of indicators is also made taking into account the data available in open sources. The analytics includes representative directions and indicators that provide the most complete overview of the market in question. The analysis is carried out for the whole of the Russian Federation, as well as for the federal districts; The Crimean Federal District is not included in some surveys due to the lack of statistical data.
The hospitality industry (hotel business) is a business aimed at providing visitors with housing, food, and organizing their leisure time. Based on this definition, we can conclude that the main clients of hotels are people who primarily make tourist and business trips. It is possible to single out, perhaps, other purposes of travel, but all of them, one way or another, will be reduced to the two indicated.
There are many subjects of the hotel business: hotels, boarding houses, guest houses, hostels, etc. Depending on their status, they provide a different set of services. However, the main product of the hotel business is the accommodation of guests in the premises of the hotel, intended for this, on a reimbursable basis. There are also related products: food, leisure, consumer services.
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According to classifier OKVED, the activity of hotels belongs to section 55 "Activities of hotels and restaurants" and has the following division:
55.1 - activities of hotels;
55.11 - activities of hotels with restaurants;
55.12 - activities of hotels without restaurants;
55.2 - activities of other places for temporary residence;
55.21 - activities of youth tourist camps and mountain tourist centers;
55.22 - Camping activities;
55.23 - activities of other places of residence;
55.23.1 - activities of children's camps during the holidays;
55.23.2 - activities of boarding houses, rest homes, etc .;
55.23.3 - renting furnished rooms for temporary residence;
55.23.4 - provision of places for temporary accommodation in railway sleeping cars and other vehicles;
55.23.5 - activities of other places of temporary residence, not included in other groups.
The hotel business as an industry does not exist on its own. Its development depends on the development of those industries that ensure the demand for its services - primarily tourism and business.
In recent years, interest in domestic tourism in Russia is growing, which is associated with a number of economic and political factors: the annexation of Crimea, the popularization of domestic tourist destinations in state level, decrease in the population's ability to pay, armed conflicts in the Middle East, etc.
According to the World Tourism Organization, in 2014 about 28 million tourists from abroad visited Russia, which puts it in 9th place in the world in terms of tourist attraction.
According to Rosstat, from 1995 to 2011 the inflow of foreign tourists to Russia increased by 27%. On the other hand, in the same period, the Russians also mastered many foreign tourist destinations - primarily beach ones: Turkey, Egypt, Thailand, Greece, Bulgaria. In 2010, the number of domestic tourists was 32 million. Unfortunately, similar data in recent years in open sources of Rosstat or Federal agency tourism is not represented. However, it should be assumed that in 2015, domestic tourism destinations were still used in great demandthan in previous years; and in 2016 we should expect unprecedented growth in the industry.
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The main obstacle to the growing popularity of domestic destinations is the undeveloped infrastructure: relatively low quality of the room stock, service, lack of a wide range of services; all this against the background of a fairly high level of prices.
As for business travel, their volume depends on the economic situation in the country and general business activity. In 2014-2015, there is a recession in the economy, a trend towards a reduction in the costs of business entities (not least due to a decrease in travel expenses), a number of domestic and foreign players leaving the market. Thus, we have to state a decline in interest in hotel services oriented to business travel. Taking into account the general economic forecast, in the coming years, we should expect a continuation of the recession in this direction.
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The only predicted factor in the growth in demand for both business and tourism destinations is the 2018 FIFA World Cup in Russia.
For the most correct display of the situation on the hotel services market, the analysis of indicators provided by Rosstat is carried out according to the most representative areas of OKVED: 55.1 and 55.23.2. Areas not included in the review, such as 55.23.3 or 55.23.5, may theoretically be somewhat relevant to the industry in question, but it is not possible to determine to what extent.
Figure 1. Dynamics of the main financial indicators of the direction 55.1, thousand rubles.
Figure 2. Dynamics of the main financial ratios of the direction 55.1,%
In the diagrams above, you can see that in terms of most indicators, the industry showed negative dynamics in 2014 - first of all, gross revenue decreased. However, it is noteworthy that the profit from sales at the same time increased, which was most likely caused by the relative decrease in the cost of services - in 2014 it was more significant than the decrease in revenue. This is confirmed by the growth in the gross profit margin. The number of market players, according to Rosstat, practically did not change in the analyzed period.
In the first three quarters of 2015, the industry showed good results, almost catching up with the full year of 2014 in revenue, and even surpassing it in profit: 5.3 billion rubles against 4.8 billion. Financial ratios, on the contrary, show growth, even within negative scale. For example, as mentioned above, in the first three quarters of 2015, the gross profitability of the industry surpassed the indicators of the previous five years; the profitability of sales has increased. Profitability of fixed assets, taking negative meaning, nevertheless, has grown significantly compared to 2014. The share of loans and borrowings in short-term liabilities has decreased, the degree of self-sufficiency has increased. Such dynamics indicate a trend towards financial recovery in the industry.
Figure 3. Dynamics of the main financial indicators of the direction 55.23.2, thousand rubles.
Figure 4. Dynamics of the main financial ratios of the direction 55.23.2,%
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The situation with boarding houses and rest houses is somewhat different. In 2014, there was a significant increase in almost all indicators. At the previous - negative - level, only the profit from sales remained, which may be caused by an increase in the cost of services. The main difference between boarding houses and holiday homes from hotels is the availability of additional services, such as catering, health treatments and entertainment. Probably, the presence of such a complex makes this type of enterprise more vulnerable to the economic crisis.
In the further analysis, we will restrict ourselves to considering direction 55.21 only for the most representative regions: the Southern Federal District, the KFD, the North Caucasus Federal District.
Figure 5. Dynamics of the main financial indicators of direction 55.1, NWFD, thousand rubles.
Figure 6. Dynamics of the main financial indicators of direction 55.1, Central Federal District, thousand rubles.
Figure 7. Dynamics of the main financial indicators of direction 55.1, Volga Federal District, thousand rubles.
Figure 8. Dynamics of the main financial indicators of direction 55.1, Southern Federal District, thousand rubles.
Figure 9. Dynamics of the main financial indicators of direction 55.1, Ural Federal District, thousand rubles.
Figure 10. Dynamics of the main financial indicators of direction 55.1, Siberian Federal District, thousand rubles.
Figure 11. Dynamics of the main financial indicators of direction 55.1, FEFD, thousand rubles.
Figure 12. Dynamics of the main financial indicators of direction 55.1, North Caucasus Federal District, thousand rubles.
Figure 13. Dynamics of the main financial indicators of direction 55.1, KFO, I-III quarter of 2015, thousand rubles.
Figure 14. Shares of regions in the formation of the market volume (by revenue) for the I-III quarter of 2015, direction 55.1,%
Figure 15. Dynamics of the main financial indicators of the direction 55.23.2, North Caucasus Federal District, thousand rubles.
Figure 16. Dynamics of the main financial indicators of the direction 55.23.2, Southern Federal District, thousand rubles.
Figure 17. Dynamics of the main financial indicators of the direction 55.23.2, KFO, I-III quarter. 2015, thousand rubles
Figure 18. Shares of regions in the formation of the market volume (by revenue) for the I-III quarter of 2015, direction 55.23.2,%
As can be seen from the diagrams above, in 2014, the overall dynamics of indicators for the country as a whole is reflected in a drop in profits in almost all regions, with the exception of the Urals and the Central Federal District. In the Urals Federal District, the increase in profits occurs against the background of an increase in revenue. In the Southern Federal District, with a significant increase in revenue, the profit actually remained at the level of 2013.
Figure 14 shows the distribution of revenue shares for the code 55.1 for the first three quarters of 2015 by region. The Central and Northwestern Federal Districts are in the lead by this indicator, which is quite logical, since along with the highest business activity, they are also of interest to a large number of tourists, primarily from abroad. As for the main resort areas, the ratio of the shares of the Southern Federal District and the KFD is quite expected - despite the high interest in the Crimean Peninsula on the part of Russians, logistics in this direction is difficult. However, a significant annual increase in the market share of the KFO is expected: the climate here is more favorable than on the coast of the Krasnodar Territory, the density of tourists is not so high; and the construction of a bridge over the Kerch Strait in the future will provide unhindered communication with the rest of the Russian Federation.
The situation is not typical for the North Caucasus Federal District, whose share is less than 1%; Since 2011, the region's revenue in this industry has decreased almost three times, which can be explained, presumably, only by the fall in popularity of the resorts of the Stavropol Territory due to imperfect rooms and incorrect pricing policy in this sector.
The KFD and the Southern Federal District are the leaders in terms of revenue from boarding houses and rest homes, which is quite expected; in total, they occupy over 60% of the market.
2014 was a difficult year for the hospitality industry. The combination of domestic and foreign policy factors caused a drop in hotel revenues; however, profitability has increased, providing more high level profit than in 2013. Despite the drop in certain indicators in 2014 and the lack of improvement in the state of the country's economy, for three quarters of 2015 the industry managed to exceed the profit indicators of the entire last year. Probably, market players are optimizing costs, reducing costs and increasing profitability.
The positive dynamics of 2015, combined with the growing interest in domestic Russian directions and the forced abandonment of a number of foreign ones, make the industry quite attractive for investment. First of all, this applies specifically to enterprises serving the tourism sector. The greatest interest from this point of view is the Crimean Federal District - it is to him that the greatest interest is expected from vacationers, despite the fact that its infrastructure is largely a legacy of the Soviet Union with a low level of service and room stock. Investments aimed at creating high-quality hotel infrastructure in the KFO have a great chance of paying off in the shortest possible time and providing the investor with high profits.
As for the business area, here the players will most likely need to mobilize all resources to overcome the protracted recession. However, as world practice shows, the crisis has a healing effect on any industry, freeing the market from random and weak enterprises.
Denis Miroshnichenko
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The Moscow hotel market remains the leading hotel market in Russia, although changes recent years, expressed in the formation of a quality supply of the Sochi market comparable to Moscow in terms of volume, are beginning to put pressure on metropolitan market accommodation facilities, primarily in the context of group business demand (MICE).
The demand for hotel services in Moscow remains predominantly business, despite the fact that in 2014-2015 there was an increase in the share of group and individual tourist arrivals, including due to domestic demand, which, together with maintaining the volume of domestic business trips at an acceptable level , protected the market from a significant drop in visits during the acute phase of the crisis in 2014 and early 2015. The preservation of demand volumes while it is redistributed among segments affects the operating results of hotels, forcing them to work more flexibly with prices. At the same time, the stabilization of the market, outlined by the middle of the year, gives hoteliers hope for a possible improvement in operating results.
As of mid-2015, the volume of the modern standard room stock in Moscow was about 15.5 thousand units. The appearance in 2014-2015 of new hotels (2068 rooms, in almost all segments, from Economy to Luxury) provided a greater choice for city guests and at the same time constrained the growth of accommodation costs. Currently, about 6,500 rooms of various standards are in various stages of construction, however, the probability of timely implementation of most of the announced projects is doubtful. At the same time, the slowdown in the introduction of new supply, typical of crisis periods, relieves competitive tensions and allows existing hotels to survive difficult times with less losses.
The increase in hotel occupancy (by 8.4% in August 2015 compared to the same period last year) is becoming a driver of market changes, and if this trend continues, Moscow hotels intend to gradually win back the reduction in average selling prices, at least for the inflationary component. The growth in average prices for accommodation starts from the upper segment of the market, which uses the effect of "overflow" of the most sophisticated clientele of other segments of the hotel market into the most expensive format, which has become more affordable due to the significant weakening of the national currency. On the other hand, having high operating costs, luxury hotels cannot help adjusting the price, following the growth of the inflation curve. Inflation and the recovery in demand are the main factors that will push the ruble prices of Moscow hotels to growth.
Moscow remains a “ruble” market, and this circumstance will determine both its attractiveness for foreign clients and the investment expectations of potential buyers of hotel assets. The stabilization of the exchange rate may give the green light to some transactions frozen during the period of sharp currency fluctuations, but in the short term the level of transparency of the investment hotel market is unlikely to undergo dramatic changes for the better.
Analysis of the number of arrivals of foreign and Russian citizens to Moscow
Slowly but surely, the number of visits to Moscow continues to grow. The loud fears of a number of experts and other market participants voiced throughout 2014 about an imminent radical drop in the number of arrivals of foreign citizens to Moscow due to Russia's international isolation in the world arena and various economic and political "catastrophes", small and large, not confirmed.
The growth of arrivals has slowed down (hereinafter, Rosstat information is used, unless otherwise indicated) from a shock 20% in 2010 to 3-5% in 2013 and 2014, but this is far from a decline. Of course, the new political reality in which Russia has been living since the beginning of 2014 could not but change the geography of arrivals. Thus, the list of leading countries from which the largest number of visitors arrives has been corrected, in particular, in 2014 the United States let Turkey go ahead and left the list of five countries leading in the number of tourists sent to Moscow. It should also be noted that all Moscow hoteliers interviewed during the preparation of this study noted a significant increase in visits to the capital by citizens of the BRICS countries, and the purpose of their arrivals is not only related to tourism, but also due to business reasons.
Against this background, the main driver of growth, domestic demand, has become quite evident. The number of Russians accommodated in Moscow hotels in 2014 is 7% higher than the same indicator in 2013 (for comparison, the number of foreign visitors practically did not change).
If traditionally Russians preferred to stay in hotels of a cheaper standard, while in the best hotels of the city the share of foreigners was very noticeable and could be up to 70-80% of residents, then in current realities some high-standard hotels note that the share of Russians among their guests increased and exceeds 50%. At the same time, despite the slower growth in the number of foreigners staying in Moscow hotels, their share in the total volume of accommodation (34% on average) has remained stable since 2009 (despite the fact that in the “fat” years of the mid-2000s, the share of foreigners accommodated in Moscow hotels reached 37-38%).
Finally, the average length of stay of a guest in Moscow continues to strive for a minimum: 1 day. Compared with 3.5-3.6 days of stay in the 2000s, in 2014 this figure is 2.5 days. The reduction in stay is caused by a number of factors, not necessarily negative ones. Along with the high cost of accommodation (and the cost of living in general), which can shorten the duration of travel, the convenience of transport links between Moscow and other destinations also makes it possible to optimize the time spent by a guest in the capital - and to reduce the number of overnight stays per visit. In addition, modern communication formats allow partially replacing business trips with communication in the format of video conferences or even skype calls.
Number of persons accommodated in Moscow hotels (million people)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Russian citizens | 2,4 | 2,27 | 2,41 | 2,33 | 2,41 | 2,48 | 2,49 | 2,25 | 2,74 | 3,12 | 3,39 | 3,48 | 3,73 |
| Change in indicator (%) | -0,05 | 0,06 | -0,03 | 0,03 | 0,03 | 0 | -0,09 | 0,22 | 0,14 | 0,08 | 0,03 | 0,07 | |
| Foreign citizens | 1,28 | 1,19 | 1,3 | 1,36 | 1,45 | 1,49 | 1,38 | 1,19 | 1,4 | 1,62 | 1,73 | 1,82 | 1,83 |
| Change in indicator (%) | -0,07 | 0,09 | 0,05 | 0,07 | 0,03 | -0,07 | -0,13 | 0,17 | 0,16 | 0,07 | 0,05 | 0 | |
| Total placed persons | 3,68 | 3,46 | 3,71 | 3,69 | 3,86 | 3,97 | 3,87 | 3,45 | 4,14 | 4,75 | 5,12 | 5,3 | 5,56 |
| Change in indicator (%) | -0,06 | 0,07 | -0,01 | 0,05 | 0,03 | -0,03 | -0,11 | 0,2 | 0,15 | 0,08 | 0,03 | 0,05 | |
| Number of nights | 12,27 | 12,09 | 12,23 | 12,31 | 12,44 | 12,03 | 12,05 | 9,75 | 11,68 | 12,65 | 13,27 | 14,15 | 14,13 |
| Change in indicator (%) | -0,01 | 0,01 | 0,01 | 0,01 | -0,03 | 0 | -0,19 | 0,2 | 0,08 | 0,05 | 0,07 | 0 |
The structure of demand for hotel services in Moscow
The question of changing the structure of demand for hotel services in Moscow is far from idle. A more even distribution of arrivals throughout the week and year allows hoteliers to improve the quality of planning (including operating costs) and increases the profitability of the hotel business. But will Moscow soon become equal in terms of attractiveness for both businessmen and tourists with key cities of the world, such as London or Paris, where the level of average annual occupancy from year to year is confidently within 80% (the average annual occupancy in London in 2014 was 83 %, in Paris - 80.4%)? So far, the significant increase in overnight stays in the segment of organized tourist groups, noted by hoteliers, is due to countries that have the advantage of visa-free travel to Russia, but it is limited to the summer season. An increase in the importance of the individual tourism segment, which can increase the occupancy of hotels on weekends and during traditional Russian holiday seasons, is still a new phenomenon, probably associated with a reorientation of domestic demand due to a general reduction in Russian travel abroad (-15% according to the results 2014 and -24% in the first half of 2015), and it is difficult to call it a long-term trend so far. Perhaps more definitely these changes will be seen "from afar", after at least a year.
At present, we can state with confidence that the end of 2015 is marked by positive trends with the recovery of demand from all types of clients - individual, corporate, group (tourist and business groups). Hotels will take advantage of this revival to restructure their sales systems to optimize business profitability. This means a return to "core values": an increase in the share of business clientele (individual visitors, corporate clients and business groups) providing premium prices for accommodation during the week / business season - while actively working with large tour operators-wholesalers in promising directions (in particular, in Asian countries) for the signing of new large group tourist agreements at reasonable prices.
Summing up the above, we can state that the structure of demand for hotel accommodation in Moscow has not changed much, and outside the summer season there are few tourists in the city. However, the emerging shifts in the positive perception of the city by visitors, resulting from the efforts of the city authorities to turn Moscow into a friendly, clean and interesting city, are already having an effect. In this context, it is not surprising that in September 2015 Mayor Sergei Sobyanin was awarded the Golden Apple prize, established by the international association of journalists writing about tourism. This prize is an international recognition of the changes for the better that have taken place in the tourism sector of Moscow.
Even the notorious visa issue, which constantly worries workers in the tourism industry and is traditionally declared one of the main barriers to increasing tourist flow in the Russian Federation, as it turns out, is completely resolved. In addition to the official list of 40 countries whose citizens today can come to the Russian Federation without a visa, citizens of the CIS countries enjoy the same benefits, and in December 2014 the Russian government officially approved the initiative to abolish entry visas for participants, accompanying persons, fans and media workers. covering the 2018 international football championship. Finally, discussions are continuing on the possibility of establishing a visa-free entry to Moscow for up to 72 hours, as has already been done for cruise ship passengers in St. Petersburg, for citizens of other countries.
Supply on the Moscow hotel market
According to the data Federal Service State Statistics, as of the end of 2014, 492 collective accommodation facilities were officially registered in Moscow, of which 246 hotels and similar accommodation facilities, with a total number of 43,442 rooms (according to the Department of National Policy, Interregional Relations and Tourism of the Moscow Government, in 2014 there were also 125 hostels and 335 mini-hotels in the city). According to Cushman & Wakefield estimates, at the end of September 2015, the so-called hotel market. The "modern standard" of Moscow consisted of 15.5 thousand rooms. The category of "modern standard hotel rooms" is difficult to define clearly, but it mainly includes hotels built in the post-Soviet period (or that have undergone complete reconstruction during this time) and corresponding to the modern ideas of travelers about comfort, many of them are located in hotels, which are part of the chain hotel companies (international or Russian). Accordingly, most of the rest of the room stock is morally and / or physically outdated or "unformatted" (mini-hotels and hostels, most small hotels are not taken into account here) and does not correspond to the expected level of comfort of a modern traveler.
Although the certification of hotels in the Russian Federation is voluntary, as part of the 2018 FIFA World Cup, Russia has undertaken to certify all hotels where the championship participants will be accommodated. As of mid-2015, 154 Moscow hotels have passed such certification, among them the main share are 3-4-star hotels.
In terms of the volume of high-quality hotel rooms, Moscow still lags behind the leading European cities - Paris, London or Berlin, but is approaching such cities as Istanbul, Barcelona or Amsterdam and is already bypassing Prague or Warsaw. Thus, it cannot be said that the Moscow hotel market looks undeveloped against the background of European cities, which is undoubtedly the result of active growth in supply in recent years.
From the point of view of the dynamics of changes in the Moscow market of hotel rooms modern quality, its growth from 2006 to the current moment amounted to 7.5 thousand rooms of various categories, which means almost doubling of the quality room stock. During this period, the market grew at an average rate of 9% per year, with peaks of activity in 2010 and 2011, when the volume of quality supply increased by 17% and 15%, respectively.
Entering hotel rooms in Moscow in 2014-2015
| Name | Segment | Number of rooms | Opening |
| "Intourist Kolomenskoye" | Middle segment (Midscale) | 259 | I quarter. 2014 |
| Mercure, Moscow, Baumanskaya | Middle segment (Midscale) | 47 | II quarter. 2014 |
| Radisson Blu, Sheremetyevo | Upper segment (Upscale) | 379 | III quarter. 2014 |
| Four Seasons Hotel Moscow | Luxury segment (Luxury) | 180 | IV quarter. 2014 |
| DoubleTree by Hilton Hotel Moscow - Marina | Upper segment (Upscale) | 270 | IV quarter. 2014 |
| Marriott, Novy Arbat | 234 | I quarter. 2015 | |
| Ibis, Dynamo | Economy segment (Economy) | 317 | III quarter. 2015 |
| Ibis, Oktyabrskoe Pole | Economy segment (Economy) | 242 | IV quarter. 2015 |
| Hampton by Hilton Moscow, Strogino | Middle segment (Midscale) | 214 | IV quarter. 2015 |
| Boutique-hotel StandArt | Upper Upscale | 110 | IV quarter. 2015 |
| Doubletree by Hilton Moscow, Vnukovo | Upper segment (Upscale) | 432 | IV quarter. 2015 |
| Total: | 2684 |
With the formation of new clusters of business activity (first of all, around the metro stations "Belorusskaya", "Paveletskaya", "Mezhdunarodnaya") and the exit of the Moscow business zone far beyond the Sadovoe and Tretye \u200b\u200btransport rings, hotel zones were also formed, functioning in close connection to new office centers... In addition, active construction of hotels was carried out along the main transport arteries of the city and in major transport hubs. It is these areas that generate the demand for new hotel projects. The specifics of the location of these districts dictate the standard and format of new hotels - first of all, the Economy and Midscale categories that are most in demand for Moscow.
According to Cushman & Wakefield, as of the date of this report, there were about 6,500 hotel rooms in the development or implementation process in 23 hotel projects. Considering the ongoing crisis in the country's economy, as well as the fact that most of the announced projects are branded (i.e. have almost fixed construction costs - in euros or US dollars - per room), a significant drop in the profitability of the hotel business in solid foreign currency due to the depreciation of the ruble in 2014 means a decrease in the investment attractiveness of these investments for owners. In this regard, it seems that the implementation of projects that are at an early stage of development may be postponed to a later date or even canceled.
Hotels expected to be commissioned before 2019
| Name | Segment | Number of rooms | Year of introduction |
| Novotel, Kievskaya | Middle segment (Midscale) | 200 | 2016 |
| Adagio, Kievskaya | Economy segment (Economy) | 150 | 2016 |
| Ibis, Kievskaya | Economy segment (Economy) | 350 | 2016 |
| Moscow Marriott Hotel Crocus City | Upper segment (Upscale) | 250 | 2016 |
| Hyatt Regency Moscow, Petrovsky Park | Upper Upscale | 297 | 2016 |
| Novotel, Avtozavodskaya | Middle segment (Midscale) | 350 | 2017 |
| Holiday Inn Crocus City | Middle segment (Midscale) | 1025 | 2017 |
| Ibis Budget, Oktyabrskoe Pole | Economy segment (Economy) | 108 | 2017 |
| Ibis Styles, Malaya Pirogovskaya | Economy segment (Economy) | 220 | 2017 |
| Radisson Blu Arena Moscow | Upper segment (Upscale) | 363 | 2017 |
| M Gallery, Gostiny Dvor | Upper segment (Upscale) | 181 | 2017 |
| Zubovsky Square Hotel | Upper segment (Upscale) | 130 | 2017 |
| Hilton, Prechistenka | Upper Upscale | 142 | 2018 |
| Hilton (former Hotel Tsentral "naya) | Upper Upscale | 170 | 2018 |
| Novotel, Taganskaya | Middle segment (Midscale) | 155 | 2018 |
| Bulgary Hotel | Luxury segment (Luxury) | 150 | 2019 |
| Persitsa apartment building (Mandarin Oriental) | Luxury segment (Luxury) | 320 | 2019 |
| Raffles Moscow | Luxury segment (Luxury) | 130 | 2019 |
| Radisson Riverside Resort | Upper segment (Upscale) | 200 | 2019 |
| Total: | 4891 |
Prospects for the development of the hotel market in Moscow
Moscow continues to actively develop, forming new large-scale clusters through the development of former industrial zones (for example, ZiL), the development of previously empty territories (for example, Khodynka, Tushino, Mnevniki), as well as the creation of qualitatively new development zones at the junction of the city and the region (for example, Skolkovo and Rublevo-Arkhangelskoye). And this is not counting the completion of ongoing projects in the business center of MIBC "Moscow City". All these projects are not only changing the face of the city, but will also create new sources of demand for hotel accommodation in areas that were once unpromising for the construction of accommodation facilities.
Below is an incomplete list of the most significant projects that were announced for implementation or were in the process of implementation at the time of preparation of this report:
MIBC "MOSCOW-CITY"
A large business center under construction in the Central Administrative District of Moscow on an area of \u200b\u200b100 hectares, consisting mainly of high-rise towers with a capacity of more than 4 million square meters. m of offices, commercial premises, apartments and hotels. The planned completion of the last projects under construction is 2020. Since the beginning of the implementation of the Moscow City project in 1995, not only the architectural appearance of the projects, the composition of the participants, but also the functional zoning of the areas has changed several times. Currently, instead of several hotels, only one has been implemented (Novotel Moscow-City, 360 rooms) and one more has been announced as part of the Grand Tower project.
ZIL
Implemented on an area of \u200b\u200b330 hectares, previously occupied by the production facilities of the auto giant of the same name, is a multi-stage and multifunctional project with a total volume of over 4 million sq. m, which will consist of 9 functional parts, which will house residential neighborhoods, a business center, a sports cluster, and car production. The implementation period is until 2022. With the opening in early 2015 of the ice "Arena of Legends" (now "VTB Ice Palace"), the first stage of the reorganization of the industrial territory has been completed. Several hotels of different price categories have been announced in several components of the multi-stage project, and the construction of one hotel with 350 rooms has been confirmed.
SKOLKOVO INNOVATION CENTER
The first "science city" implemented in the post-Soviet era, being built from scratch on the border of Moscow and the Moscow region (since 2012, the territory has officially become part of Moscow). The project "Russian Silicon Valley" (the total area of \u200b\u200bbuildings and structures - 2.6 million sq. M.), Occupying 386 hectares, should be completed by 2020. In addition to performing research and production functionsSkolkovo will be an ordinary scientific town with a permanent population of 20 thousand people and the usual infrastructure for the city, including a transport and transfer point and several hotels.
RUBLEV-ARKHANGELSK
The 461 hectare site located along the Novorizhskoe highway was initially positioned for the creation of a new international financial center, but the realities of the current state of the economy have made appropriate adjustments, resulting in 4.1 million sq. two-thirds of the area will be built up with housing. At the same time, the current version of the project provides for the construction of more than 800 thousand square meters. m of office space, as well as 60 thousand sq. m hotels. The timing of the project is unclear, since the owner of the project, Sberbank, is still looking for investors.
PARLIAMENTARY CENTER IN LOWER MNEVNIKI
The decision to move some federal institutions from the center of Moscow to the periphery with the simultaneous unification of both chambers of parliament (the State Duma and the Federal Assembly), amended in 2014, identified the Nizhniye Mnevniki district as the final address for the future Parliamentary complex with a total area of \u200b\u200b345 thousand square meters. m. According to reports from the Moscow Government, a parliamentary town will be built next to the main building, which will include premises for the work of both chambers of parliament, service housing, a hotel, a fitness center, a medical clinic and other social infrastructure facilities. A metro station and two new bridges across the Moskva River will also be built nearby. The announced terms of the project implementation are 2016-2019.
TUSHINO
The name of the project “City on the River - Tushino 2018”, implemented by the IFD Capital Group, has clear allusions to the planned holding of the International Football World Cup in Moscow in 2018. The first stage of the project (the total area is more than 1.5 million sq. M. Of areas for various purposes), occupying 160 hectares of the former Tushino airfield, ended with the commissioning of the Otkrytie Arena football stadium in 2014. The rest of the project will include a diverse sports infrastructure, office and retail real estate, housing, and a 322-room hotel. All sports infrastructure, hotel and about 90 thousand square meters. m of apartments should be completed by the start of the FIFA World Cup, and the rest of the project by the end of 2020.
Profitability of the hotel business in Moscow
It can be said without exaggeration that, starting from 2014, the entire Russian economy has been living in new conditions, which, if they change for the better, will not be soon. Along with the political and economic sanctions of the West, which seriously changed the playing field for hoteliers, the end of 2014 also brought about a depreciation of the ruble. As a result, 2014 became one of the most alarming and unstable years for Moscow hotels, just regaining confidence in the future ”after the economic crisis of 2008-2009.
Business segmentation specifics in hotel industry, where only a part of sales is made at "open prices", subject to fluctuations in momentary changes in demand, and a rather significant share of sales is made under long-term contracts concluded before the beginning of the calendar year and fixing tariffs for different groups of customers for a year, determines a certain delay in the reaction of changes in the average price to a number (Average Daily Rate - ADR) to a new "picture of the world". That is why, with an almost 7% (-6.8%) drop in demand for accommodation, at the end of 2014, the average room price did not change significantly (-1% compared to 2013). Of course, due to the sharp drop in the ruble exchange rate in the second half of the year (according to the Moscow Exchange, at the end of 2014, the ruble exchange rate depreciated by 41% against the US dollar and by 34% against the euro), expressed in US dollars, the decrease in ADR amounted to 18 %, and the resulting decrease in profitability per number (Revenue per Available Room - RevPAR) was 23.6%. At first glance, it looks like a catastrophe, if we forget that not so long ago, in 2009, the depth of the fall seemed even more tragic (while the level of occupancy in the market decreased by 12.2% on average, the average room price decreased by 22.3% , the resulting profitability per room - by 31.7%, and in US dollars the decline in RevPAR was 46.5%).
Why did 2014, given the general “pre-storm” mood against the background of the Ukrainian crisis unfolding since the beginning of the year, show more stable results, even taking into account the increased supply (the increase in the number of rooms between 2009 and 2014 amounted to 5.5 thousand rooms)?
Hoteliers usually prefer to “treat” weakened demand using traditional methods: a flexible approach to pricing and an urgent search for new clients to replace those who have disappeared (as noted above, in 2014 most of the contracts with travel groups from the EU and the USA were canceled due to concerns - real or imaginary - tourists regarding the safety of visiting Russia during the "Ukrainian crisis").
As a result, the summer tourist seasons in Moscow 2014-2015 marked a significant increase in tourist groups from China, India, South Korea, Iran. As noted in a report by CityMetric Intelligence, in 2014 Moscow became the most popular destination for Chinese tourists in Europe.
Against the background of a clear stagnation in the number of foreigners accommodated in Moscow hotels (1.83 million in 2014 compared to 1.82 million in 2013), the demand for accommodation from Russians became more noticeable (an increase in 2014 by 7%, to 3 , 73 million hosted persons). Moreover, the tendency of Russians' reorientation to rest on the territory of the Russian Federation, which became noticeable in 2014 and was the result of the rise in the cost of foreign travel due to the devaluation of the national currency, as well as (and not least!) Due to the explosion of interest in Moscow as a center of "event tourism" (According to the Moscow Government, the total number of tourists and excursionists who visited Moscow in 2014 was 16.5 million) caused a noticeable - up to 10 percentage points - increase in the level of occupancy of city hotels during weekends and seasonal holidays (November, January , May).
The first signs of a recovery in demand, noted by all hotels in the city, became noticeable in the spring of 2015, against the background of a general stabilization of the political situation in the country, especially in connection with the large-scale holding of a number of international events, such as the celebration of the 70th anniversary of Victory Day in May and the holding of BRICS conferences and SCO in July, when it became clear that the attempt at international isolation of Russia had not been successful. In hotels of almost all price categories, an increase in occupancy was recorded (the exception was the Economy segment, where in 2013-2014 the volume of supply increased by 16%). There was a redistribution of demand between segments, logical for crisis periods, both by price: an increase in the category of hotel by customers with a significant convergence of prices between hotels of different categories, and by geography, which assumed the willingness of customers to consider moving to a less conveniently located hotel with a discount on accommodation. All this allowed higher-class hotels to improve their financial performance (primarily, to increase occupancy) by attracting cheaper customer groups flowing there from lower-quality segments (in particular, the Upscale segment was particularly affected).
July-August, as well as September 2015 became the busiest months since 2013, when in almost all price segments the utilization level came close to 80% and even exceeded it. And although the "depth of booking" remains small (for groups - about 2 weeks, for corporate employees - less than a week), the general mood among hoteliers is positive, allowing us to speak of overcoming the "bottom".
The main indicators of modern Moscow hotels
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| 0,687 | 0,648 | 0,569 | 0,633 | 0,65 | 0,673 | 0,685 | 0,638 | |
| Placement price (RUB) | 8 447 | 8 166 | 6 349 | 5 366 | 5 685 | 5 916 | 5 991 | 5 933 |
| Profitability per room (RUB) | 5 803 | 5 292 | 3 612 | 3 397 | 3 695 | 3 983 | 4 103 | 3 786 |
| Change in yield (%) | -0,09 | -0,32 | -0,06 | 0,09 | 0,08 | 0,03 | -0,08 | |
| Inflation rate (%) | 0,119 | 0,133 | 0,088 | 0,088 | 0,061 | 0,066 | 0,065 | 0,114 |
Moscow hotel market development forecast
The logical consequence of stronger demand is price increases. How prepared are hoteliers to raise prices, and are there other options for increasing profits?
Undoubtedly, demand is still weak, not least due to the vague economic policy of the Government of the Russian Federation, which now results in a prolonged recession (the Central Bank's forecast for 2016, announced in October 2015, suggests negative changes in the country's economic growth). In this regard, one can hardly expect a radical increase in prices in the contracts that are now being concluded by hotels for the next year with corporations, as well as large tour operators and other companies providing large amounts of overnight stays. The cautious consensus of hoteliers today is the 5-7% price increase expected for 2016, which at best will be able to offset the projected inflation (according to the Ministry of Economic Development's expectations, in 2016 it could reach 6.4%).
A more flexible mechanism for the operative influence of hoteliers on changes in demand is traditionally the category of "open prices", which includes, along with their own hotel sales channels, sales via Internet services (Expedia, booking.com and similar), whose share in individual hotel bookings it increases significantly annually (despite the rather impressive commission rates, which amount to 15-20% of each booking).
In addition to a universal recipe for widespread price increases, Moscow hoteliers are committed to conducting a thorough audit of their own business segmentation in order to reconfigure it - from segments that provide volumes (group tourism) to traditional high-income segments (individual visitors, corporations and business groups) that provide software loading. maximum prices. One of the expectations of Moscow hotels is also the possible return of business groups from Sochi, where many organizers of business events (MICE segment), especially large ones (800 delegates and more), moved in 2015, some out of love for diversity, some doing unspoken government order to state-owned companies to take an active part in maintaining demand for the newest and most saturated market for congress and recreational facilities in the country. Taking into account that all the largest state-owned companies in Russia became the main investors in these projects, such a decision seemed quite logical.
In addition to restructuring business segmentation and selective (and, if possible, widespread) price increases, hoteliers in 2016 will continue to closely monitor the main operating costs, monitor all purchases (especially in the area of \u200b\u200bfood and beverages, if possible, with the replacement of some of the goods with local analogues - in order to reduce currency risks for positions that are purchased abroad for foreign currency), although there is an opinion that after the previous crisis of 2008-2009, which served as a reason for the development of measures to improve the efficiency of hotel enterprises, there was practically no "surplus" ... Question annual indexing salaries for employees (to neutralize the effect of inflation), which was once the main motivating factor for staff retention, also ceases to be universal. Hospitality executives are increasingly favoring other motivators, offering employees new skills and career advancement as an excuse for higher pay.
Among the "uncontrollable costs" that affect the level of operating profit of Moscow hotels, are the so-called. “System costs” of branded hotels (payments for part of the centralized services of hotels operated by international operators are recorded in the currency of the countries where these companies are located), as well as city utility costs (whose volume in the structure of hotel operating costs, however, is not high).
As a result, the Gross Operating Profit (GOP) level of modern Moscow hotels is gradually approaching the average European levels and no longer amazes foreign hotel investors, but there are exceptions here, in particular, among the excellently located Economy and Midscale, which are still capable of generating over 60-65 percent GOP in some months. For the sake of fairness, it should be noted that Moscow hotels still have a margin of safety, especially against the backdrop of petty savings that hotels in Eastern Europe (Prague and Budapest) had to resort to in recent times of crisis.
Although the issues of capital investment in existing hotels are a concern of owners, not hired hotel managers, hoteliers have a direct interest in ensuring that the level of physical and moral deterioration of the hotel is minimal, which is achieved by reasonable adherence to the generally accepted schedule in the hotel industry for scheduled repairs and replacement of old ones. pieces of furniture and equipment. The 2014-2015 crisis not only postponed the start, but also called into question the completion of many of the hotel capital improvement programs planned or started after the previous crisis of 2008-2009. For example, even the opening at the end of 2014 of the Four Seasons Moscow, which was a serious competitor to the existing hotels in the Luxury segment, did not allow two hotels of this segment (Ararat Park Hyatt and Baltchug Kempinski) to fully complete the ongoing capital repair programs, which were estimated at around 200,000 US dollars. to the number.
Tough economic times mean that most hotel owners are likely to choose to postpone scheduled refurbishment of their hotels until future times, which means bad news for hotels commissioned in the 90s / early 2000s, which will continue to lose their competitiveness - against the backdrop of the continued increase in the city's room stock and the continuing intense competition among hotels.
Analysis of the Moscow hotel investment market
Although the number of modern-quality hotels in Moscow is growing from year to year, the Moscow hotel investment market is still quite local, and the transactions of purchase and sale of properties that are recorded from time to time, as a rule, occur either through direct interaction between the seller and the buyer, or as a result of tenders. where state property is sold. A similar situation due to the limited number of participants who, as a rule, are professionally involved in investing in hotel projects and who know each other and the "rules of the game". Of course, the factor of the “accidental buyer” cannot be ruled out, but the reasons for such transactions often go beyond purely economic factors.
The most famous deals from 2013-2014 include:
- Sale of the Belgrade Hotel in April 2014 by the private owner of a company controlled by an investor and developer, the owner of KR Properties, Gleden Invest, Azimut Hotels, as well as the Metropol Hotel, Alexander Klyachin. The transaction amount is estimated at USD 110 million, which is USD 480 thousand in terms of the current room stock. But the hotel needs a complete restructuring, after which its number of rooms from the current 230 rooms can increase. Taking this into account, and also taking into account the increase in future operational efficiency, the nominal profitability of the transaction cannot be considered indicative.
- Purchase in 2014 of the Heliopark Empire hotel (33 rooms) by a private investor. The seller was a bank for which the asset was non-core. The amount of the deal was not disclosed and is estimated at USD 4-5 million. A peculiarity of the transaction is the presence of encumbrances in the form of a lease agreement with the operator Heliopark Hotels and Resorts, which is atypical for the Moscow market. In this regard, the profitability of the transaction is comparable to the profitability of the investment sale of a class B office building.
- The sale of the Renaissance Moscow Olympic hotel (486 rooms) by Viktor Rashnikov's structure of the Magnitogorsk Iron and Steel Works (the hotel was transferred to the owner as compensation for the debt of the city of Moscow) to Alexander Klyachin in May 2013. The amount of the transaction is estimated at USD 150 million, which is calculated per room gives 310 thousand US dollars. The estimated profitability of the transaction is 9%. After the purchase, the new owner terminated the agreement with the management company Marriott and added the hotel to its own Azimut Hotels chain.
If before the 2014-2015 crisis the expected profitability of Moscow hotel deals for operating hotels was estimated at 9-11% (although more aggressive profitability levels were recorded for hotels with unique characteristics and / or the potential for a significant increase in business profitability), now time, the drop in the profitability of the hotel business (especially in terms of US dollars) calls into question the definition of the "market price". In this respect, the seller's market and the buyer's market have practically no points of contact, especially in light of the persisting “dollar” expectations of sellers against the background of the “ruble” income stream generated by hotels. The leaps in the ruble exchange rate observed in December 2014 and summer 2015 practically deprived the market of hopes for the implementation of transactions: the objects offered for sale were removed from the market "until better times." This circumstance, however, is an additional argument in favor of the persisting, despite the economic shocks, “margin of safety” in the market: “stressful” sales, as in 2009, remain a myth. The owners prefer to "hold back" the profitable asset, than to significantly lower in price. Obviously, if the market situation stabilizes, it will be easier for the owner and the buyer to find a price compromise and the profitability of transactions will return to pre-crisis levels.
The review was prepared by:
Marina Smirnova, Head of Hospitality and Tourism at Cushman & Wakefield,
Marina Usenko, expert in hospitality and tourism