World Cup tourists help to boost Russian hotel market

World Cup gives boost to Russian hotel sector

According to JLL, the World Cup caused a significant increase in the speed of supply growth in hotel development sector in Russia in H1. 

 

“In the period from January to June 2,800 new branded rooms appeared in Russia, and almost 90% of them were added in the cities hosting the competition,” comments Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS. “In general, approx. 3,800 branded hotel rooms were opened in the analyzed region.”

 

For comparison, 1,900 rooms appeared on the Russian market in H1 2017 and 1,700 rooms in the same period in 2016.

 

Top 3 most active countries for the hotel openings in H1 also included Georgia (479 rooms) and Ukraine (283 rooms). Leading cities in terms of new rooms were Moscow and the Moscow Region (1,100 rooms) and St. Petersburg (539 rooms).

 

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"The plans of operators are changing. In the last few years, we have seen the delays of some projects and the cancellation of others, and had to change our forecast mid-year. This year international brands said that they will open 400 more rooms than announced earlier - 9,700 vs. 9,300 rooms. This exceeds both the forecast for the middle of last year (8,200 rooms) and its actual result (6,200 rooms),” notes Tatiana Veller.

 

Marriott, Intercontinental Hotels Group (IHG) and Wyndham remain the market leaders, with Azimut closing the top four.

 

In terms of the geography of new hotels, 6,000 branded rooms (or 62% of all planned for 2018 new room stock) in the region are announced in Russia. Further, the highest activity of international brands is in Georgia and Kazakhstan (approx. 1,000 rooms in each country), followed by Armenia (661 rooms).

 

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The beginning of 2018 was marked by a large number of ‘firsts’ in the region: the first lifestyle limited service hotel by Marriott – Moxy in Tbilisi, Georgia, the first luxury Lotte Hotel in Samara, the first midscale lifestyle hotel by Marriott in the region – Aloft hosted its first guests in Kiev, the first hybrid hotel and hostel from Meininger opened in St. Petersburg, the first internationally branded hotel in Moscow’s Vnukovo airport – DoubleTree by Hilton was put into operation.

 

In H2 2018, the German operator Pentahotel is expected to return to the Russian market as part of the project in the Book building on Novy Arbat in Moscow. In addition, the first asset in the region under the Radisson Collection brand will open in Tsinandali, Georgia, on the territory of the famous vineyard during the ‘rtveli’ period (the Georgian harvest festival in September).

 

“Hotel operators started to expand their reach into smaller markets (Nebug, Ulyanovsk, Arkhangelsk, Sairme, Goderdzi, Brest) that have never been on their radar before. The larger cities are getting oversupplied, and both leisure and business tourists are increasingly interested in new, unexplored directions and going off the beaten paths. Therefore, the brands are following their target audience, ” adds Tatiana Veller.

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