According to JLL, 2015 saw the quality hotel supply of Russia, CIS and Georgia increase by 6,000 rooms, slightly more than a half (3,300) of which was in Russia. More than 8,900 rooms were scheduled for opening in 2015, of which 5,200 rooms were in Russia.
Tatiana Veller, head of JLL’s hotels & hospitality group, Russia & CIS, said: “The main reason why a third of all announced projects got postponed is obviously the economic situation, which has a ripple effect on the whole region. In some cases we witness the lack of funding necessary for project completion, in others - investors prefer to freeze their projects instead of continuing to put money into construction and fit-out without having certainty in future operational indicators.”
In 2016 international hotel operators are planning to open 7,400 rooms in Russia and CIS, 64% (4,700) of which are scheduled to enter the Russian market. Other leaders in terms of new supply this year include: Kazakhstan (876 rooms), Armenia (549 rooms), Uzbekistan (533 rooms) and Belarus (414 rooms).
“Although investors are being very cautious these days with starting new hotel projects due to current political and economic instability, the amount of internationally managed hotel rooms planned to open in 2016 in the region is still high,” – Tatiana Veller commented. – “New branded openings are not expected in Ukraine for the second consecutive year: that market still has some way to go before it returns to pre-crisis indicators, and many investors hesitate to start new projects given the circumstances”.
Of the 4,700 rooms announced in Russia, almost half (2,200), are projected to enter the Moscow market, putting the quality Moscow supply at 25,000 rooms. The largest 2016 project in Moscow will be near the Kievskiy railway station, a triple-brand by Accor – Adagio, Ibis and Novotel (701 keys in total). St. Petersburg, which did not see any new branded openings last year, is expected to receive three new hotels – the city’s first Hampton by Hilton Expoforum and the country’s first Jumeirah and Wyndham, with a total room count of 395 keys. Other regional cities with over a million population (excluding Moscow and St. Petersburg) are expected to add about 1,000 rooms.
“Considering the recent trends in demand patterns, developers today start focusing attention on lower segments; according to our estimations, almost a third of 2016 new supply will contribute to this category; that is about 2,400 keys. It is worth mentioning that development of projects scheduled for this year started long before the ruble devaluation of 2014. Taking into account the length of an average hotel construction cycle (3-4 years), the implications of the current economic situation will likely only show by a gap in supply in 2018-2019.” Tatiana Veller concluded.
