Following a poor first quarter, all segments have caught up over the year to end mostly flat compared to 2012, with only the luxury segment showing any real growth at 4% (all in rate, not occupancy). In fact there has been no occupancy (demand) growth at all across all segments this year compared to last. With ADR also mostly level to last year we have seen a year with no market movement to speak of.
David Jenkins, Head of Jones Lang LaSalle’ Hotels & Hospitality Group, Russia & CIS, said: “With several new hotels entering the branded segments, (including Sheraton Sheremetyevo, Kempinski Nikolskaya & Novotel Moscow City) we saw an increase in supply of 7% and a similar increase of occupied rooms – bringing the market itself to a similar level to 2012 – but given the increase in supply there was the same increase in demand.”
The first multibranded hotel complex (Mercure / ibis / Adagio Bakhrushina, 433 rooms in total) was opened in December in Moscow, but it has had no influence on the hotel market yet.
“Since 2008, the number of available rooms within the 5 ‘branded’ segments has increased by 60%, by almost 4,000 rooms, whilst the demand (occupied rooms) has increased by 50%. Essentially supply and demand are keeping pace with one another – but at the expense of average rate (ADR) – which has dropped by 20% from 2008.” – David Jenkins commented.
“This allows us to forecast going forward further rate compression as supply will increase dramatically in the coming 5 years. Jones Lang LaSalle’s Hotels & Hospitality Group estimates that an amazing 13,000 new hotel rooms could be delivered to the Moscow market up to 2018,” - David Jenkins predicted. – “Many of these new rooms are in the branded economy and mid-market segments and will essentially drain business from the local hotels but such a huge volume of new rooms will certainly impact the achievable occupancies and rates in the city going forward.”
What to expect in 2014
All the focus now is, unsurprisingly, on Sochi and the Winter Olympics. The major brands mostly all have hotels opening in the coming weeks and months prior to the Games (Hyatt, Accor, Swissotel, Radisson, Interstate, Marriott, Capella, etc). This does not though mean we will see no new activity in terms of openings in 2014 in Moscow, in fact we expect quite a significant range of new hotels across all segments, including:
Four Seasons ‘Hotel Moskva’ – 180 room luxury hotel;
* Marriott New Arbat – 234 room upper upscale hotel;
* Radisson Sheremetyevo – 379 rooms upscale airport hotel with extensive meeting facilities.
The Russian regions will see a boost in new openings too, with some of the more notable possible openings being:
* St. Petersburg – Park Inn Pulkovo Airport, 200 room midscale airport hotel, and Hilton & Hampton by Hilton ExpoForum St. Petersburg, Upscale and economy hotels – app. 400 rooms.
* Rostov-On-Don – Sheraton, 307 room upscale hotel, and Hyatt Regency, 189 room upper upscale hotel.
* Hilton Garden Inn, Volgograd (with Interstate), app. 150 rooms.
* 4 Points by Sheraton Kaluga, 172 room upper midscale hotel.
* Holiday Inn Express in Samara and Voronezh, app. 150 rooms each.
* Park Inn Volgograd, 150 room midscale hotel.
* Mercure Lipetsk, 184 room upper midscale hotel.
* Radisson Chelyabinsk, 211 room upscale hotel.
* Radisson Gelendzhik, 274 room upscale resort hotel.
* Hyatt Regency Vladivostok, 253 room upper upscale hotel.