According to JLL, in 2016 the branded hotels market in Russia, CIS and neighboring countries* has been less active in terms of new market players compared to a year before. This year branded hotels supply in the region increased by 5,100 rooms, while in 2015 room stock here grew by 6,900.
Almost two thirds of that amount – about 3,200 rooms – were opened in Russia; for comparison, in 2015 the Russian quality hotel market grew by 4,000 rooms. The second place in terms of putting new branded hotels into operation in 2016 has Armenia: three new hotels in Yerevan started welcoming guests with 571 rooms in total; Belarus is the last of top three countries in the region: two assets for 414 rooms were opened in Minsk.
The most active market in the region and the only one with positive dynamics vs. previous year in bringing new hotel projects to life was Moscow. According to JLL research, Russian capital and the region received about 25% of the new room stock of the entire region, or more than 1,200 rooms (this is a 500-room increase vs. 2015).
Branded Hotels Opened in 2016 (by Number of Rooms)
“Moscow continues to attract investors as the most stable and predictable market in the region, therefore the dynamic here is different from overall. In general the slowdown in number of new participants coming into the market can probably be attributed to the general economic downturn of 2014-2015, which resulted in delay of many hotel development projects,” – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, says. – “It is worth noting that the 2016 final result is significantly lower compared to the forecast of the beginning of the year (7,400 rooms). And, even in comparison with the updated mid-year forecast (6,250 rooms), hotel market in the region has missed the mark by more than 1,100 rooms, as many projects have been frozen or postponed.”
For 2017, 9,600 new branded rooms are announced in the region, almost 6,700 of which are in Russia. Kazakhstan takes the second place with about 1,200 rooms, and the third is Georgia (626 rooms).
“We are seeing significant activity in Kazakhstan, where in preparation for the EXPO-2017 six branded hotels are planned to open in Astana this year, while in other regions of the country only one property is announced. In Georgia, the development of hotel market is more evenly spread: the tourist demand is growing not only in Tbilisi, but also in smaller cities, so hotel operators direct their attention both to the capital and the regions,” – Tatiana Veller comments.
It is worth noting that in 2017 in Moscow and Moscow Region more new hotel rooms are expected than in all analyzed countries together besides Russia – 3,400 versus 2,900, respectively.
2017 will see some ‘new old faces’, brands which did not open new hotels in Russia for several years. This year two Hyatts – in Moscow and Vladivostok – are planned, Lotte in St. Petersburg and Golden Tulip in the Moscow Region.
Among the expected openings of the year is Hyatt Golden Horn in Vladivostok, which was initially being built for the APEC Summit-2012 and now is finally going to start welcoming guests. Also, 2017 will be remembered for its ‘firsts’:
• the first branded hotel since 2014 is going to be opened in the Ukrainian capital – Park Inn Troitskaya Kiev;
• the first in covered by this report region Accor boutique hotel brand – MGallery – will be added to the Ukrainian resort market in Odessa;
• the first branded hotel in Sochi, opened after the pre-Olympic construction boom – Courtyard by Marriott Sochi Plaza – will add 345 rooms to the Russian Black Sea coast hotel supply;
• Saransk, the smallest of the cities of the FIFA World Cup 2018, will receive its first branded hotel – Four Points by Sheraton.
“Increased activity in the hotel markets of Russia and neighboring countries could have different reasons: increasing interest in domestic tourist destinations; strengthening of some of national currencies that gives confidence to investors and spreads to neighboring markets; numerous planned international events in the region in the coming years.” – Tatiana Veller adds.
Branded Hotel Openings in Russia, CIS & Surroundings (by Number of Rooms)
Due to the rebound of the hospitality market in the Baltic countries, this year JLL experts include the region in the analyzed region (not counted in the figures above). In 2016, the most dynamic city in the Baltic States in terms of getting new room stock was Riga, where four branded hotels were opened with 535 rooms total. One hotel (201 rooms) opened last year in Tallinn. In 2017, international operators are planning to open only one branded hotel in the region – Autograph Collection in Tallinn with 84 rooms.