Growth year-to-date 2003
|December 2003 - Whilst many of the
world’s economies are struggling in the aftermath of 9/11 and the war in
Iraq, Russia’s seems to have been moving in the opposite direction. Following
a period of sustained growth since the financial crisis of 1998, the Russian
economy has remained relatively sheltered from the world economic slowdown.
Latest figures from the Economist Intelligence Unit (EIU) forecast that
Russian Gross Domestic Product (GDP) will increase by 6 percent in 2003,
this compares to just 0.6 percent for the EU.
Moscow is currently ranked as one of Europe’s strongest performing markets in terms of revenue per available room (revPAR) growth. Preliminary year-to-October 2003 figures from the HotelBenchmark Survey by Deloitte shows an increase in revPAR of 17 percent to US$97, compared to the same period in 2002.
The city however has not always seen such strong growth. The financial crisis of 1998 brought with it tough trading conditions for Moscow’s hoteliers. A year before the crisis the city was managing to achieve occupancy levels of around 68 percent, however by the end of 1999 - just two years later - this had fallen to 45 percent. As the country’s economic climate started to improve, hotel occupancy levels naturally followed suit, however it took five years before these were back at the same levels achieved in 1997. Although occupancy may be back, average room rates still have some way to go. Year-to-October 2003 figures show that Moscow’s average room rate is almost US$60 below that achieved in 1997. The good news however is, that since hitting an all time low in 2001 room rates have been showing a gradual improvement. However, the devaluation of the rouble during this time period should not be forgotten.
With the majority of internationally branded hotels in Moscow operating in the 4- and 5-star sector the 3-star market has remained relatively untouched, until now. Last year Accor opened their second Novotel (255-rooms) in Moscow and are rumoured to be looking to also establish the Ibis brand there. Plans are also afoot by several chains to roll out mid-market properties across the rest of the country. Rezidor SAS and Delta Capital Management have recently announced plans to open 50 Country Inn hotels across Russia within the next decade. Marriott International are also reported to be working with Yukos to develop some 40 mid-market hotels, however whether this continues in light of the recent press coverage on Yukos remains to be seen. Kempinski are also reported to be planning to roll out a chain of 3- and 4-star hotels across the country.
Notes: all analysis in US dollars.
The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels and 1.1 million rooms every month. Four regional monthly rate and occupancy reports are produced covering Asia Pacific, Caribbean and Latin America, Europe and the Middle East & Africa. These are supplemented by country reports for Australia, Belgium & The Netherlands, Germany, Italy, New Zealand, South Africa, the UK and a city survey for London. Annual profitability surveys are run across all regions of the world, whilst in Germany and London monthly profitability surveys are conducted.
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|Also See:||Income Before Fixed Charges (IBFC) Falls Second Consecutive Year for European Hotels / July 2003|
|Delta Capital Management and Rezidor SAS Plan Country Inn Brand Properties in Moscow and St. Petersburg / Mar 2003|