Hotel services (Russian market)

Main article: Tourism in Russia

2024

The number of hotels under construction in Russia increased 4 times over the year. The volume of investments exceeds 0.5 trillion rubles

The number of hotels under construction in Russia over the past 12 months has quadrupled. The volume of investments in this industry exceeded ₽0,5 trillion. This is due to an increase in the internal tourist flow and the introduction of state support measures.

According to the consulting company TenderPro"," in August 2024, 3.6 thousand projects tourism in the amount of ₽532 billion were under implementation, which is four times more than in the same period in 2023. In the first quarter of 2024, according to the Ministry of Economy, the volume of investments amounted to ₽156,7 billion, which is almost double the figures for January - March 2023.

The number of hotels under construction in Russia increased 4 times over the year. Investments exceeded 0.5 trillion rubles

The main part of the projects is focused on the construction and reconstruction of accommodation facilities and recreation centers. Among the regions with the most active hotel construction are the Krasnodar Territory (11% of the total), as well as the Kaliningrad, Nizhny Novgorod and Sverdlovsk regions (4.4% each). In Moscow and the Moscow region, the share of such projects is 3.8%, and in St. Petersburg - 2.9%.

Experts note that not all declared objects will be completed on time, as some projects may face financial and organizational difficulties. According to Roman Yeremyan, Deputy Chairman of the Union of Tourism and Hospitality, some of the hotel projects are apart-hotels that can subsequently be sold, which does not make them a full-fledged part of the tourism infrastructure.

In the first half of 2024, according to the Ministry of Economy, the number of trips within Russia increased by 11.8%, reaching 39 million. This stimulated the demand for quality hotel facilities in various regions, such as Altai, Kamchatka, Sakhalin and Karelia, where almost all rooms were booked in the summer months. According to Olga Shirokova, partner of NF Group, the presence of demand for modern hotels has made the tourism industry attractive to investors.^[1]

A robotic hotel was built in Innopolis for 0.5 billion rubles

In July 2024, it became known about the construction of a robotic hotel in Innopolis, investments in which amounted to about ₽0,5 billion. Innopolis Mayor Dmitry Vandyukov said that the commissioning of the facility is planned until September 1, 2024. Read more here

2023

Growth of investments in hotels by 203% to 54 billion rubles

In 2023, the volume of investments in hotel real estate in Russia reached 54 billion rubles. This is 203% more compared to 2022, when investments in this area amounted to about 18 billion rubles. Such data are provided in the IBC Real Estate review, which TAdviser got acquainted with at the end of October 2024.

It is noted that the result of 2023 was the maximum in the entire history of observations: it is comparable to the total indicator for the previous four years, during which a total of 56 billion rubles were invested in hotels in Russia.

The authors of the study say that against the background of the formed geopolitical situation, there is a withdrawal of foreign owners from Russian assets. At the same time, domestic tourism is actively developing in the Russian Federation, which opens up significant prospects for potential investors: in many regions of the country there is an acute shortage of high-quality number of rooms. The largest deals in the hotel sector in 2023 were:

• Resort Arkhyz (): Karachay-Cherkessia total area - 20 hectares, transaction amount - 24.3 billion rubles;
• 10 Wenaas hotels (Moscow, St. Petersburg, regions of the Russian Federation): total fund - 4078 rooms, transaction amount - 15-17 billion rubles;
• Zvezdny Hotel (Sochi): total fund - 142 rooms, deal amount - 4.5 billion rubles.

At the same time, analysts point to a number of potential difficulties that future owners of such objects may face. This is, in particular, the need for high-quality and integrated management of hotel projects. In addition, when building new complexes or reconstructing a morally outdated Soviet fund, investors, according to experts, should take into account the increase in the cost of construction and the cost of borrowed financing.^[2]

The number of hotels and sanatoriums in Russia for the year increased by 6.6% to 31.49 thousand.

In 2023, 31.49 thousand hotels, hotels and sanatoriums operated in Russia. For comparison, a year earlier their number was estimated at 29.55 thousand. Thus, an increase of 6.6% was recorded. In total, from 2018 to 2023, the CAGR in the market under consideration was 2.8%. The number of collective accommodation facilities (DAC), including unclassified ones, increased by 14.8% compared to 2018. Such data are given in a study by the Center for Market Economics, which TAdviser got acquainted with in mid-August 2024.

It is noted that in the structure of accommodation facilities without taking into account unclassified, the share of city hotels is 40.2%. Even more than 15.8% are hostels. Mini hotels account for 13.6% of the total number of classified accommodation facilities. More than half of the objects - 54% - do not have stars. Another 22.5% have the status of 3 stars. Approximately 1.5% of the facilities in Russia are five-star, among them the largest in terms of room stock are: the hotel "City Mira Family Resort & SPA Anapa Miracleon 5 *" in the Krasnodar Territory, the hotel "Plaza Garden Moscow WTC" in Moscow, the resort complex "Radisson Collection Paradise Resort and SPA, Sochi," Hotel "Radisson Collection Hotel Moscow" in Moscow.

In regional terms, in terms of the number of classified collective accommodation facilities, the leader is the Krasnodar Territory, which accounts for 17.1% of all hotels, country hotels and other facilities intended to accommodate tourists. In second place in the ranking is with Moscow 5.9%, and closes the top three Republic of Crimea with an indicator of 5.2%.

Country hotels account for 19.6% of all rooms in Russia. Another 11% of the room capacity is concentrated in sanatoriums. Recreation centers provide 5.9% of the number of rooms. In the context of categories, the predominance of objects without stars in the number of objects in Russia is less than in the number of objects - 35.9% versus 54%. Three-star objects account for 29.3% of the country's number of rooms, another 17.9% of rooms are located in four-star objects. The share of five-star facilities is 4.1% of all rooms of Russian hotels and other accommodation facilities.^[3]

Growth continues: 31.4 thousand hotels and other places of recreation, 1.11 million rooms

Experts of the CSR recorded an increase in the number of hotels, hostels, sanatoriums, rest houses and other accommodation facilities in Russia, and received that the increase in the number of all collective accommodation facilities (DAC) in 2023 amounted to 6.6%, and their total number exceeded 31.4 thousand. For 2023, 1941 objects appeared in the country to accommodate tourists.

In total, from 2018 to 2023, the number of accommodation facilities in Russia increased by 12.2%. The average annual dynamics of the number of accommodation facilities over the past 6 years, taking into account the periods of COVID-19 and sanctions pressure, amounted to + 3.8%. In the country in quantitative terms for ten years more than double growth, and in relation to 2006 three times.

The dynamics of the industry is positively affected by the growing demand for domestic tourism and government initiatives in support of business. The volume of state support measures, initiatives and investments indicate that in the coming years we will expect moderate, but confident development in the industry.

As of the end of 2023, the most hotel facilities were recorded in the Krasnodar Territory - 5.4 thousand tourist accommodation facilities, since 2014 their number in the region has grown 3.2 times. This is followed by Moscow with 1.8 thousand hotels, hostels, holiday homes, and the growth over the year in the capital was 38.6%. In 2023, 519 were opened in Moscow, 232 in the Krasnodar Territory, 140 in the Moscow Region, 120 in Dagestan, and 87 accommodation facilities in Tatarstan.

The increase in the number of accommodation facilities is interesting, but it is more indicative to see what is happening with the number of rooms, because the hotel can be designed for 50 people, or maybe 500. The total number increased by 58.7 thousand and reached 1.117 million numbers, which is 125 thousand more than in 2019 (+ 12.6%). At the end of 2023, about 3 million people a day can be accommodated in the number fund throughout the country at the same time.

At this time, there is an increase not only in large hotels (from 50 rooms or more), but also in small hotels, including modular ones. This allows you to close the traditionally sagging middle segment - the most acute thing was the shortage of middle-class numbers with acceptable quality and a relatively affordable price, but now there are more and more of them.

By 2030, it is planned to increase the number of rooms almost one and a half times to 1.486 million rooms, of which 238 thousand are a new number of rooms, and another 190 thousand will be added thanks to the work on the legalization of unclassified hotels and guest houses. Financial support for 66 constituent entities of the Russian Federation, in 2024, made it possible to create and commission 4.5 thousand numbers out of 17 thousand planned by the end of this year.

In 2023, almost 83.6 million people used the DAC number fund. In total, they spent almost 358 million nights in them, which is 26.4% more than in 2019. On average, tourists stayed in accommodation for 4.28 nights per trip. Against the background of the growth of the supply economy, of which the tourism industry is a part, and comparing the ratio of outbound trips of Russians abroad and travel within the country over the past years, it can be stated that in Russia there is a trend towards an increase in domestic tourist trips, Russians are increasingly choosing tourist destinations within the country. The share of Russians from the total number of guests was 95.3%. Also in 2023, the flow of foreign tourists increased by almost 43% and amounted to 3.97 million people.

An interesting feature, despite the fact that the Krasnodar Territory is the leader in the number of accommodation facilities, but more tourists check into hotels in Moscow, here the capital leads with an indicator of more than 11.95 million tourists,

• Krasnodar Territory 9.96 million,
• Saint Petersburg 6.2 million,
• Moscow region 5.77 million,
• Republic of Tatarstan 2.8 million,
• Sverdlovsk region - 2 million,
• Tyumen region - 1.98 million,
• Republic of Crimea - 1.8 million,
• Rostov region - 1.78 million,
• Nizhny Novgorod region - 1.6 million.

And in terms of loading numbers in collective accommodation facilities for 2023, the leaders were the Stavropol Territory with an indicator of 73.2%, the Kaliningrad Region 63.6%, the Penza Region 63.1%, the Kursk Region 57.0% and 55.3% in the Altai Territory. And the average annual workload of collective accommodation facilities increased compared to 2022 and the indicator was 46.96%, and in comparison with 2019-31.09%.

The number of hotel guests and other accommodation facilities over the past six years has grown mainly due to domestic tourism.

Another important component and affecting tourists is stardom. At the beginning of 2023, there are more than 330 hotels of the five-star category in Russia, about 2 thousand hotels are four-star, about 5 thousand hotels belong to the category of three stars, 2 thousand hotels have two stars, a little more than 600 hotels - one star. In the category without stars there are more than half (12.6 thousand) of all hotels in Russia.

The leaders of the classified hotels are Krasnodar Territory, Moscow, the Republic of Crimea, Moscow Region, St. Petersburg, however, the 5 leaders in the "one star" category include the Irkutsk Region, in the "two stars" category - Rostov Region and the Republic of Tatarstan, "four stars" - Stavropol Territory.

Market volume growth by 3% to 202 million overnight stays

The volume of the hotel services market in Russia in 2023 reached 202 million overnight stays, which is 3% more than a year earlier. The market continues to increase, but growth rates are declining: in 2021-2022. They were measured at + 37% and + 18%, respectively. This is evidenced by the data of the analytical agency BusinessStat, published in April 2024.

According to the study, about 62% of overnight stays in hotel-type accommodation houses in Russia in 2023 were in hotels. Also, citizens were often accommodated in motels and hostels.

According to analysts, the stability of the hotel market is supported by demand for domestic tourism. The trend has continued since the end of 2020, when the popularity of Russian recreation routes has grown against the background of the active phase of the COVID-19 coronavirus pandemic.

State support for the industry aimed at creating and updating the infrastructure of accommodation facilities contributes to the sustainable development of the hotel industry. Measures there include:

• grant support for the construction of non-capital modular accommodation facilities. The program is being implemented in 2022-2024 and is aimed at replenishing the shortage of number of rooms in areas where the construction of capital buildings is problematic;
• concessional lending to build infrastructure. The measure was launched in 2021 and initially extended only to the construction and reconstruction of hotels and multidisciplinary resorts. In 2023, the program was expanded - the construction of year-round amusement parks, water parks and ski resorts was added;
• exemption of the tourism industry from payment. VAT

The study cites the five largest enterprises in the hotel industry in Russia:

• Rosa Khutor ski resort;
• Lotte Rus JSC;
• Family Recreation LLC;
• Talion JSC;
• NAO "Center" Omega^[4].

The number of hotels managed by foreigners has decreased by a third since the beginning of 2022

In Russia, the number of hotels managed by foreigners has decreased by a third since the beginning of 2022 and amounts to 30 thousand units by April 2024. Such data are provided by Olga Shirokova, partner of NF Group.

According to her, by April 2024, 17 international operators operate in the Russian Federation, 156 hotels are under their management. In April 2022, there were 44 thousand rooms in hotels managed by foreign companies in Russia. In a conversation with RIA Real Estate, the head of the research and analytics department of IBC Real Estate, Ekaterina Nogai, listed the names of large hotel operators who left the Russian market:

• Hyatt;
• InterContinental;
• Marriott;
• CPI Hotels;
• Belmond;
• Sokos Hotels;
• Four Seasons Hotels and Resorts;
• BWH;
• Wyndham.

The number of hotels managed by foreigners has decreased by a third since the beginning of 2022

The French group Accor is gradually decreasing its share in the Russian market. The operator continues to manage hotels in the Russian Federation, but does not expand its portfolio. The facilities, which have been at various stages of readiness since 2022, are being managed by other operators, for example, Marins Hotels and Zont Hotel Group, Nogai said.

According to her, in Moscow in two years there was a reduction in the share of high-quality number of rooms under the management of foreign operators in half - from 80% in 2022 (over 20 thousand numbers) to 40% at the end of the first quarter of 2024. The hotel fund remaining after the departure of foreign chains from Russia came under the control of Russian operators or local management, Nogai added.

Olga Shirokova noted that the departure from Russia of a number of major international hotel operators pushed other foreign players to enter the Russian market. By April 2024, it is known about the plans of Dusit International (Thailand) and River Rock Hotels & Resorts (Turkey) to start a business in the Russian Federation, said partner NF Group.^[5]

The largest hotel chains in Russia are named

At the beginning of 2024, the rating of the largest hotel chains in Russia was headed by Azimut Hotels, founded in 2004 by businessman Alexander Klyachin. It covers 30 regions of the Russian Federation, includes 63 hotels and has a total of 11,000 rooms. This is stated in the Forbes rating, published on April 8, 2024.

It is noted that thanks to the restoration of tourist flow and business trips, the introduction of electronic visas for foreigners, 2023 turned out to be generally successful for hoteliers. In most Russian regions, tariffs and hotel occupancy increased: the average revenue from a room increased by 30% compared to 2022, while hotel occupancy on average in Russia increased by 13.5%. At the same time, the profitability of the hotel industry is decreasing due to increased costs. Hoteliers shift their costs to customers, hotel services in 2023 rose in price by an average of 15-20% compared to the previous year.

The rating of the largest hotel chains in Russia was headed by Azimut Hotels

After the departure of foreign hotel brands, the change of management companies passed almost imperceptibly for customers - in some hotels only signs were changed, while the names remained recognizable. The rating of the largest hotel chains in 2024 includes projects related to Russian billionaires: these are the Safmar hotels of Mikhail Gutseriev's family, the Cosmos AFK Sistema chain of Vladimir Yevtushenkov, hotels under the Azimut brand of Alexander Klyachin, as well as the Legend hotel group of En + holding, founded by Oleg Deripaska. In general, the rating is as follows:

1. Azimut Hotels - 63 hotels, 11,000 rooms, 30 regions;
2. Cosmos Hotel Group - 37 hotels, 10,000 rooms, 18 regions;
3. Radisson Hotel Group - 37 hotels, 9905 rooms, 18 regions;
4. Accor Group - 56 hotels, 9600 rooms, 23 regions;
5. Amaks Hotels & Resorts - 27 hotels, 7170 rooms, 23 regions;
6. Mantera Group - 15 hotels, 6500 rooms, 2 regions;
7. Safmar Group - 10 hotels, 4222 rooms, 1 region;
8. Group of hotels "Legend" - 22 hotels, 1682 rooms, 7 regions;
9. Alan Collection - 5 hotels, 1629 rooms, 1 region;
10. Marton hotel chain - 38 hotels, 1500 rooms, 7 regions.^[6]

Rosstat named the leading regions in terms of hotel revenues

In February 2024, Rosstat named the leading regions in terms of hotel revenues. The first place in this list was taken by the Krasnodar Territory, where hotels and hotels in 2023 earned 179.5 billion rubles, which is 9.8% more than a year earlier.

As RBC writes with reference to the materials of Rosstat, in its materials the department takes into account the income of collective accommodation funds from the residence of vacationers, food, sanatorium-resort, health and other services included in the cost of rooms and vouchers, the press service of the department specified. Collective accommodation facilities include hotels, motels, hostels and other hotel-type organizations, as well as specialized accommodation facilities (sanatorium-resort organizations, rest houses, boarding houses, campsites, recreation centers, tourist bases).

The three leading regions of the Russian Federation in terms of income hotel business for 2023 included (Moscow 121.4 billion rubles) and St. Petersburg (58.2 billion rubles). In fourth and fifth place are Moscow region and (Stavropol Territory 50.6 and 44.5 billion rubles, respectively). The least earned hotels,,, and Nenets Autonomous Okrug. Tuva Kalmykia Chukotka Ingushetia

In total, for 12 months, all accommodation facilities in Russia earned 821.8 billion rubles. This is 15% more than a year earlier. When assessing the revenue, Rosstat took into account the income from the accommodation of vacationers, food, services provided. At the same time, tourist accommodation in the private sector is not included in the data.

Experts interviewed by the publication adhere to the point of view that hotel revenue is growing due to higher prices for accommodation and an increase in tourist flow. Another factor that affects the indicators is the construction of new hotels. Vice-President of the Federation of Restaurateurs and Hoteliers Vadim Prasov said that taking into account inflation, hotel revenues in 2023 did not exceed the indicators of 2019.^[7]

Mishustin allocated 8 billion rubles for the creation of modular hotels in 38 regions

Prime Minister Mikhail Mishustin signed an order to allocate 8 billion rubles for the creation of modular hotels in Russia. The corresponding document was published by the Cabinet of Ministers on June 13, 2023.

Subsidies will be provided to 38 regions on co-financing terms. This will make it possible to implement more than 200 investment projects and create new tourist facilities with a total capacity of about 6.5 thousand rooms, the Government of the Russian Federation said.

The largest amounts of subsidies will be received by the Altai Territory, Buryatia, Chelyabinsk and Kaliningrad regions. The competitive selection of regional applications was carried out by the commission of the Ministry of Economic Development in April-May 2023 as part of the national project "Tourism and Hospitality Industry."

We hope that these steps will make it possible to improve the quality and increase the supply of the number of rooms in a fairly short time, which means to provide our citizens with more comfortable conditions for recreation in Russia, - said Mikhail Mishustin, announcing the decision made at the Government meeting on June 13, 2023.

The President instructed to finance the construction of modular non-capital hotels following a meeting with members of the Government in January 2023.

The press service of Rostourism previously explained to Izvestia that the condition for subsidies is the suitability of the number of rooms for year-round long-term operation, its comfort and modernity.

Such a number of rooms belongs to non-capital objects, which avoids long coordination procedures and reduces the construction process, the department explained. - According to our data, in our country there are more than 60 manufacturers of such modules of different formats, and they are ready to join this project.

It is emphasized that the placement of facilities will be carried out taking into account all requirements, including environmental ones.

Government of the Russian Federation Order of May 31, 2023 No. 1441-r

Mishustin allocated 5.3 billion rubles for the creation of 27.5 thousand hotel rooms in Russia

In March 2023, Prime Minister Mikhail Mishustin signed an order on the allocation of more than 5.3 billion rubles from the federal budget to support the program of concessional lending to investment projects necessary for the development of domestic and inbound tourism.

The funds will be used to maintain a preferential credit rate for 87 hotel construction projects in 33 regions of the country, which will allow the construction and reconstruction of 27.5 thousand rooms in hotels in the category of at least "three stars."

This means that more people will be able to relax in various parts of Russia in comfortable conditions, - said Mikhail Mishustin at a meeting of the cambin on March 24, 2023.

The mechanism of state support for investment projects to create tourism infrastructure was launched by the Government as part of the national project "Tourism and Hospitality Industry." The main goal is to attract new investors to the industry, stimulate the creation of high-quality infrastructure, and increase the attractiveness of domestic and inbound tourism.

The head of the Cabinet spoke in detail about the development of tourism during the Government's report to the State Duma on March 23, 2023. According to him, the demand for travel in Russia is increasing, more than 60 million people made them last year alone. In general, tourism has become one of the fastest growing industries, thanks to which about 70 thousand new jobs in this area have appeared in the regions.

Earlier, the Russian government came up with an initiative to finance the construction of prefabricated hotels in 19 regions of the country. 4 billion rubles were allocated for the creation of modular hotels from the reserve fund of the Cabinet of Ministers, of which 300 million are intended for the implementation of the project in Crimea.^[8]

2022: Loading of Russian hotels exceeded pre-pandemic indicators

In 2022, Russian hotels accommodated a total of 62.4 million people, which is 63% more than in 2020 (38.3 million), and also exceeds the level of 2019 (61.1 million), when there was no COVID-19 coronavirus pandemic. This was announced in early May 2023 by the research company BusinesStat.

According to experts, the difficult epidemic situation and difficulties with international recognition of the effectiveness of Russian vaccines have led to a significant reduction in outbound tourism and the development of domestic tourism. Business trips, business meetings, forums and conferences resumed. In 2022, the demand for hotel services in the country was also supported against the background of the geopolitical crisis and sanctions. In the current conditions, there was a partial redistribution of demand from outbound tourism to domestic tourism. The increase in hotel bookings was also influenced by the tourist cashback program.

In 2022, in Russia, the number of employees of hotels and similar accommodation facilities amounted to 282.4 thousand people, which was 8.6% higher than in 2018, but did not reach 10.4% to the level of 2019. The absence of migrants and the persistence of the profession did not completely make up for the lack of staff. Even the forced increase in salaries did not contribute to the necessary influx of applicants. Not all migrants who, before the pandemic, worked in the positions of lower line personnel (utility workers, washers, baggage loaders, cleaners and maids) were able to return to Russia, the study notes.

According to labor market experts, before the pandemic, on average in Russia, competition for vacancies in HoReCa was at the level of 5 people per place. At the peak of the first wave of the pandemic due to the stop of hiring and cuts in May 2020, as recorded, HeadHunter the competition increased to 16 resumes per place. In December 2022, only 3.3 resumes of applicants accounted for one vacancy in the HoReCa sector.^[9]

2020: Decrease in hotel occupancy to a minimum - up to 37.9% in Moscow and 29% in St. Petersburg

Due to the COVID-19 coronavirus pandemic, which led to a strong reduction in domestic tourism in the Russian Federation, 2020 was the worst for Russian hotels. This is evidenced by the data of the consulting company JLL.

According to Kommersant, citing a JLL study, Moscow hotels at the end of 2020 were loaded by an average of 37.9%, which is more than half less than the previous year. In St. Petersburg, the indicator decreased even more - by 57% to 29%.

Similar data are provided by other consulting companies. According to Cushman & Wakefield estimates, in Moscow last year, the average hotel occupancy was 38.5%, in St. Petersburg - 30.1%. In CBRE, the average occupancy of Moscow hotels in 2020 is estimated at 37%, St. Petersburg - at 29%. The segment of luxury hotels was most affected, which were only 20-22% full.

Dmitry Shlopak, a member of the organization's general council, chairman of the hotel business committee, estimates the losses of the hotel business at 300 billion rubles at the end of 2020.

High-budget business tourists postpone their trips indefinitely and reoriented themselves to resort facilities and private villas, Yana Ukhanova, head of the hotel business department at JLL, told Kommersant.

Alexander Schwein, President of Cosmos Hotel Group, estimates a drop in demand by about half, linking this to a decrease in business travel activity. The average occupancy rate of the group's facilities, according to him, decreased by 29% over the year

According to estimates by the consulting company Rusland SP, the total lost revenue of hotels in St. Petersburg and Moscow in 2020 amounted to about 132 billion rubles. Experts note that to a greater extent, hotels with an outdated number of rooms located far from the center were affected, to a lesser extent - high-quality hotels in good tourist locations. At the same time, for absolutely all hotels, dumping prices became the only means of attracting customers, which ultimately affected a significant drop in ADR and led to colossal losses in the industry.^[10]

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Notes