JLL analyzed the growth of branded room supply and plans for new openings in the hotel markets of Russia, CIS and surroundings in 2017.
In H1 2017, more than 2,200 rooms have been already added to the room inventories around the region; that is roughly the same as this time last year. In Russia alone, about 1,900 new rooms were put into operation, as compared to 1,700 a year earlier.
“As 2017 draws to mid-summer, the forecasts of new room stock in Russia and the surroundings have been revised,” commented Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS. “According to the plans of hotel brands corrected in June 2017, the market should receive 8,100 new keys by the end of 2017. This is a reduction by 15 percent (or 1,500 rooms) compared to the predictions of early 2017. A number of projects in the region were postponed to 2018 (approx. 3,200 rooms), but partially replaced with some newly signed management or franchise contracts with this year’s opening date.
“As for Russia specifically, here the prognoses also changed: roughly 2,000 rooms got moved to 2018 and 431 new keys were announced, thus reducing the size of expected new room stock by over 1,500 – to 5,100 rooms,” she added.
The most active market in the reported geography is still Moscow (with Moscow Region), where almost a half of all room stock planned for this year has already opened (1,200 with 1,400 left to go). St. Petersburg already brought to the market both of its projected openings for this year (388 new rooms). If all plans for new openings are realized, this will bring the total number of quality hotel keys in just Moscow to 32,100 and increase the inventory in the city by almost 10 percent.
“In terms of geographies, among larger markets the most active start of the year has been recorded in Kazakhstan (we assume, due to preparations for Expo 2017) – 41 percent (or, 460 out of 1,100) planned rooms already opened (all in Astana). Cities like Minsk, Tashkent, Yerevan, Sochi, Elabuga disappeared from the map of projected branded additions. New entrants are Yakutsk, Bakuriani and Ureki,” Tatiana Veller says.
The top three chains by volume of expected openings, due to shifts in plans, reordered from Marriott/Starwood – Hilton – Accor, to Marriott/Starwood – Accor – Hilton. The most active branded operator in the first half of the year has been Accor – the group has already started receiving guests in 61 percent of its rooms announced for 2017 (760 out of 1,200). Hilton already opened 58 percent of its planned rooms (700 out of 1,200), and Marriott/Starwood – only 1 hotel (160 rooms) so far (10 percent of the annual plan). Notably, Azimut already opened both of its hotels announced for the year – Smolenskaya (full renovation) and Yakutsk (rebranding).
“Dynamics of the openings show a clear and direct correlation to the activity which brings new tourists into each market – mainly, large-scale international events,” noted Tatiana Veller. “Three cities make up half of the projected number of new hotel rooms in the covered region (4,000 out of 8,100): Moscow and St. Petersburg with the Confederations Cup and preparations for the World Cup, Astana hosting Expo 2017 this year.
“Additionally, Tbilisi continues to attract a lot of tourists and hotel investors (planning to add yet another 660 rooms to its already sizeable branded inventory this year). Renewed interest in Kiev as it gets ready for a series of large-scale events in the nearest years demonstrates the return of investors’ trust in the hotel business in the Ukrainian capital.”
