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“This year, on the background of the World Cup and the expected steady demand in June-July, hoteliers of the two Russian capitals were able to significantly increase prices. However, the consequences for these hotel markets were different. Moscow, having been the main transit hub for fans with its large number of branded hotels, grew significantly in occupancy, while St. Petersburg as simply a venue for some games and already quite an expensive city for tourists, has not been occupied enough compared to previous years,” says Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS.

As the result of H1, Moscow boasted a 72% occupancy of quality hotels (that is more than 30,000 rooms), which is 2.7 ppt higher than last year. The average rate (ADR) in the capital increased by 48% and reached RUB11,200. In St. Petersburg, the hotels sold 2 ppt less rooms compared to last year (the occupancy was less than 55%), while increasing the rate by 16% (up to RUB8,800).

At the same time, in H1 both markets increased the average profitability of hotels per occupied room: RevPAR in Moscow grew by 52%, to RUB7,700, and much more modestly in St. Petersburg (by 10%, to RUB4,700).

The busiest hotels in Moscow in the first half of this year were Upscale, Economy and Upper Midscale segments (78, 77 and 76% respectively), and Upscale segment also showed the most active growth in occupancy (6.4 ppt higher than the previous year). The leader in terms of rate increase was the Luxury segment, having grown by 73%, to more than RUB30,000.

In St. Petersburg, Upscale hotels also reached the maximum occupancy: they sold 69% of the rooms in H1, 1 ppt more than last year. “Curiously enough, the biggest drop in the occupancy (by 3 ppt) and the lowest absolute index (50%) were recorded in the least expensive segment – Midscale. At the same time, these hotels exhibited the highest growth of prices (by 22%, to RUB 4,600). It seems that groups and price-sensitive tourists, the target audience of these hotels, fearing the rising prices during the World Cup and in the preceding months, preferred even more budget-friendly accommodation options: hostels, private apartments, mini-hotels” comments Tatiana Veller.

The most expensive luxury hotels in the Northern capital lagged only RUB 3,000 behind their Moscow colleagues: the cost of the room in the period from January to June was RUB 27,000, while the growth was more modest in comparison with Moscow – by 15%.

Let’s discuss it in greater detail June 2018 in both markets. The average market occupancy in Moscow this month was 88%. For comparison, a year earlier the indicator was at 82% (the effect of the Confederations Cup), and 78% in 2016. All segments of the Moscow hotel market had a very busy June with an average monthly occupancy above 83%, with Upscale and Upper Midscale segments exceeding 90%. Prices have increased in Moscow almost threefold (by 170%) compared to last year.

“In St. Petersburg, increased rates for the period of the World Cup seem to have scared off the traditional guests for this city, while the expected influx that the World Cup was supposed to generate did not take happen: only 71% of the rooms were occupied, while in June 2017 the average market occupancy was 78%, in 2016 – 82%. It should, however, be noted that in the previous two years the St. Petersburg International Economic Forum fell on the first summer month, which this year was held in May to separate the flows of visitors,” notes Tatiana Veller.

The average cost of a standard room in the Moscow Luxury segment in June exceeded 1,000 euros per night (RUB74,500), while the hotels sold 86% of the available rooms. Even the hotels of the lowest price segment in the Russian capital – Economy – increased prices more than twofold and sold rooms for RUB5,800 in the first month of the championship.

In St. Petersburg, the prices in Luxury segment in June were lower than in May of this year and almost two times lower than in Moscow: one night in a standard room in the most expensive hotels of the city cost RUB38,000. At the same time, only 65% of the rooms were occupied.

The Moscow Region hotels have not seen a significant positive impact of the championship. In the first half of the year, both the occupancy (by 3 ppt, up to 50%) and ADR (by 6% or RUB300, to RUB5,400) increased slightly compared to the previous year. However, in June, the occupancy dropped: 53% vs. 57% last year. Probably, some part of the audience decided not to vacation in the Moscow Region in favor of attending some games, or sought to leave the overloaded with fans region for the summer.

“We can assume that the impact of July on the second half of the year will be similar to the effect of June on the first. In this case, the average annual increase in the occupancy of hotels in Moscow can be exactly the 3-5 ppt that we predicted before the start of the championship,” adds Tatiana Veller. “St. Petersburg hoteliers are left to hope that the market will restore its operating performance due to the delayed to August and early Fall usual tourist demand.”


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