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HVS 2013 Russia, CIS, and Georgia Report Shows Positive Growth

Apr 11, 2013


Hotels in 10 out of 12 reviewed markets in Russia, CIS, and Georgia show positive occupancy growth⎯⎯according to the HVS’s Moscow office 2013 Russia, CIS, and Georgia Hotel Trends and Opportunities report.

In 2012, hotel markets across Russia, the CIS, and Georgia continued recovering in occupancy, though at a slower rate than in 2011. Russia’s Yekaterinburg and Kazan and Tbilisi, Georgia observed a double-digit increase in occupancy levels, while the rest of the covered locations reported less aggressive growth. 

Among slower growing areas were Baku, Azerbaijan, and Kiev, Ukraine⎯⎯where occupancy levels dropped due to the large supply increase in 2012. At the same time average rates have been under pressure, which resulted in negative growth in 10 out of 12 markets in local currency terms.

In the local currencies, RevPar in Russia increased 18.3 percent in Kazan, 5.5 percent in Yekaterinburg, and 0.3 percent in Rostov-on-Don. RevPar also exhibited growth by 10 percent in Tbilisi, Georgia, and 10 percent in Yerevan, Armenia.

 According to the report, supply has increased by 9 percent for the past year⎯⎯with 65 percent of the new hotel rooms in the region opened in Kiev, Baku, and Sochi, Russia.

“As hotel revenues in Moscow are significantly higher than the country average, the hoteliers here are able to enjoy the better profitability then average,” says Tatiana Veller, co-author and HVS Moscow managing Director. 

Comparison of the compensation trends showed that annual payroll per employee in international hotels is almost 50 percent higher than in the local ones. Additionally, the number of employees per room is higher in the properties managed by international brands.

The past 18 months have also witnessed high profile hotel transactions in the upscale and luxury segments. As hotel markets mature and more hotels become operational, opportunities to purchase functioning assets will increase. Mid-scale and budget segments retain the highest potential for development in the region.






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