Skip to main content Skip to footer

Completion of hotel rooms to increase 33% to 2,500 rooms in 2018

The World Cup effect of maintaining high operating performance in Russia's hotel market will last two years

Moscow, January 25, 2018 – In 2017, eight international-brand hotels opened in Moscow with a total number of 1,884 rooms, which is 55% more year over year. The growth in supply is largely due to the approaching 2018 World Cup, which will also significantly impact growth of all operational figures. Colliers International forecasts that average room price will increase by 40%-50% during the championship, while in general, in 2018, occupancy will grow an average 8%-10%, the average room price (ADR) will increase by 16%-18%, and room profitability (RevPAR) will increase by 18%-20%.

All operating figures across all price categories of Moscow hotels have grown for the second year in a row. Increased tourist flow also contributed to growing demand for accommodations. In 2017, average hotel occupancy grew by three percentage points year over year to 75%. Occupancy grew the most in the midscale and upper midscale sectors – the occupancy rate increased by 3.6 percentage points and was the highest among all sectors, with 83.3%.
The average room price rose from 7,820 roubles per day in 2016 to 7,950 roubles per day by the end of 2017. The upscale and luxury sectors saw the largest growth – +2.5% and +2.4%, respectively. In the midscale, upper midscale, and upper upscale sectors, the average increase for the year was less than 1%. Per-room profitability growth followed growing demand for accommodations. The average market RevPAR increased by 5% year over year and amounted to 5,930 roubles. The leading sectors were midscale and upper midscale, where the average yield was 3,360 roubles – 160 roubles more than in 2016. More than 50% of hotels that opened in 2017 are in the luxury sector. At the end of 2017, Moscow hotels had a total of roughly 50,000 rooms (excluding hostels and mini-hotels) and hotels run by international operators have 34% of the total supply. At the end of 2017, one player – AccorHotels – accounted for 25% of the market among the international operators, both in terms of the number of hotels and the number of rooms. The chain expanded its presence with the opening of two more Ibis and Ibis Budget hotels. Newcomers were Tulip Inn, Hyatt Regency, Holiday Inn Express, which were not previously represented in the Moscow area. 
A record number of tourists visited Moscow in 2017. According to Rosturizm, tourist flow in 2017 amounted to 21.5 million people, up 13% year over year. Both Russian and foreign tourists drove the increase. The growth leaders among foreigners are tourists from China – in January-September 2017, 30% more Chinese tourists visited Moscow year over year. The flow from Germany, the U.S. Latin American countries also grew.
Colliers International forecasts that the supply of rooms will increase by roughly 2,500 in 2018, given that announced opening dates for hotels are observed. The bulk will replenish the market before the onset of the 2018 World Cup. International operators planning to open new hotels in Moscow include InterContinental Hotels Group, Carlson Rezidor Hotel Group, Pentahotels Group, and Marriott International.

Nikolay Kazanskiy, managing partner of Colliers International Russia: “The World Cup will have a major impact on the growth of all the operational figures of Moscow hotels in 2018. Some of the capital's hotels already have all their rooms booked for the duration of the event. We forecast that the average room price during this period will grow 40%-50%. Such relatively restrained growth can be explained by high competition among market participants, which is not the case in other cities hosting the championship, except for  St. Petersburg. In the regions, the average price could grow severalfold. The occupancy of Moscow hotels will approach 90%, which will entail RevPAR growth. However, after the Championship, room prices are most likely to return to 2016-2017 levels. Nevertheless, we do not expect operational figures to drop sharply after the World Cup is over – such a major sporting event will have a lasting effect of one-and-a-half to two years.”