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Moscow's luxury hotel sector index dips in Q1

19-May-2017


Michael Gerrity, World Property Journal

According to JLL's Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, "The market in the Russian capital is still riding strong, gaining volume of rooms sold in most segments and rates in some. Overall, the weighted market average occupancy of the quality hotels in the Russian capital had risen 2.6 ppt, and reached 62.1%, the highest Q1 YTD number in at least 5 years. Average marketwide ADR has dropped by mere RUB 44, representing a 0.6% loss, to RUB 7,450. RevPAR still managed to climb a healthy 2,2% - to RUB 4,480". 

Surprisingly, the segment in this quarter that lost a little bit on all fronts first time in at least 4 years was Luxury. Occupancy here dropped by 3 ppt (to 55%), rate by 1% (to RUB 17,250), and as a result the revenue per available room was 6% less, RUB 9,450. "This is probably because the segment has been riding high and making large gains in many previous periods or maybe because the ruble had been appreciating further against hard currencies, and splurging on unreasonably high-end accommodation became less affordable for foreign traveler," says Veller.

The segment that recorded the largest RevPAR gain was, of course, Midscale. "We say 'of course' because the market has been fueled by domestic business and leisure travel and group tourist business for a while, and that's high-volume, relatively inexpensive demand," says Veller. "The occupancy growth was very large here, by 7 ppt, to 66% - this is higher than any other segment this quarter, and higher than this segment has been in at least 5 years! So, even with a few rubles' loss in ADR, the RevPAR managed to bring additional 11% to the bottom line for the owners."

The suburban resorts in the Moscow Region also had a good start to the year. Here RevPAR grew by 6% - to RUB 2,500 - due to an increase in the average rate by 11%, to almost RUB 5,500. At the same time, the occupancy dropped by 2 ppt, to 46% amidst growing prices.

"According to our estimates, April will support the positive dynamics of the market, due to business travel and MICE demand and will become another successful month for most segments of the Moscow hotel market. In June, Moscow will welcome guests of the Confederations Cup as a small rehearsal for future sporting events of 2018. This event will likely bring an upsurge in rates, as hotels will expect more demand, but with a high probability restrain the occupancy: regular tourists and business travelers will plan trips and events so as not to mix with a crowd of football fans", concluded Veller.


World Property Journal
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