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News Release

Moscow

Krasnaya Polyana Hotel Market Overview


Moscow, 2 October 2014 - JLL Hotels & Hospitality Group is glad to present the Sochi Mountain Cluster Hotel Intelligence report.

There are essentially three mountain resorts in Krasnaya Polyana – Laura (Gazprom), Rosa Khutor and Gorky Gorod. Significant ski and winter sport facilities were developed for the Winter Olympic Games and Russia now has a world class facility in this area. Clearly questions are posed over the massive over supply of hotels and apartments and how to combat seasonality – especially given the significant new room stock in the coastal cluster, David Jenkins, Head of JLL Hotels & Hospitality Group, said.

There were previously private apartments for rent, small hotels and the one former Radisson. According to JLL, today there are 1,844 branded rooms and thousands of apartments for sale or lease – quite an oversupply. In 2014, Marriott and Rixos have been opened in Gorky Gorod (428 and 114 rooms respectively) and Solis Sochi Hotel )120 rooms).

“It is almost exclusively a domestic ski market. There has been no development in the past of summer mountain vacations, though now we see a variety of facilities to try and drive demand in the summer.” – David Jenkins commented. – “The Olympics were a boost in some ways this year but hotels lost any real commercial opportunity as a result. This coming winter will see the first real commercial season. 2014 YTD occupancies are no higher than 25% at RUB 5,500 in upscale segment. Hotels have offered summer deals but have to work against the high flight costs to Sochi.”

“Rosa Khutor was completed ahead of the Olympics and today seems a more accomplished ‘resort’. Laura is Gazprom ‘focused’ and Gorky Gorod remains unfinished having been ‘rushed’ in time for the Olympics. There have been construction issues that remain unresolved, especially in Gorky Gorod. Some hotels are unopened, cancelled or sitting empty.” – David Jenkins said. – “Winter 2014-2015 will be the first commercial ski season and this will demonstrate the true potential of the ‘new’ mountain cluster. The summer has been somewhat of a disaster commercially and many hotels closed immediately after the Olympics, with some unlikely to re-open. There are concerns that airlines will price families out of this market and that hotels are unable to influence their own destiny. Nevertheless the ski facilities are excellent but will the lack of ‘joined up thinking’ dilute the results? Time will tell.”

Please find link to the report.