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News Release

​St. Petersburg

St. Petersburg Hotel Market Update. 2014 Results


​St. Petersburg, 5 February, 2015 – JLL Hotels & Hospitality Group announces the 2014 St. Petersburg hotel market results.

“Certainly St. Petersburg hotels have been impacted by the 2014 crisis here in Russia although there has been somewhat of a silver lining. Whilst it is clear that there has been a reduction in foreign tourists there has been a boost in domestic tourists – something that has long been coveted but until now has not occurred.” - David Jenkins, Head of JLL Hotels & Hospitality Group, Russia & CIS, says. – “Circumstances aligned, with the ruble crashing to the Euro, GBP and USD, a large number of Russians being unable to travel abroad and perhaps also a desire to ‘shop locally’, all leading many more local tourists than before to travel to the second capital. This is an exciting trend and one that we hope continues within or out-with a crisis. Domestic tourism is still largely unexploited and St. Petersburg is the city to do so.”

Results compared to 2013 showed a significant drop in RevPAR for the upper upscale to luxury hotels with smaller drops in the midscale segments. We do need to bear in mind that in 2013, St. Petersburg was the host of the G20 event – that boosted hotel performances significantly in September of that month. If we are to compare results in 2014 to 2012 we can see marginal increases across all segments – so in all we see the 2014 results as being tinged with hope and certainly we would like to see this continue in 2015.

Given the new ruble rate is at 67.8 at time of writing, hotels in St. Petersburg (which have often been cited as being too expensive by the western tourist), are now a bargain. “This is exactly the moment we would like to see the city run a full campaign to drive visitors. The new airport terminal is a quality addition and the city has hotels of all segments for all guest tastes – and now for half the price.” – David Jenkins comments. – “It will take more than efforts by hotels to boost demand, especially given the negativity surrounding Russia on the international stage, but certainly the conditions are there in terms of value for money for something to be done in terms of demand growth.”

According to JLL, the St. Petersburg branded hotel market saw two openings in 2014, incl. first Indigo hotel in Russia (119 rooms) and Park Inn Pulkovo (210 rooms). There is no significant opening planned for 2015.


St. Petersburg Hotel Market in details

Luxury

The luxury segment had the largest drop simply because it had the largest gain last year from the G20. The 16% RevPAR increase in 2013 was reversed fully. Of significance though is that the reductions where not equal to the previous growths – occupancy dropped by 7% to only 48% and ADR fell by 9% to just above RUB 10,000, whereas the previous year saw gains mostly in rate due to the G20.

​2014 St. Petersburg Luxury Segment

2014 St. Petersburg Luxury Segment_05022015.png

Source: STR Global, JLL


Upper Upscale

“A 10% drop in RevPAR also cannot be viewed as positive though it again reflects a similar growth in 2013 caused by the one-off event. Both rate and occupancy sit above 2012 year end figures. Occupancy was 55% with ADR close to RUB 7,000. It is still an indication of the inherent weakness of the market and the opportunities in it, London and Paris for example post occupancy in excess of 80%. Budapest, Vienna, Prague, Venice – similar historical ‘European great cities’ all post above 70%.” – David Jenkins notes.

2014 St. Petersburg Upper Upscale Segment

2014 St. Petersburg Upper Upscale Segment_05022015.png

Source: STR Global, JLL


Upscale

JLL experts believe that the upscale hotels benefitted from increased domestic tourism, posting annual occupancy of 60% - the same as in 2013 – although with an inevitable drop in ADR to RUB 4,700 (down 6%). This places the ADR for quality branded city centre upscale hotels at below $75.

2014 St. Petersburg Upscale Segment

2014 St. Petersburg Upscale Segment_05022015.png

Source: STR Global, JLL


Upper Midscale

A 4% drop in occupancy and 3% drop in ADR puts the segment down by 7% for the year. RevPAR at RUB 2,550 is above 2012 figures but given the new ruble rates is just $40. The hotels in this category are all well located and offer a range of services and facilities – for a RevPAR of $40.

2014 St. Petersburg Upper Midscale Segment

2014 St. Petersburg Upper Midscale Segment_05022015.png

Source: STR Global, JLL


Midscale

According to David Jenkins, Midscale hotels have on one hand seen a drop of 7% year to date occupancy but on the other hand have managed to grow ADR by almost 2%. The drop of 6% is better than the city average and encouragingly there has been a slight ADR growth.

2014 St. Petersburg Midscale Segment

2014 St. Petersburg Midscale Segment_05022015.png 

Source: STR Global, JLL


“As far as the hotels have not crashed operationally as they did in 2009, the new ruble rate is causing more problems than any drop in demand. Hotels operate in rubles yet we tend to value hotels in USD, and certainly investors consider USD values in terms of any possible transaction. As such, these values have just halved. Whilst we are in this crisis and whilst demand is soft, hotels will not be able to simply increase ruble rates – this comes only with strong demand. It means that even slight increases in occupancy or rate will not help to combat reducing GOP and values.” – David Jenkins comments. – “In terms of hotel development or even refurbishments, costs of equipment and furniture from abroad have sky rocketed – putting many projects at risk.”


About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316.0 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

In Russia and CIS JLL has offices in Moscow, St. Petersburg and Kiev. JLL, Russia & CIS was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012 , 2013 and 2014 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.

For further information, visit www.jll.ru