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News Release

​Moscow

Moscow sees impressive 11% growth in luxury hotel segment over first half of 2015


​​Moscow, 22 July, 2015JLL Hotels & Hospitality Group announces the H1 2015 Moscow hotel market results*.

The city hotel market is running at 4.5% down in RevPAR for the first 6 months of 2015 compared to the half-year in 2014. This is coming from a drop in occupancy with ADR essentially flat. This figure was at 6% down after Q1 so the market is recovering as the year progresses.

“There is a clear split between the upper and lower segments in performance, with the luxury hotels seeing growth in rate (up 10% to RUB 15,200) and a slight growth in occupancy (60%) and the upper upscale hotels benefitting from a boost in occupancy (up by 6% year to date) as foreign clients ‘upgrade’ themselves.” - David Jenkins, Head of JLL Hotels & Hospitality Group, Russia & CIS, commented.

The segments from upscale downwards are not having such a good year, with both upscale and midscale segments down 10% in RevPAR so far in 2015. This has come mostly via a drop in ADR – as hotels are needing to reach out to groups to fill rooms left vacant by exiting corporate guests. Such groups from Asia may well provide occupancy but rates are far lower than previous corporate guests who have limited their travel to Russia for now. This drop in ADR in rubles is an even more significant drop in hard currency terms and poses the concern as to when these segments will be able to grow rate to counter the growing operating costs.

“We see the trends continuing into the second half of the year, and on the assumption that there will be no further political obstacles then the year should close almost flat to 2014 for the city as a whole with both luxury and upper upscale segments closing the year in strong positions to drive rate further in 2016 – which in turn should spin-off and assist the upscale segment to make some inroads into rate growth in 2016.” – David Jenkins noted.

​Moscow Hotel Market in details

Luxury

The segment has seen an impressive 11% growth in RevPAR this year so far, mostly through a 10% rate boost and 1% more in occupancy. “We are clearly seeing the results of the price increases for online rates that were posted in January.” – David Jenkins said. – “The fact that occupancy has held also indicates a degree of clients upgrading themselves to take advantage of the still competitive pricing in foreign currency terms and the fact that such hotels are less dependent on the typical corporate.”

H1 2015 Moscow Luxury Segment
H1 2015 Moscow Luxury Segment_23072015.png

Source: STR Global, JLL

Upper Upscale

The 6% growth in occupancy so far this year has been somewhat cancelled out by a drop in rate of 2.5% - but still this is an overall growth in RevPAR of almost 3.5%. We still see it coming from international guests ‘upgrading’ themselves from lower segments – so staying in a higher graded hotel for the same price (in foreign currency) as having stayed in an upscale or upper midscale hotel in the past.

H1 2015 Moscow Upper Upscale Segment
H1 2015 Moscow Upper Upscale Segment_23072015.png

Source: STR Global, JLL

Upscale

A dependence on groups to compensate for rooms vacated by the usual blue chip corporate clients has seen this segment run at a 9% drop in RevPAR – as ADR has fallen by 6% in ruble terms and occupancy is down by 3% on last year. “This ADR drop is 45% down in USD compared to last year, making these hotels extremely price competitive but with the reduction in core clients they cannot take advantage of it through occupancy.” – David Jenkins mentioned.

H1 2015 Moscow Upscale Segment
H1 2015 Moscow Upscale Segment_23072015.png

Source: STR Global, JLL

Upper Midscale

This segment seems to have taken some occupancy from the segment below (from the midscale segment) as again guests are upgrading. The 7% occupancy growth is aligned to a drop in ADR so far of 4% - leading to a RevPAR growth of 3% year to date.

H1 2015 Moscow Upper Midscale Segment
H1 2015 Moscow Upper Midscale Segment_23072015.png

Source: STR Global, JLL

Midscale

“The almost 10% drop in ADR in this segment demonstrates that such hotels are needing to replace occupancy usually taken by corporate rated guests with lower rated local corporate business and tour groups. Even with such a rate drop, the hotels are running at 2% down on occupancy year to date.” – David Jenkins said.

H1 2015 Moscow Midscale Segment
H1 2015 Moscow Midscale Segment_23072015.png

Source: STR Global, JLL


* All statistics are sourced from STR Global with segments based on JLL configurations.


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. A Fortune 500 company 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 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 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, 2014 and 2015 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015, and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.

For further information, visit www.jll.ru