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News Release

​Moscow

H1 2016 saw RevPAR growth in all hotel market segments in Moscow and St. Petersburg


​Moscow​, 25 July, 2016 – JLL presents the H1 2016 results of the quality hotels market* in Moscow and St. Petersburg.

Moscow

Despite the traditional seasonal slowdown in business activity in the first half of May and June, all segments of quality hotel market in the Russian capital continue with a positive trend in operating performance due to sustained demand from leisure tourists.

In Q2 2016, the market-wide weighted average occupancy continued to grow, and as a result, for the first half of the year reached a record over the past five years – 68%, exceeding the last year’s number by 4.6 p.p. In its turn, ADR demonstrates a slow but steady growth: an increase by 6.7% took it to RUB 7.8 thousand. As a result, RevPAR (Revenue per available room) continues to grow: the market average over the first six months of the year reached RUB 5.2 thousand, showing an increase of nearly 15% compared to the same period last year.

H1 Moscow quality hotel market results (YTD year-on-year)
H1 Moscow quality hotel market results (YTD year-on-year)_25072016.png
Source: STR Global, JLL

“The luxury segment of Moscow hotel market continues to set records, being the undisputed leader in terms of growth rate,” – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, says. – “The number of guests, which can afford the highest levels of service and comfort on the background of the still weak national currency, is growing. With occupancy growth of more than 6 p.p. (to 65%) over the previous year’s January-June period, and an average rate increase of 14% (to RUB 17.3 thousand), Moscow hotels in this segment continue to shine with rate of revenue growth: per room it increased by 26% during this period.”

The midscale segment in Moscow displayed the most modest growth rates in terms of operating performance. Here, H1 2016 only brought a 3% RevPAR growth, because of moderate increase of occupancy (by 4.7 p.p., to 67.5%) coupled with a slight reduction in ADR (by 3.9%, to RUB 4 thousand). “Since this segment in Moscow mainly serves group travelers and business demand with lower budgets for accommodation, and, probably, for now this market has maxed out on its level of performance, its growth has temporarily halted. After the commencement of a new business season, we will probably see it pick up again.” – Tatiana Veller notes.

Quality resort hotels of Moscow region continue to benefit from the stable upward curve of domestic tourism, and in particular, from increased demand for short countryside breaks within a driving distance from big cities. The occupancy of this segment grew by the end of the H1 2016 by almost 17 p.p. compared with the previous year and reached 47.2%. Despite the fact that the average rate remained roughly at last year's level, the revenue per room is growing actively, aided by steep increase in occupancy. By the end of the first summer month, RevPAR in this sub-market was ahead of the previous year by 55%. Busy summer time will allow these hotels to create a “safety cushion” for inevitable drop of revenues in the off-peak season.

The stock of quality hotel rooms in Moscow and Moscow region in H1 2016 grew by more than 500: Holiday Inn Seligerskaya (201 rooms), Ibis Stupino (125 rooms) opened during this period; also Radisson Zavidovo resort added 200 residences. By the end of the year, more than 1 thousand additional rooms are announced for Moscow hotel market in various segments.


St. Petersburg

In general, a steady positive dynamic in all operational indices in St. Petersburg continued in Q2 2016, as predicted by JLL experts at the beginning of the year. The market-wide average weighted occupancy in January-June 2016 was 59%; this is the highest number in our history of observations. Taking into account the 18% ADR growth (to RUB 6.3 thousand), RevPAR increased by 23%.

“In H1 2016 all segments of St. Petersburg hotel market showed increase in both ADR and RevPAR of more than 14%,” – Tatiana Veller comments. – “Occupancy of hotels in all segments in June 2016 was the highest in five years, so the ‘White nights’ season this year is driving positive operating results like never before. Three segments out of five we cover – upscale, upper midscale and midscale – saw 9 out of 10 rooms occupied throughout the month of June.”

​H1 St. Petersburg quality hotel market results (YTD year-on-year)
H1 St. Petersburg quality hotel market results (YTD year-on-year)_25072016.png

Source: STR Global, JLL

There is no doubt that top segments benefitted most from the effects of the St. Petersburg International Economic Forum in June. Moreover, this year the accommodation cost hike in the month of the event was more pronounced than usual, additionally helped by the record increase in the number of visitors to the northern capital, along with the customary for this month effect of ‘White nights’. While in June 2015 the average rate in the luxury segment increased by RUB 20 thousand compared with May of the same year, this year the increase amounted to RUB 21.3 thousand, and the occupancy has risen to almost 80%, compared to 77.5% last year. On average for the first 6 months of the year, the ADR in luxury hotels in St. Petersburg managed to surpass the Moscow’s figure and amounted to RUB 19.5 thousand.

The most modest growth in occupancy for the first half of the year – by just 0.2 p.p. compared to the same period last year (to 64%) – was observed in the upper midscale segment. The increase in occupancy in the midscale segment was also relatively small – by 2.5 p.p. (to 55%). “Hoteliers in these segments appear to have made a conscious strategic choice, sacrificing further occupancy growth from price-conscious groups in favor of increasing the rates amidst the strong and stable demand,” – Tatiana Veller comments. – “Both segments in the first half of the year showed double-digit growth of ADR: in the midscale segment by 25% (to RUB 3.3 thousand) and in the upper midscale by 15% (to RUB 5 thousand).”

In H1 2016 St. Petersburg market grew stock by 314 new rooms under international brands: Hampton by Hilton St. Petersburg Expoforum with 207 rooms and Best Western Plus St. Petersburg Centre with 107 rooms started to welcome guests.

“In general, both of the largest hotel markets in Russia are enjoying healthy growth of all operational indices. Moscow’s seasonality is still more subdued due to a combination of business and tourist demand, while St. Petersburg experiences record levels of occupancy and rates for the entire observable history in all market segments, although the beginning of the year was more modest for many market participants.” – Tatiana Veller concludes. – “We can only hope that the gradual strengthening of the national currency and the stabilization of the exchange rate will soon allow us to report rate increases in hard currency terms, which will help investors’ confidence and should serve as a catalyst for activating both the transactions market and the new development in the hotel sector.”


​* All statistics on operational results 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 $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 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, 2006-2016 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, 2016, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015.