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News Release

Moscow

Summer 2017 quality hotel market results in Sochi and Moscow Region – Not so ho​t any more


Moscow, September 25, 2017 – JLL presents Summer 2017 results of the quality hotel market in Moscow Region, and Sochi Mountain and Sea Clusters*.

“Unlucky weather this summer and opportunity to visit hot all-inclusive shores of Turkey again, have taken their toll on the operational indices of both the Moscow Region quality resorts, and the southern destinations”. – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, comments. – “This could also be an inevitable consequence of the aggressive pricing strategies these hotels have been using to grow ADR for three consecutive years in a row. They finally reached a point of relative price comparability to overseas vacations, so cost vs. value is no longer in the domestic resorts’ favor in consumers’ minds.”

Summer in Moscow Region started relatively strong, with a 3 ppt gain in Occupancy in June 2017 vs. 2016, and a slight increase in monthly RevPAR on the back of a stable ADR. In July fewer rooms were sold at higher rates as the vacations season kicked in, encouraging hoteliers to raise prices (+ 9% to ADR compared to summer 2016). As a result, RevPAR suffered a 3% drop. Due to equal declines in both ADR and Occupancy (by 8% each), August experienced a record-breaking RevPAR loss – by 16% YTD.

All in all, this summer compared to 2016, Moscow Region hotels lost 3 ppt of Occupancy (down to 58%) vs. 2016, as well as 1% (to RUB 5,550) in ADR which resulted in a 6% (or, almost RUB 200, down to RUB 3,200) RevPAR loss. Good news is, this is still considerably higher than 2015, and overall YTD numbers are at the level of 2016.

Summer Moscow Region quality hotel market results
Summer Moscow Region quality hotel market results_1.pngSource: STR Global, JLL
 
In the southern resort on the Black Sea, the overall trend continued from earlier this year – the mountain cluster was growing occupancy healthily, by 4 ppt. (up to 64%) at cost of a slight drop in rates (-0,6%, to RUB 2,800), as a result gaining in RevPAR (+5%, to RUB 1,800). This was mainly driven by strong June, with growth both in Occupancy (by 6 ppt, to 52%) and ADR (by 20%, to RUB 2,800), respectively, and reflected in a whopping 36% hike in RevPAR (up to RUB 1,500) vs. last year. In August market has dropped significantly in all indices, although occupancy continued to be strong for the mountain cluster – 72%.

Summer Sochi mountain cluster hotel market results
Mountain cluster_2.png
Source: STR Global, JLL

“At the same time, hotels by the Sea suffered from bad weather effect and overseas competition, and lost 11 ppt vs. 2016 in occupancy (down to 57%) in 3 summer months, while slightly gaining on ADR (probably, not counting on extra demand from lowering prices) – by 3%, to RUB 12,300. As a result, RevPAR dropped significantly – by 14%, to RUB 7,000). The only bright spot here was a healthy 11% increase in ADR in June, on the backdrop of quite modest summer performance in occupancy and revenues.” – Tatiana Veller notes.

Summer Sochi sea cluster hotel market results
Summer_3.pngSource: STR Global, JLL
 

“Curiously, this has been the first summer in our history of observation of the Russian all-season resort that there were more rooms sold in the mountains than by the sea. Summer has been the reflection of this year to date results so far. We are only left to hope that the active autumn will bring more tourists to the sea cluster of Sochi, which recently got noticed as a MICE destination, and allow to recoup the loss of the first part of the year.” – Tatiana Veller says.

*All statistics on operational results are sourced from STR Global with segments based on JLL configurations; Sochi: in mountain cluster – from Upper Midscale to Upper Upscale segments, in coastal cluster – Upper segments.​


About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and on behalf of its clients managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the second quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of nearly 80,000. As of June 30, 2017, LaSalle Investment Management had $57.6 billion of real estate under asset 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, 2006-2017 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.​