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International Hotel Chains in Russia — 2018

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Page 1: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

International Hotel Chains in Russia — 2018

Page 2: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

1 | International Hotel Chains in Russia – 2018

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Number of hotels

International hotel chains in RussiaAccording to EY’s annual market research on the presence of international hotel brands in Russia, there were 179 hotels under international management operating in the region in October 2017 with a total room stock of 38,705 keys.

Moreover, nine new branded hotels (1,575 rooms) were opened in January - October 2017, compared with 13 hotels with a total room stock of 2,458 keys commissioned in Russia in 2016.

More than half of the existing room supply is concentrated in Moscow and St. Petersburg (52%), followed by Sochi (11%), the Moscow Region (6%), Ekaterinburg (3%), and other locations.

It is planned that by 2022 the number of hotels under international management will increase by 102 new properties (20,249 rooms). Thus, if by 2022 all announced hotels open, the number of hotels under international management in Russia will reach 281 (58,954 rooms), located in 59 cities.

In this case, by 2022 the share of Moscow and St. Petersburg will decrease by 5% (to 47%), while the share of Sochi will decline to 8%, due to the growth of branded hotel supply in the Moscow Region (7%) and Nizhny Novgorod (3%).

Moreover, openings of the first ever branded hotels are planned in 22 new locations, including Khabarovsk, Novorossiysk, Ryazan, Saransk, Stavropol, Tomsk, Vladimir, Vladivostok, and others.

Sources: hotel operators’ data, EY analysis

New hotels opened under international brands, per year (October 2017)

Page 3: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

2International Hotel Chains in Russia – 2018 |

Hotels under international brands are currently located in 37 cities of Russia. By 2022 their presence is planned to grow to 59 cities.

International-scale events are often a key driver of the expanding footprint of international hotel operators. The biggest upcoming event is the 2018 FIFA World Cup, which will be held in Russia in 11 cities:

• Ekaterinburg

• �Kaliningrad

• �Kazan

• Moscow

• Nizhny Novgorod

• Rostov-on-Don

• Samara

• Saransk

• Sochi

• St. Petersburg

• Volgograd

As of October 2017 10 of the 11 host cities already had 123 hotels under international brands (28,394 rooms). By 2018, 20 new properties are planned to open (5,027 rooms).

The graph below shows the presence of international hotel chains in Russia as of October 2017.

Sources: hotel operators’ data, EY analysis Sources: hotel operators’ data, EY analysis

Share of existing room supply by cities in Russia(October 2017)

Share of future room supply by cities in Russia(including existing room supply)

30%

22%11%

6%3%

28%

Moscow St. Petersburg Sochi

Moscow region Ekaterinburg Other cities

29%

18%8%

7%3%

35%

Moscow St. Petersburg Sochi

Moscow region Nizhny Novgorod Other cities

Page 4: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

3 | International Hotel Chains in Russia – 2018

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2,000

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10,000

11,000

12,000

Carlson Rezidor Hotel Group Accor Hotels InterContinental Hotels Group

Marriott International Hilton Worldwide Best Western

Sokos Hotels Kempinski Hotels Hyatt Hotels Corporation

Wyndham Hotel Group Louvre Hotels Group Rixos

Corinthia Hotels Rocco Forte Hotels Four Seasons Hotels & Resorts

Vienna House Domina Hotels

Lotte Hotels & Resorts

Belmond

Capella Hotel Group

Mamaison Hotels & Residences

Existing room supply under international management by city of Russia (October 2017)

Sources: hotel operators’ data, EY analysis

Page 5: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

4International Hotel Chains in Russia – 2018 |

International hotel operators’ footprint in Russia by 2022

Sources: hotel operators’ data, EY analysis

SaranskRyazan

Kaluga

Astrakhan

KrasnodarKislovodsk

Stavropol

Mineralnye Vody

Novorossiysk

Sochi

Chelyabinsk

KrasnoyarskNovosibirsk Kemerovo

TomskOmsk

EkaterinburgNizhny Tagil

Tyumen

KazanKirovCheboksary

Ulyanovsk

SamaraTolyatti

LipetskVoronezh

VolgogradRostov-on-DonSevastopol

Yalta

Gelendzhik

IzhevskPerm

YaroslavlVladimir

ZavidovoVeliky Novgorod

Nizhny NovgorodIvanovo

Murmansk

Irkutsk

Vladivostok

KhabarovskBlagoveshchensk

KaliningradSvetlogorsk

Moscow

St.Petersburg

Ufa

Novokuznetsk

Zelenogradsk

Arkhangelsk

Orenburg

Elabuga

Zheleznovodsk

Kogalym

Surgut

The total branded room stock available in Russia as of October 2017 (i.e. 179 hotels with 38,705 keys in 38 locations) is operated or franchised by 22 international hotel chains currently present in the region.

The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor Hotel Group, InterContinental Hotels Group.

The graphs below show the actual and projected footprint of hotel operators in Russia as of October 2017 and including future projects till 2022.

Sources: hotel operators’ data, EY analysis Sources: hotel operators’ data, EY analysis

Share of hotel operators – distribution of existing room supply (October 2017)

Share of hotel operators – distribution of future room supply (including existing rooms)

25%

19%

13%

12%

11%

20%

Carlson Rezidor Hotel GroupAccor Hotels

Marriott International

InterContinental HotelsGroupHilton Worldwide

Other operators

17%

21%

14%14%

15%

19%

Carlson Rezidor Hotel GroupAccor Hotels

Marriott International

InterContinental HotelsGroupHilton Worldwide

Other operators

37

Page 6: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

5 | International Hotel Chains in Russia – 2018

Sources: hotel operator’s data, EY analysis

Russian hotel operators in the domestic and international markets (October 2017)

Chain Number of hotels in Russia / abroad Regions / cities in Russia Countries abroad

GOST Hotel Management 26 / 2 Moscow, Moscow region, Sochi, Nizhny Novgorod, Nizhny Novgorod region, Irkutsk, Irkutsk region, Kislovodsk, Khakasia, Abakan, Buryatiya

Ukraine, Austria

Amaks Hotels & Resorts 19 / 4 Vladimir, Belgorod, Rostov-on-Don, Ryazan, Azov, Omsk, Veliky Novgorod, Voronezh, Tambov, Novy Urengoy, Perm, Kazan, Krasnoyarsk, Ufa, Izhevsk, Tolyatti, Yoshkar-Ola, Kurgan, Valday

Belarus

Azimut Hotels 18 / 8 Moscow, St. Petersburg, Sochi, Yakutsk, Vladivostok, Voronezh, Astrakhan, Murmansk, Ufa, Novosibirsk, Nizhny Novgorod, Kostroma

Germany, Austria

Cronwell Hotels & Resorts 11 / 3 Moscow region, St. Petersburg, Khantymansiysk - Yugra

Greece

Heliopark Hotels & Resorts 7/ 1 Solnechnogorsk, Zvenigorod, Nebug, Penza, Suzdal, Malye Soli

Germany

Soyuz Marins Group 7 / - Yalta, Sochi, Ekaterinburg, Nizhny Novgorod, Rostov, Novosibirsk

-

Cosmos Group 5 / 3 Moscow, Moscow region, Petrozavodsk, Valday Czech Republic, Italy, Namibia

Alliance Hotel Management 5 / - Moscow, Obninsk, Saransk, Abakan, Tuapse -

Korston Hotels 3 / - Moscow, Ryazan, Serpukhov -

Total: 101 / 21

Russian hotel brands

Meanwhile, Russian hotel operators are increasing their presence in both Russia and abroad. National brands as a rule account for a significantly smaller proportion of hotels in the markets of most countries (except the U.S.) compared with hotels under international management. This is also true for the Russian market: currently, the share of hotels under international brands (179 hotels) is almost 1.5 times higher than the share of hotels under national management (101).

In October 2016 there were 169 hotels under international management in Russia vs. 72 hotels operated by Russian chains. Thus, this year the difference has decreased by 19 hotels in favor of Russian chains.

Russian operators continue to grow and are opening new hotels both on the domestic market and abroad. Major Russian hotel chains are listed in the table below:

Page 7: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

6International Hotel Chains in Russia – 2018 |

Sources: hotel operators’ data, EY analysis

Sources: hotel operators’ data, EY analysis

Hotels opened under international management in Russia in January – October 2017

Chain Hotel Number of rooms City

Accor Hotels Ibis Irkutsk Center 128 Irkutsk

Ibis Budget Moscow Panfilovskaya 114 Moscow

Ibis Moscow Oktyabrskoe Pole 240 Moscow

Carlson Rezidor Hotel Group Park Inn by Radisson Izmaylovo Moscow 109 Moscow

Hilton Worldwide Hilton Garden Inn Moscow Krasnoselskaya 292 Moscow

Hilton St. Petersburg Expoforum 234 St. Petersburg

Hilton Garden Inn Volgograd 158 Volgograd

Lotte Hotels & Resorts Lotte Hotel St. Petersburg 150 St. Petersburg

Marriott International Courtyard by Marriott Nizhny Novgorod 150 Nizhny Novgorod

Total: 9 hotels 1,575 rooms 5 cities

Hotels under international management due to open in Russia by the end of 2017 (October 2017)

Chain Hotel Number of rooms City

Accor Hotels Ibis Domodedovo 158 Domodedovo, Moscow region

Carlson Rezidor Hotel Group Radisson Blu Hotel, Rostov-on-Don 81 Rostov-on-Don

Hilton Worldwide Hilton Garden Inn Novorossiysk 125 Novorossiysk

Hilton Garden Inn Orenburg 119 Orenburg

Hyatt Hotels Corporation Hyatt Regency Moscow Petrovsky Park 298 Moscow

InterContinental Hotels Group Holiday Inn Express Moscow - Dubininskaya 184 Moscow

Marriott International Sheraton Nizhny Novgorod Kremlin 176 Nizhny Novgorod

Sheraton Rostov-on-Don 307 Rostov-on-Don

Four Points by Sheraton Saransk 159 Saransk

Four Points by Sheraton Voronezh 108 Voronezh

Voronezh Marriott Hotel 220 Voronezh

Wyndham Hotel Group Ramada H&S Moscow Greenwood Park 376 Moscow

Days Hotel Zolotoe Koltso 150 Pereslavl-Zalessky

Ramada Resort Zolotoe Koltso 200 Pereslavl-Zalessky

Total: 14 hotels 2,720 rooms 9 cities

New hotels: 2017 – 2018

During the first ten months of 2017 the Russian hotel market increased by six new hotels opened under international brands.

According to information that EY has compiled from hotel operators and open sources, 14 more hotels are due to open by

the end of 2017. We believe, however, that the opening of some of them may be postponed until 2018.

Page 8: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

7 | International Hotel Chains in Russia – 2018

Sources: hotel operators’ data, EY analysis

Key fi gures for international hotel operators in Russia(October 2017)

ChainExisting number of Future number of Total number by 2020

Hotels Rooms Hotels Rooms Hotels Rooms

Accor Hotels 39 7,311 30 5,069 69 12,380

Carlson Rezidor Hotel Group 35 9,607 3 621 38 10,228

Hilton Worldwide 24 4,301 26 4,340 50 8,641

Marriott International 23 5,278 16 3,319 39 8,597

InterContinental Hotels Group 18 4,561 12 3,816 30 8,377

Wyndham Hotel Group 5 752 6 1,198 11 1,950

Best Western 5 485 1 125 6 610

Sokos Hotels 3 927 - - 3 927

Kempinski Hotels 3 803 - - 3 803

Hyatt Hotels Corporation 3 700 5 1,213 8 1,913

Louvre Hotels Group 3 634 - - 3 634

Capella Hotel Group 3 220 - - 3 220

Rixos 2 536 - - 2 536

Rocco Forte Hotels 2 367 - - 2 367

Four Seasons Hotels and Resorts 2 357 - - 2 357

Vienna House 2 348 - - 2 348

Domina Hotels 2 327 4 668 6 995

Lotte Hotels & Resorts 2 454 1 192 3 646

Belmond 1 265 - - 1 265

Corinthia Hotels 1 388 - - 1 388

Mamaison Hotels & Residences 1 84 - - 1 84

Jumeirah Group - - 1 76 1 76

Total: 179 38,705 105 20,637 284 59,342

Page 9: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

8International Hotel Chains in Russia – 2018 |

Source: hotel operators’ data, EY analysis

Sources: hotel operators’ data, EY analysis

Distribution of international operators by number of hotels

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Existing (October 2017) Future

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Existing (October 2017) Future

Distribution of international operators by room supply

Page 10: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

9 | International Hotel Chains in Russia – 2018

Hotel chain affiliations — key benefits

It is a prevailing opinion among hotel developers and owners – both domestic and international – that a global chain affiliation is an indispensable component of a hotel’s success. Without advocating either option and given the focus of this publication, below we share our thoughts on the key benefits that an owner may expect to gain from affiliation with a global hotel chain.

Source: EY analysis

Major benefits of affiliation with a global hotel chain

Benefit Comment

Recognition Recognizable hotel brand is perceived as a quality guarantee

Status of the property International brand raises the status of the property

Safety Foreign tourists prefer to stay in hotels with well-known international brands in “unsafe” countries

Global booking system Opportunity to book via various electronic channels, simplicity of search, booking without intermediaries

Integrated marketing Integrated marketing allows brand promotion costs to be reduced due to the hotel’s presence on the operator’s website, in booking systems, catalogs, and brochures

Loyalty programs Guests who join hotel chain loyalty programs are motivated to choose hotels in this chain due to various benefits and discounts for regular guests

Level of service Common service standards, management systems and staff training in hotel chains result in a higher level of service than in independent hotels

Stability in times of crisis Hotel chains are more resilient in times of crisis for a number of reasons: more stable demand from loyal guests, efficient occupancy management due to presence in several global reservation systems, the availability of highly skilled professionals with experience of working in unstable economic conditions

Lower costs Hotel chains guarantee lower costs on consumables, maintenance and repairs, advertising and marketing due to large purchase volumes and cost distribution among all hotels in the chain

Lower risk to investors International brand lowers risks and provides a great advantage when selling a property or obtaining a bank loan

Page 11: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

Olga ArkhangelskayaPartner, Real Estate Advisory Services Leader in the CIS

Tel: +7 495 755 [email protected]

Anna LevinaManager, Hospitality & Leisure Advisory Services

Tel: +7 495 662 [email protected]

Angelika Normann

Senior manager, Hospitality & Leisure Advisory Services Leader in Russia

Tel: +7 495 648 [email protected]

Contact information

Page 12: International Hotel Chains in Russia — 2018 · The largest market share (80%) is divided between five chains: Accor Hotels, Hilton Worldwide, Marriott International, Carlson Rezidor

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY works together with companies across the CIS and assists them in realizing their business goals. 4,500 professionals work at 20 CIS offices (in Moscow, St. Petersburg, Novosibirsk, Ekaterinburg, Kazan, Krasnodar, Rostov-on-Don, Togliatti, Vladivostok, Yuzhno-Sakhalinsk, Almaty, Astana, Atyrau, Bishkek, Baku, Kyiv, Tashkent, Tbilisi, Yerevan, and Minsk).

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© 2017 Ernst & Young (CIS) B.V. All Rights Reserved.

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global EY organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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