In 2024, nine new hotels with 1.18 thousand rooms will be commissioned in Moscow

The increase in hotel occupancy in Moscow has forced developers of such properties to quickly complete projects that began before the crisis. In 2024, nine hotels with 1.18 thousand rooms will be launched, which is a record value since 2017, when developers tried to complete facilities for the World Cup in Russia. However, such dynamics will be short-lived, experts warn. Already in 2025–2028, the commissioning of such real estate will be minimal.

In 2024, nine new hotels with a total stock of 1.18 thousand rooms will open in Moscow, CMWP estimates. This volume will more than triple the 2023 levels and will be a record since 2017, when developers completed the construction of six hotels with 1,600 rooms in preparation for the 2018 FIFA World Cup in Russia. Nikoliers has more restrained forecasts. They expect six new properties with a total of 726 rooms to appear in Moscow this year.

Despite the high dynamics, about 1 thousand new numbers for Moscow, according to the regional director of Accor in Russia, Georgia and the CIS Alexis Delaroff, “this can hardly be called a surge.” Most of the projects planned for 2024 have been in the final stage for several years, notes Ekaterina Nogai, head of the research and analytics department at IBC Real Estate. Now it is more profitable to launch them than to freeze construction, adds Mr. Delaroff.

Developers’ optimism has returned due to increased hotel occupancy. Last year the figure rose 16.7 percentage points to 72%, according to Nikoliers. However, the weakening of the ruble against the dollar by 24% and the total inflation accumulated since 2019, exceeding 30%, do not yet allow us to talk about a real restoration of operating results in comparison with the pre-crisis 2019, CMWP notes. According to their calculations, in 2019 the average profit per room was $82, and in 2023 – already $77.

In the future, the situation in the Moscow hotel market will worsen. In 2025–2028, CMWP expects single projects totaling 474 rooms will be completed. This failure is due to the economic and political risks of 2020–2023, when some projects were postponed or transferred to another real estate category, explains CMWP partner Marina Usenko. She cites the example of the Fairmont project on Tverskaya Street in Moscow, which was reformatted into a condo-hotel with the subsequent sale of individual lots in the form of apartments to private investors. It is easier for a developer to build apartments and sell them while still under construction than to expect profitability from the more unpredictable hotel business, says Alexis Delaroff.

The reticence of investors was also influenced by the departure of international network operators, Ms. Usenko believes. Since the spring of 2022, Hyatt, Intercontinental, Marriott, Sokos, Four Seasons, BWH and others have left the Russian market. The shortage of professional network operators creates risks for investors, so projects at a very early stage of development may be postponed until the situation is clarified or canceled altogether, she explains.

Now the interest of investors and developers is focused on regional tourist destinations: Anapa, Kamchatka, Altai and ski resorts, and not on city hotels, notes Alexis Delaroff. Thus, in Anapa, nine hotels with 6.9 thousand rooms are expected to open in 2024–2028; in Gelendzhik, at least three hotels with 750 rooms will open by 2030, notes Marina Usenko. The Mantera structures of Alexander Tkachev intend to build an amusement park and resort and hotel complex on Russky Island in Vladivostok, and the Cosmos Hotel Group will build a hotel with 120 rooms in Pskov.

Development in the regions still remains a problem area due to difficulties with the supply of materials and logistics, as well as the unavailability of quality general contractors, warns Ekaterina Nogai. With the Central Bank rate at 16%, not all investors will be able to afford the required capital investments, adds Alexis Delaroff. Therefore, Ms. Nogai summarizes, in the coming years, tourism demand will significantly exceed supply.

Daria Andrianova