State corporations will add numbers

A new major project may appear on the Moscow hotel market. State Corporation “Tourism.RF” is considering the possibility of investing an estimated 6 billion rubles. in the construction of a hotel with approximately 500 rooms on the site of the Basmannaya hospital in the center of Moscow. Market participants call the project untimely, so the turnover of the capital’s hotels for the nine months of 2022 turned out to be one and a half lower than before the pandemic.

As two sources told Kommersant in the tourist market, Tourism.RF can invest in the construction of a hotel with 480-500 rooms on Novaya Basmannaya Street in Moscow. The concept of the project was previously developed by the Ginzburg Architects bureau, follows from the materials on the company’s website. The work was commissioned by Tourism.RF, but the design stage is still far away, architect Alexei Ginzburg explained to Kommersant. Tourism.RF did not respond to Kommersant’s request.

2.3 hectares are being considered for construction, where the city clinical hospital No. 6 was previously located. The complex of buildings of the former hospital is a monument of federal significance – this is the estate of Nikita Demidov built in 1779-1791. Local residents in the spring of 2021 tried to restore the work of the medical institution. Moskomstroyinvest explained to Kommersant that the urban planning and land commission at the mayor’s office had not yet considered the project on this site.

For Tourism.RF, the hotel on Novaya Basmannaya may become one of the first notable projects in Moscow. Previously, the state corporation acted as a co-founder of mainly regional projects. Pavel Ikkert, managing partner of Ickert & Partners, sees no legal obstacles for Tourism.RF to act as the sole investor in the project. Although the lawyer draws attention to the fact that the main goal of the corporation is still to attract private capital. The site on Novaya Basmannaya, if it is on the balance sheet of the city authorities, according to Mr. Ickert, can be provided for a large-scale investment project by decision of the mayor of Moscow.

The founder of Ivashkevich Hospitality, Stanislav Ivashkevich, believes that it will not be difficult to find a co-investor for Tourism.RF. The cost of a new high-quality hotel on Novaya Basmannaya, according to him, could amount to 5 million rubles. per room, but with a large-scale reconstruction of the heritage site, the cost will increase to 12 million rubles. for the number. Based on this, the total investment in the project may fluctuate in the range of 2.4-6 billion rubles. Evgenia Tuchkova, deputy director of the consulting department at Nikoliers, calls the location’s proximity to the square three stations a plus, which will attract guests using rail transport. The best thing here, in her opinion, is to open a hotel of the middle price segment. In such hotels, the load is now higher than in high-budget hotels, but they have to reduce the rate for accommodation, says Anna Sabirova, CORE.XP consultant.

The conjuncture of the Moscow hotel market as a whole remains difficult for business. According to Rosstat, the income of collective accommodation facilities in the capital in January-September amounted to 52.86 billion rubles, which is 13.6% yoy and 44.6% less than in pre-pandemic 2019. Revenue is declining even without taking into account inflation, Roman Yeremyan, deputy chairman of the council of the Union of Tourism and Hospitality, states. According to him, this is largely due to the dependence of the Moscow market on the inbound and business tourist flow.

Against this background, Roman Yeremyan doubts the expediency of implementing new large hotels in Moscow, seeing the risk of overproduction of rooms. The latter, according to the expert, creates problems for existing investors and banks that have received them as collateral for a loan. He also doubts the effectiveness of the investment of funds “Tourism.RF”. According to Mr. Yeremyan, there are no prerequisites for the recovery of the Moscow hotel market in the next two or three years: “This process is tied to the resumption of full-scale air traffic.” Although Evgenia Tuchkova is more positive, pointing out that the project will be implemented no sooner than in three or four years, and by that time the situation may change.

Alexandra Mertsalova