The FIFA World Cup 2018 achieved the anticipated effect: this summer, the number of visitors in hotels in cities that are historically popular with Russian and foreign tourists grew. According to Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, occupancy in Saint-Petersburg shattered a three-year record with a market average result of 88 percent. Real estate
"Moscow hoteliers observe an exceptional surge of leisure travellers," Veller continued. Such visitors began to outnumber business travelers in several hotels. It's a significant shift for Moscow, where business flow has traditionally accounted for 75-80 percent of total demand." Real estate
The room rate dynamics, on the other hand, were not so favorable. Due to the lack of a significant international event of the World Cup level this year, Moscow hoteliers were free to set high prices within the limitations allowed by law, expecting the demand of football fans and journalists. As a result, all markets experienced a reduction in ADR. Moscow, on the other hand, lost the greatest ground, with room rates falling by slightly more than half.
Moscow and its environs
Despite the fact that Moscow served as a primary hub for mundial guests this summer, market average occupancy in the Russian city was 87.4 percent from June to August, up 2 percentage points from the previous year (85.6 percent) and 6 percentage points higher than in 2017. With 92 percent of the rooms sold, the Upper Upscale segment was the most popular.
ADR, on the other hand, declined by 55 percent to RUB 7,100, while RevPAR decreased by 54 percent to RUB 6,200. The Luxury segment, on the other hand, saw the most significant fall. Hotels in this area have reduced their costs by 61 percent, to RUB 20,900, making them 30% less expensive than their counterparts in St. Petersburg. When comparing this data to the preceding period (summer of 2017) without the World Cup, we can see that the ADR has increased by 20%.
"This summer, branded resort hotels in the Moscow region were able to raise occupancy by a healthy 13 percentage points, to 63 percent. The World Cup held back traditional visitor demand last year; individuals decided to stay in the city and attend World Cup festivities. This summer, Muscovites who are used to traditional country vacations focused their attention on the facilities "just in their backyard." The month of June saw the most growth. In the first month of 2019 summer, hotel guests in the Moscow region increased by 8% compared to June 2018. Tatiana Veller writes, "ADR only declined significantly compared to a year ago, by 13.5 percent to RUB 5,700."
St. Petersburg is a city in Russia.
"The rapid surge in the number of guests this summer pleased St. Petersburg hoteliers, which was something the market had been anticipating. Hotels received 15.5 percent more guests than the previous year and 4 percent more than the summer of 2017. The average occupancy rate in the market was 88 percent. The most popular section is traditionally the budget-friendly one, which caters mostly to organized tourist groups. During the entire season, these rooms in Northern Venice were sold at a rate of 91 percent, which is a three-year high. The RevPAR grew by 15% as a result of the higher occupancy in this area, according to Veller.
At the same time, ADR fell by 17% compared to the previous summer, but increased by 4% (to RUB 9,300) compared to 2017. Despite the reduction in ADR, St. Petersburg hotels' RevPAR climbed by 2% (to RUB 7,800) due to a considerable increase in the number of rooms sold.
Prices in St. Petersburg's luxury class remained relatively stable year over year, falling by 1.5 percent to RUB 30,500. Due to significant business events such as SPIEF and the absence of football enthusiasts, premium segment guests were more interested in the market. The occupancy rate improved by 7 percentage points to 77 percent. As a result of these variables, RevPAR increased by 12 percent (to RUB 23,700).
Sochi
This summer by the sea, the Russian all-year-round attraction sold 6 more rooms, up 74 percent from the previous year. ADR decreased by 19 percent to RUB 7,500 at the same time. The occupancy rate in the Upscale categories, with an average price of RUB 13,500, was high at 72 percent. The "cheap price category" players, however, were responsible for the majority of the increase in occupancy, with 75 percent of rooms selling for around RUB 3,600 as ADR. Having said that, we estimate that occupancy was much greater in large "all-inclusive" hotels in the Imereti lowland (which we don't include in the numbers).
"It's worth noting that, even in a generally beach season, the mountain cluster competes well with its coastal counterparts, with 69 percent of hotel rooms sold here" (an increase of 5.5 ppt compared to 2018). This is due in part to their low-cost approach and attractive discounts; the ADR in Krasnaya Polyana was RUB 3,300. The average room sold for RUB 4,400 in the upper segments, while the tariff in more budget-friendly hotels increased marginally from 2018 to RUB 2,500 this summer," Veller concludes.