St. Petersburg Hotels Show Record-Breaking ADR and RevPAR on the Back of Occupancy Declines

(Source: Travel Weekly China)

JLL presents the H1 2017 results of the quality hotel market 1 in St. Petersburg.

"Russian North Capital quality hotel stock in H1 2017 showed the highest performance in last five years in terms of ADR and RevPAR – growth by 15% and 8.5%, to RUB 6,400 and RUB 3,500 respectively. On the back of dropping occupancy (decline by 1.8 ppt – down to 50.5%), hoteliers focused their attention on demand quality, building up prices and thus revenues. As a result, price sensitive tourists shied away from St. Petersburg quality hotels in favor of more budget-friendly accommodation options or other travel destinations." – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, comments.

June in St. Petersburg was marked by two international events - St. Petersburg International Economic Forum and FIFA Confederations Cup. "Generally, common tourists tend to avoid destinations of large-scale sporting events, fearing extortionate prices, stricter security measures, overcrowded airports, overloaded traffic and infrastructure. Consequently, despite the significant reduction in number of sold rooms, this month exhibited considerable ADR growth in all segments and eventually resulted in substantial RevPAR growth over last year." – Tatiana Veller notes.

Midscale segment this month took a lead in ADR and occupancy dynamics: ADR increased by nearly 19% (to RUB 6,200), occupancy dropped from 90% in H1 2016 to 80% this year. Luxury hotels in the first summer month of this year achieved unbelievable ADR (almost RUB 45,000, 2,5 times higher than most expensive hotels in Moscow). Even though their occupancy dropped by 5.5 ppt, but it still remained high for this segment – 74%.

"Outstanding operational performance of St. Petersburg luxury segment in H1 2017 is quite notable. It outdid luxury hotels in the Russia's capital not only by ADR (which is actually typical and expectable for the first half of the year), but also by revenue due to the high demand from two coinciding international events, and little in terms of new additions to the room stock in the city (a 154-room Lotte plaza in the Luxury segment)." – Tatiana Veller says. – "As a result, Luxury segment ADR in the Northern Capital reached RUB 23,300 in H1 this year, compared to RUB 17,600 in Moscow, and the RevPAR was at RUB 11,500 and RUB 11,000 respectively."

Upper Midscale segment became a leader in revenue growth and the only category that showed slight growth in occupancy – by 1 ppt, to 65%. Due to the solid ADR improvement (9% vs. H1 2016, to RUB 5,500), RevPAR here increased by 11%, to RUB 3,600.

"Relatively low number of quality rooms put into operation in St. Petersburg and no scheduled openings for the remainder of the year should help by December smooth out the negative impact of price sensitive tourists fleeing the market. We expect 2017 for the hotel market in St. Petersburg to finish at least at the previous year's level, maybe with small growth in market-average operating performance indices." – Tatiana Veller adds.