The Market in Moscow is Still Riding Strong

“The market in the Russian capital is still riding strong, gaining volume of rooms sold in most segments and rates in some. Overall, the weighted market average occupancy of the quality hotels in the Russian capital had risen 2.6 ppt, and reached 62.1%, the highest Q1 YTD number in at least 5 years. Average marketwide ADR has dropped by mere RUB 44, representing a 0.6% loss, to RUB 7,450. RevPAR still managed to climb a healthy 2.2% - to RUB 4,480” Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, says.

Surprisingly, the segment in this quarter that lost a little bit on all fronts first time in at least 4 years was Luxury. Occupancy here dropped by 3 ppt (to 55%), rate by 1% (to RUB 17,250), and as a result the revenue per available room was 6% less, RUB 9,450. “This is probably because the segment has been riding high and making large gains in many previous periods or maybe because the ruble had been appreciating further against hard currencies, and splurging on unreasonably high-end accommodation became less affordable for foreign traveler” Tatiana Veller comments.

The segment that recorded the largest RevPAR gain was, of course, Midscale. “We say ‘of course’ because the market has been fueled by domestic business and leisure travel and group tourist business for a while, and that’s high-volume, relatively inexpensive demand” Tatiana Veller notes. “The occupancy growth was very large here, by 7 ppt, to 66% - this is higher than any other segment this quarter, and higher than this segment has been in at least 5 years! So, even with a few rubles’ loss in ADR, the RevPAR managed to bring additional 11% to the bottom line for the owners.”

The suburban resorts in the Moscow Region also had a good start to the year. Here RevPAR grew by 6% – to RUB 2,500 – due to an increase in the average rate by 11%, to almost RUB 5,500. At the same time, the occupancy dropped by 2 ppt, to 46% amidst growing prices.

JLL presents also the Q1 2017 Kiev quality hotel market results. “Compared to what we forecasted for 2017 when reporting on 2016 results, quality hotels in the Ukrainian capital are meeting the expectations. The occupancy grew healthily in the first 3 months of the year, actually surpassing the YTD results of the last stable year, 2013 (39%). 40% of quality room stock was occupied in Jan-March this year, vs. 34 last year, and 31 in 2015” Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, says.

In terms of rates, average quarterly ADR results continue to give mixed feelings – still growing in UAH terms (probably a result of continued weakness of the national currency, rather than a real market condition change), and still falling in USD terms (to an absolute figure of USD141 vs. USD148 last year and USD151 in 2015). In local currency, quarterly average ADR remained relatively stable compared to a year before (grew by a meagre 7,5 hryvnia) but increased by over UAH 600 compared to 2015, reaching UAH 3,203.

RevPAR though, even USD-denominated, makes one see a recovery in underway. On the back of a stronger occupancy, the average index reached USD57 in the Q1 2017, the highest in the past 4 years (growth by 12.5% YoY). In local currency, obviously, the figure is even more impressive, UAH1,542 which is about 240 hryvnia (19%) higher than last year.