Moscow Luxury-Hotel Occupancy Falls to Five-Year Low, JLL SaysIlya Khrennikov
The occupancy rate in Moscow luxury hotels last year fell to the lowest in five years as geopolitical tensions discouraged visitors, Jones Lang LaSalle Inc. said.
The average rate for luxury hotels including those run by Marriott International Inc. and Hyatt Hotels Corp. was 62 percent, the U.S. broker said in a report today. Revenue per available room fell 6.5 percent, the first decline since 2009.
President Vladimir Putin’s incursion in Ukraine led the U.S. and European Union to impose sanctions, triggering a selloff of Russian assets and a drop in business and leisure travel to Moscow. The measures, compounded by falling prices for oil, the country’s biggest export, have brought the economy to the brink of recession.
“With several new hotels recently opened and more to come in 2015, a jump in supply is not really what’s required right now,” said David Jenkins, head of JLL’s Russian hotels and hospitality group. A Four Seasons hotel opened near the Kremlin in October, and the Marriott Noviy Arbat is scheduled to start taking in guests this year.
Rooms in Moscow’s luxury hotels are now a “bargain” for foreign visitors who benefit from the ruble’s weakness and a 3 percent decrease in average daily rates in the local currency, Jenkins said. The ruble has lost 14 percent this year and plunged 46 percent against to the dollar last year as the Ukraine crisis sent tensions with the U.S. and EU to a post-Cold War high.
“Without a boom in demand there can be no route to increasing rates, and without a shift in how Russia is perceived, there will be no boom in demand,” Jenkins said in the report.
Hotels developers and owners are reconsidering their investment plans as the slumping ruble boost costs for financing and for importing fit-out parts, according to JLL.