Contact us

Experts: coronavirus has created problems for hotels in Moscow and Peter

MOSCOW, 18 March - RIA Real Estate. The coronavirus pandemic launched a serious strike for the hotel sector of Moscow and St. Petersburg, the number of cancellations and occupation decline in the industry are increasing, said consultants of commercial real estate and hotel sector, interviewed by RIA Real Estate.

On 11 March, the World Health Organization declared the outbreak of the new coronavirus COVID-19 a pandemic. In the world more than 200 thousand people are already infected in more than 150 countries, most have recovered, and more than 7.4 thousand have died. Against the backdrop of coronavirus infection, major cities have not only restricted air travel and border crossing, but have also introduced additional security precautions, reducing the total number of people allowed to visit public events. There are currently 147 cases of COVID-19 in Russia.

Coronavirus strike

"The hotel industry in Russia is under pressure because of coronavirus pandemic. This is mainly due to the ban on Chinese tourists to enter the country, given the fact that China is the leader in terms of amount of tourists entering our country since 2014. In the second half of March, the situation was exacerbated by the cancellation of business and sport events, as well as the imposition of a ban to entry the country. As a result, the final occupancy at the end of the first quarter in Moscow may be reduced by 1.5 times, but after the removal of all restrictions, we can see a rebound in this direction", - said the Managing Director of Consulting and Analytics Knight Frank Olga Shirokova.

As she said, the most vulnerable in this situation will be small hotels or facilities characterized by a bad location. In turn, the absence of additional restrictions may have a positive effect on the local Russian hotel real estate market due to the reorientation of the population towards domestic tourism.

We agree with the consultants of Knight Frank and Colliers International. Thus, the deputy director of strategic consulting department of the company Evgenia Tuchkova believes that currently the situation with tourism is in a state of great uncertainty, and the main centers of tourist flows attraction - Moscow, St. Petersburg and Sochi - in the nearest future will live mainly due to domestic tourism and business trips.

"If we talk about losses in the hotel segment, in St. Petersburg only the luxury segment will lose about 80-100 million rubles per day, respectively, in Moscow this figure will be several times higher. According to the data of international and large local hotel chains, hotel occupancy over the last two weeks, when coronavirus infections started to record actively in Russia, has decreased by of 20% in average, mass cancellations of booking have appeared, in Moscow the figure has reached 40%", - Tuchkova notes.

In turn, Deputy Director of the development Department of Becar Asset Management apart-hotels Nikolay Pana makes a more daring forecast about the losses in the hotel business. According to him, in 2020 the hotel market may not count 15-20% of annual revenues. Congress and exhibition industry can potentially lose about 50 billion rubles as about 300 exhibitions and events may be cancelled in Russia.

Krasnodar Region is on the plus side

Despite the overwhelming number of hotel cancellations in Moscow and St. Petersburg, experts unanimously agreed that against the backdrop of mass cancellations of flights to popular tourist destinations and border closures, the Krasnodar Region's resorts may benefit significantly due to the coronavirus pandemic.

"Resorts in the Krasnodar Region, which concentrate a large number of hotels’ supply in different price segments, will certainly be able to receive mass tourists and thus win in this situation. According to our estimates, Sochi, Anapa and Gelendzhik will show a high occupancy in the summer season. Already now we can note that at sea resorts prices for accommodation has increased to the previous year by about 10-12%", - said Tuchkova.

Olga Shirokova also shares the opinion of consultant Colliers International. In her opinion, despite mass cancellations of flights to popular foreign holiday destinations, Russian citizens are not ready to cancel their vacations and may reorient to domestic resorts.

"Resort regions expect a good high season - now a Russian tourist, faced with flight cancellations and border closures in Europe, is looking for alternatives inside the country. Already now it is possible to observe increase in tariffs for summer months both in Crimea and Sochi", - notes Becar expert.