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Hotel Industry Performance in Moscow and St. Petersburg

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According to data compiled by STR Global, Moscow and St. Petersburg have reported RevPAR declines for the first eight months of 2009. The increasing supply within both cities coupled with declining demand resulted in occupancy and ADR declines.

Moscow reported occupancy rates of 56%, dropping 8.7 percentage points compared with year-to-date August 2008, its lowest performance for any January-to-August period during the past seven years.

 Moscow’s ADR declined 42% to US$197, but the market still reported a higher ADR than St. Petersburg‘s US$145 (-35%).

 St. Petersburg saw occupancy levels fall by 14.3 percentage points. In local currency, both cities fared better with rates declining only 20% for Moscow and 12% for St. Petersburg.

“For the past few years, Moscow saw supply limitations especially with the absence of Western-standard hotels and this enabled the existing international brands to charge premium rates,” said Jan Freitag, vice president, global development STR. “The declining business demand due to the worldwide economic downturn resulted in low occupancy levels and rate pressures this year. The steady supply increase in St. Petersburg has put additional pressure on local hoteliers to keep their market share in this declining market. Our Hotel Market Forecast Reports show Moscow ending 2009 with a RevPAR decline between -26% and -28% in local currency and starting to see RevPAR recovering in the second quarter of 2010.”

Jan Freitag will speak on trends, pipelines and industry outlook at this year’s Russia & CIS Hotel Investment Conference which will take place in St. Petersburg 25 to 27 October 2009.

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