Pipeline Imbalance Presents Great Opportunities in Russia

Horwath HTL, one of the world’s largest hotel consulting networks, hosted a plenary session on pipeline and development at the fourth Russia and CIS Hotel Investment Conference on Tuesday, held at the Renaissance Moscow Monarch Centre Hotel.

Michael O’Hare, Managing Director of Horwath HTL Russia and a leading industry expert in the region, led the session and was joined by senior developers from Hilton, Hyatt, IHG and Starwood Hotels and Resorts.

The session addressed whether Russian hotel development had begun to move again after a difficult 2009, where financing was scarce and opportunities were limited. Michael O’Hare talked about the huge disparity in supply of International Hotel Brands compared to demand and how this would be the driving force for opportunities as the financial markets loosened and bank lending began again.

The general feeling among the brands was that projects were beginning to move again, and that those hotels whose construction had been delayed due to a freeze on financing were now finding new sources of capital to enable completion.

Michael O’Hare said, “It was positive to hear that projects and demand for opportunities are beginning to grow again. Russia, in particular Moscow and St Petersburg, had a period of very strong growth in the middle of the decade until the financial crisis. Those brands will now need to take the opportunity of an upturn to gain critical mass and look outside of the two major centers to the vast majority of Russian cities that have no International presence at all. There are over 50 cities in the Region with over half a million inhabitants that could support new hotel supply and that is where we expect the focus to be in the coming years.”

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