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    US Hotels Investing Heavily in Russia

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    American travelers to Moscow, St. Petersburg and elsewhere in Russia may find themselves in familiar surroundings, thanks to a surge in US hotel chains opening across the country.

    WASHINGTON, July 11 (By Maria Young for RIA Novosti) – American travelers to Moscow, St. Petersburg and elsewhere in Russia may find themselves in familiar surroundings, thanks to a surge in US hotel chains opening across the country.

    “Russia is one of our three top priority markets, because travel to and from Russia is growing fast. We see it as a significant opportunity because it’s a prosperous country and it’s relatively underdeveloped,” said Tim Rycroft, director of communications for the InterContinental Hotels Group (IHG), which has 13 hotels in Russia now, with five more scheduled for the near future.

    The company plans to open its first Holiday Inn Express, a moderately-priced hotel chain, in Veronezh next year, with a total of 15 Holiday Inn Express sites scheduled to open across the country by 2019.

    “We know that there is considerable demand for branded hotels in Russia. International travelers want the reassurance of a brand they’re familiar with, and a lot of the hotels in Russia are local brands or family-owned, so penetration of international hotels is quite low,” Rycroft told RIA Novosti.

    But competition is growing among the international chains. Other US hotel chains with a presence in Russia include Marriott, Hilton, Radisson, Sheraton and the Ritz-Carlton.

    The Chicago-based Hyatt Hotels Corporation announced this week it will open a second Hyatt Regency in Moscow, with 168 guest rooms and 52 extended-stay apartments, by 2017. It will be the sixth Hyatt-branded hotel under development across Russia.

    “Establishing our brand’s presence in key gateway cities like Moscow is an integral part of our strategy to drive guest preference for Hyatt-branded hotels in Russia, a market that continues to experience strong growth in visitor numbers,” Peter Norman, senior vice president of real estate and development for Hyatt Hotels & Resorts, said in a statement.

    The US-based Morgans Hotel Group plans to open its first Russia hotel with 160 rooms in 2015.

    The luxury Four Seasons Hotels and Resorts opened its first hotel in Russia at the renovated Lobanov-Rostovsky Palace in St. Petersburg this week, with plans to open a second Four Seasons in Moscow next year, a move the company said would “change the face of luxury hospitality in Russia.”

    “Guests tell us they want us to be in more places where they travel and Russia is at the top of that list,” said Christopher Norton, Four Seasons’ president of hotel operations for Europe, the Middle East and Africa, in a statement to RIA Novosti.

    “Russians are among our most loyal guests at our properties worldwide, having frequented our international properties for years and are an extremely important target market for Four Seasons. We are thrilled that Russians can now experience a Four Seasons property at home,” Norton added.

    The number of hotels in Russia, the former Soviet republics that make up the Commonwealth of Independent States (CIS) and Georgia grew by 10 percent last year, with 65 percent of new hotels popping up in Kiev, Baku and Sochi, according to research conducted by market research group HVS, which provides hotel industry data.

    In its annual Trends & Opportunities Report for 2013, the firm reported that another 6,400 hotel rooms will be built in Moscow by 2018, a growth of 37 percent. In St. Petersburg, the company’s research indicates there will be another 1,260 rooms added in the next five years, an increase of 18 percent, and 3,800 new rooms will be built in Sochi, a growth of 22 percent.

    A report released by STR Global, which tracks data for the hotel industry worldwide, shows there are 25 hotels scheduled to open in Moscow in the coming years, eight already under construction.

    Experts who spoke with RIA Novosti identified three primary reasons for strong international growth in Russia: it is a BRIC country (Brazil, Russia, India, China) which puts it among the four top emerging markets considered a global hotspot for development, the number of hotel rooms per capita in Russia is still low compared to other European cities, and travel to Russia has increased significantly in recent years.

    “Russia is very attractive because it’s a country that is finally opening itself up to development opportunities... From Moscow to St. Petersburg, those urban areas are rife with opportunities. And hotel companies are also expanding to the suburbs with more midscale offerings, which, at least Moscow, lacks,” said Alissa Ponchione, editor of Hotel News Now, which follows global developments in the hotel industry.

    There are challenges, Ponchione said in a statement to RIA Novosti, including high cost, a lack of geography and regulations, in Moscow in particular.

    “There’s a lot of bureaucracy, some government instability, but I think American hotel companies know that they have to have a presence in Russia to remain on top of their game,” she said.

    Beyond the large number of foreign travelers now flocking to Russia for both business and pleasure, there is also a great deal of travel within the country, so some US hotel chains aren’t just targeting Americans in Russia but Russians as well.

    “We know that when we open a hotel in a new market we see increased outbound traffic to our international properties as the local market becomes acquainted with Four Seasons,” said Norton.

    He added, “As Russians travel more frequently within the country and around the world, they’ll look for a brand they already know and can trust.”


    Holiday Inn Express, Four Seasons Hotels and Resorts, InterContinental Hotels Group (IHG), BRICS, Peter Norman, Tim Rycroft
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