Who else is lowering prices
The high-price category hotels in the capital (upscale) are also reducing rates. This category includes hotels with more than 250 rooms, which are focused on the business segment and conferences, these are the corresponding hotels of the brands Marriott, Radisson, Crowne Plaza, as well as, for example, Hilton Leningradskaya and Renaissance Monarch. According to the Russian classification, this, as a rule, is also a 4-star segment, but sometimes five-star ones also fall here. A night in them fell on average to 5.5 thousand rubles, which is almost 17% lower than in January-May 2019.
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In the absence of events, large hotels, especially in the high-price category, find it problematic to provide occupancy only by individual tourists, so they reduce prices, explains Ukhanova. But the load in this category is now still lower than before the pandemic: 58 and 72%, respectively.
Following four-star hotels, three-star hotels (midscale) had to cut rates – hotels located outside the Third Ring Road, among chain brands – Park Inn, Holiday Inn, Ibis, night prices in them fell by almost 26% compared to 2019, on average up to 2.9 thousand rubles. But despite the biggest discounts, their occupancy has not yet returned to the level of 2019: 58% versus 63% of rooms.
The reason is that tourists who usually prefer three-star hotels, having seen a significant decrease in prices in more expensive hotels, prefer to stay in them, says Marina Usenko, partner of Cushman & Wakefield. Hotels of 3–4 star categories now “compete for one guest,” and the difference in rates between segments is often only 0.5–1 thousand rubles, while the level of hotels and the development of their infrastructure differ significantly, Ukhanova agrees. She recalls that “the trend towards upgrading in guest preferences” was typical of previous crises.
In January-May 2021 in Moscow, the volume of services provided by hotels reached, according to Mosstat, 17.2 billion rubles, which is almost 23% more than in the same period of 2020. In January-May 2019, hotels provided services for 18.1 billion rubles.
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Who is not ready for discounts
Moscow five-star hotels, unlike 3-4-star hotels, not only did not cut prices, but even raised them. The average cost of rooms in luxury hotels increased, according to JLL estimates, by almost 32%, to 25.2 thousand rubles. per night, in the upper upscale category – by 11%, up to 11.5 thousand rubles.
The difference between these two segments is that the luxury hotels are located in the historical center of the city, they focus on “top corporate guests and wealthy individual travelers”, while the upper end of the high price category are located near the center and are aimed at the upper business segment. – guests, clarifies Ukhanova. The first segment includes, for example, Four Seasons, Lotte, Ritz-Carlton, Park Hyatt, St. Regis hotels, the second – Hyatt Regency, Intercontinental, Radisson Collection, Swissotel, etc.
It is in the hotels of the higher price segment that the occupancy rate is recovering the worst; in luxury hotels, according to the results of five months, it was lower than in January-May 2019, by 28 percentage points, and in the upper upscale segment – by 36 percentage points.
Despite this, the luxury suite can keep prices, since the clients who make up its target audience, if they can come, are unlikely to change the hotel operator they are used to, explains Evgenia Tuchkova, Deputy Director of the Colliers Consulting Department. This is a normal strategy for high-end hotels, since if rates are reduced, it will take a very long time to return them to their previous level, Usenko agrees. She also notes that the increase in average rates is due to the fact that corporate clients have disappeared from the hotels of the higher price segment, who settled at fixed prices below the usual rates: “There are still individual tourists who often choose rooms of higher categories, plus they have no discounts, as from corporate clients, because of this, the average price is growing. “
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What to expect for hotels next
Only after the demand from groups returns to the same volume, high-segment hotels will be able to increase their rates, this will enable more democratic hotels to also increase their rates, says Yana Ukhanova. But in the near future, a significant increase in demand should not be expected, says Tatyana Belova, head of the hospitality industry division of the strategic consulting department of CBRE. She recalls that restrictions continue to operate in the city, which are often updated and supplemented. “I believe that we will enter the autumn business season in the same state of uncertainty,” the expert concludes.
A full return to pre-pandemic indicators should not be expected until the restrictions on the entry of foreign tourists are lifted, which most likely will not happen until the end of the year, warns Olga Shirokova, director of the consulting and analytics department at Knight Frank. According to Marina Usenko, small positive movements in this direction were noticed in March, when small groups of organized foreign tourists from India, Egypt and the United Arab Emirates began to appear in Moscow. In the first quarter of 2021, according to the FSB Border Service, 10.7 thousand people (for tourism purposes only 563), 5 thousand (40) and 1.1 thousand people (944) arrived from these countries, respectively. Data for the second quarter has yet to be released.
RBC sent a request to Accor (Mercure, Ibis, etc.), Marriott (Courtyard by Marriott, Marriott, Renaissance Monarch, Ritz-Carlton), Hilton, IHG (Holiday Inn, Crowne Plaza), Radisson Hotel Group (Radisson, Radisson Collection, Park Inn).