The Rise of Russian Hotel Chains: A New Era in Hospitality

The past two years have seen a dramatic shift in the Russian hotel market. The departure of major international brands has opened the door for new players, and the surge in domestic tourism has driven up prices and occupancy rates.

This transformation is reflected in Forbes' 2024 ranking of Russia's largest hotel chains. Unlike 2019, where international companies dominated the top 10, the list is now headed by networks associated with Russian billionaires. Among these are Azimut Hotels, owned by Alexander Klyachin, Cosmos Hotel Group, part of Vladimir Yevtushenkov's AFK Sistema, Safmar, owned by Mikhail Gutseriev, and the Legend hotel group, belonging to Oleg Deripaska's En+ holding.

Here are some key changes shaping the market:

• Most hotels kept their familiar names but switched to brands formerly owned by foreign companies.
• Leaders like Azimut Hotels and Cosmos Hotel Group are aggressively expanding their networks, investing in new hotels and resorts.
• The average cost of hotel services rose by 15-20% in 2023, driven by higher costs and increased demand.
• Hotels are facing growing competition from apartments and apart-hotels, which are becoming increasingly popular with travelers, particularly families.

Looking ahead, the Russian hotel market shows strong growth potential:

• Russian chains are expected to continue their development, especially in the resort real estate and luxury segments.
• The volume of investment in hotel real estate reached a record high in the first quarter of 2024, reflecting investor confidence in the market.
• The trend towards apartments and apart-hotels is expected to continue, providing an alternative to traditional hotels.

The Russian hotel market is experiencing a revitalization, fueled by the revival of tourism and the emergence of new Russian brands. This dynamic sector is poised for even more growth in the years to come.

While domestic tourism has played a key role in the success of Russian hotel chains, several other factors contribute to their growth:

• The Russian government has implemented policies and initiatives to support the development of domestic tourism, including tax breaks and infrastructure investments.
• Russian billionaires and other investors are pouring resources into the hotel sector, recognizing its potential.
• Many Russians are now choosing to vacation within their own country, seeking new experiences and supporting local businesses.
• Russian hotel chains are developing strong brands and effective marketing strategies to attract both domestic and international travelers.

These factors, combined with the rising popularity of domestic tourism, are driving the success of Russian hotel chains and paving the way for a new era in Russian hospitality.