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Moscow too keen on building luxury hotels


MOSCOW. (RIA Novosti commentator Olga Sobolevskaya) --

Luxury hotel chains, offering the smartest and most comfortable accommodation and excellent services, are stepping up their presence in Moscow. In 2006, the Russian capital will get a Ritz Carlton. The hotel is being built on Tverskaya Street, one of Moscow's main shopping streets, on the site previously occupied by the Intourist Hotel. Then in 2007 a five-star Four Seasons hotel will open its doors on the site of the old Moskva Hotel that was recently pulled down. Conrad, part of the Hilton hotel chain, also has a project in the pipeline, and Mariott, Balchug and other elite hotels are already operating in Moscow.

As is known, demand drives supply. Business tourism is on the rise in Russia, with representatives of large foreign companies visiting the country increasingly often. Luxury hotels are in demand in major Russian cities, especially in Moscow and St. Petersburg. They usually operate at 70-80% of capacity, but the figure can be even higher during peak season. However, to develop mass foreign and domestic tourism, Russia needs cheaper and more modest two- or three-star hotels. These are the categories of hotels used by ordinary tourists, and it is precisely these types of hotels that Russia is lacking.

The two- and three-star Soviet-era hotels that were built from the 1950s to the 1980s are now outdated and in poor condition. An overseas visitor staying at Hotel Universitetskaya, for example, will be taken aback, to put it mildly, when he walks into his room and sees the stripped floor, the scuffed bath, the faded curtains and the worn-out towels. He will be lucky if the fridge and television are working. The service will be passable, the reception staff perfectly polite, but this will not improve his general impression of the hotel. Yet this is one of the better Soviet-era hotels. How then can Moscow accommodate the five million tourists that it hopes to be attracting by 2010? Some of the 2,919,000 foreign tourists that visited Moscow last year were clearly dissatisfied with their accommodation.

The 150 hotels in Moscow, which have a total capacity of 64,000 beds, are now more or less obsolete. It has been officially recognized that only 25% of the hotels meet all of the latest standards, and the city administration reports that these are generally four- or five-star hotels that were built in the last seven to ten years.

Moscow's hotel construction plans are ambitious. The aim is to build hotels to accommodate an additional 61,700 people by 2010. In 2004 and 2005, 14 or 15 new hotels with a total capacity of 5,000 - 6,000 were due to be built. Another 90 hotels are currently being built, renovated or designed. But still...

Will the two- and three-star hotels that are being built or modernized meet the expectations of tourists in terms of prices and comfort? An English acquaintance of mine, a teacher from Durham, complained that what she had thought was a nice and just an ordinary hotel had charged her an exorbitant 170 euros a day for a completely standard room. It is almost hard to believe.

It is not yet known how many hotels will be built to cater to mass tourism. The plans may change, not least because investors prefer to invest in large-scale projects. The General Plan for the Construction of Hotels in Moscow until 2010 includes the requirement that the sites adjacent to hotels be developed. This will only be economically viable if large hotel complexes are built. These complexes usually offer a whole range of facilities, including shops, entertainment, business and fitness centers, showrooms, cafes, restaurants and souvenir kiosks. In large cities it is more profitable to build such huge hotels than to construct small hotels that might not even have an advertising budget. Investors in hotel construction have to wait at least six years to see a return on their money, and land in Moscow is expensive. This means that investing in small hotels is fairly risky.

There is no doubt that the tourism industry in Moscow is set to grow. New entertainment facilities and shops are being built, and the general quality of life in the capital is being improved. However, big business may stand in the way of the construction of small hotels. Big business in Russia needs big profits, and it may well prioritize its own narrow commercial interests over the broader interests of the city.

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