No new hotels opened in Russia in the first quarter of 2026, which hasn't happened in 25 years.
Across Russia, economic pressure and financing constraints have reshaped the hospitality sector's growth. Hoteliers and analysts in Russia said the news marks a stark shift for a sector that has steadily expanded for more than two decades. The freeze reflects a combination of weakening economic conditions, elevated borrowing costs and Russia's currency getting stronger.
Russia entered the first quarter with four hotels scheduled to open with approximately 700 total rooms, said Alexey Efimov, general director at IBC Real Estate. IBC's quarterly review published on April 29 showed that all four hotel projects scheduled to open in the first three months of 2026 had been delayed, leaving Russia without a single hotel opening during the period. That even includes fully completed buildings that had received commissioning approvals.
“The key reason [for the delay] is the rising cost of the pre-opening stage, during which hoteliers are required to invest a significant amount of capital upfront,” Efimov said.
These costs include equipment procurement, building up stocks of consumables and — most critically in the context of labor shortages — staff training, he added.
Hoteliers said the reasons for Russia's hotel development crawl run deeper, such as broader economic slowdown and the high cost of borrowing.
“We are living in conditions of turbulence, and investment activity is declining. Unfortunately, a worrying trend has emerged,” said Andrey Tkachev, general director of Nord Hotels, which operates a network of hotels in St. Petersburg.
Market conditions in Russia’s hospitality sector are showing a complex but increasingly pressured dynamic across booking behavior, demand patterns and price sensitivity, he said.
“We observe a reduction in booking lead times and a shift in tourist preferences toward lower-category properties in order to preserve overall travel budgets,” Tkachev added.
Weaknesses
Hotel demand across Russia decreased earlier this year, with both booking volumes and room rates coming under pressure. OneTwoTrip, a Moscow-based online travel agency, reported hotel bookings in Russia fell 10% year-on-year between January to March, while hotel demand in some segments declined by up to 15%. The downturn is affecting not only hotel occupancy but also profitability.
TravelLine, a hotel technology firm based in Yoshkar-Ola, 500 miles east of Moscow, estimated that the average price of a sold hotel night in Moscow in April was 8,080 Russian rubles ($103.54), down 9% year-on-year. In St Petersburg, the figure fell 3% to 6,590 rubles.
After a period of strong growth between 2023 and 2025, the Russian hotel market has reached a demand plateau, said Maxim Brodovsky, CEO of Azimut Hotels. The country's hospitality industry is also feeling the effects of Russia's currency strengthening, he added.
In 2025, the Russian ruble experienced a sharp, unexpected rally, increasing by approximately 38% to 45% against the U.S. dollar and around 22% to 25% against the euro, effectively becoming one of the world’s best-performing currencies.
This strength revived domestic interest in outbound trips as Russian citizens made 2.66 million trips abroad in the first quarter, which is up 19% year over year, according to data from the Federal Customs Service.
Russia's number of foreign visitors fell by 30% to 40% in the first quarter of 2026 due to geopolitical tensions and the strong ruble, which has made travel to Russia less attractive from some Asian markets, Brodovsky said.
Cautious investors
Investment in Russia's hospitality sector is hampered by persistently rising construction and operating costs, a shortage of qualified personnel and subdued consumer demand, IBC’s Efimov said.
Instead, investment has shifted toward aparthotels, said Anton Agapov, general director of aparthotel chain YE’S.
“The market has indeed become more rational. Today, investors are much more attentive when assessing location, profitability and asset liquidity,” he said.
Amid a lack of investment in traditional hotel developments, the aparthotel segment is emerging as a potential growth driver. Agapov said aparthotels currently account for approximately 13% of the Russian hotel market and could see their share increase fourfold by 2030.
The investment attractiveness of this segment remains limited, though. Agapov estimates that returns on aparthotel investments in Russia currently stand at between 8% and 9%, compared with around 15% in Azerbaijan and higher in Uzbekistan.
State aid
Hotel development activity in Russia is expected to remain subdued in 2026, Efimov said. Risks of project delays remain elevated and a significant share of announced hotel openings may ultimately fail to reach the market by year-end.
Yet government support continues to play a central role in sustaining new hotel supply across Russia.
“The key development driver remains Government Decree No. 141, under which projects previously approved for subsidized financing are now entering the pipeline,” Efimov said.
More and more hotels in development in Russia have received some form of state support. Launched in 2021, the program remains active, though some economists have raised concerns about the federal budget’s capacity to sustain the initiative.
The Ukraine conflict is the reason why, with Russia’s budget deficit already exceeding its 2026 ceiling by approximately 60% by the end of April.
Despite the downturn, Russian hotel investment activity is not expected to come to a complete halt, with demand growth increasingly concentrated in niche tourism destinations.
Traditional resort markets such as Krasnodar Krai and Crimea remain important, but future growth is also expected in regions where hotel supply remains limited, Efimov said. These include Kaliningrad Oblast and Murmansk Oblast, as well as more remote destinations such as the Altai Republic, Altai Krai and Kamchatka Krai.
“These regions are primarily seen as seasonal and niche tourism destinations where development is driven by strong domestic demand during peak periods, ongoing infrastructure improvements and access to state support measures,” Efimov said.
Russia’s traditional hospitality hubs such as Moscow, St. Petersburg and Sochi are expected to become increasingly exposed to broader macroeconomic pressures.