Not surprisingly there has been much talk this week about the continued presence of Western hotel companies in Russia.
Hotel News Now published last week an article stating that hotel-management and -operating firms were not canceling agreements with Russian owners.
The comments we received from hotel firms, apart from an universal condemnation of the invasion of Ukraine, all ran along the same lines:
We will not continue with developments, signings or agreements in Russia and partnerships with those Russians on international sanctions lists.
One individual source who will remain nameless told me that hotel firms do not possess the same flexibility as other retail businesses, many of whom, immediately or after pressure, have announced they are temporarily closing shops and not having their merchandise for sale in Russia.
Fashion and food outlets have either led the way in this, or they have been picked up by the media as examples.
My source argued hotel firms offering services and brand and intellectual property, but which are not the owners of the bricks and mortar, probably have little say in the matter.
In my initial article, I was loath to state such opinions as these, so as not to appear to be editorializing.
We try sincerely to report what are the facts, corroborated by industry insiders, and their insights, which will usually be presented in “quotes.”
When the article went to publication, I and my colleagues had received no such comment along these exact lines.
It has been one of the few, it not only, articles I have written where I have been happy to publish unattributed quotes.
That is not something we will ever adopt as a modus operandi.
Western hotel companies have ended some parts of their business in Russia, and others are to donate any fees they receive to charities helping Ukrainians.
“Even if you withdraw your use of the brand name, the hotel could continue trading. … If they do not take the [Western hotel brand] signs down or change the operating standards, what can you do? Most likely the owners and staff are Russian. You can’t exactly litigate, even if a foreign jurisdiction is in the contract as the legal code applicable,” my source argued.
The different business models of hotel operations do not provide any real difference in how Western hotel firms look at the situation, the source said.
“[A brand] can withdraw points systems or reservations systems, but most likely those are mainly for international clients inbound, who aren’t currently inbound anyway, due to sanctions.
I suppose certain procured F&B goods and other services could be withheld from hotels if the hotels themselves cannot directly order them?
“[It is also] hard to argue that international staff or management are at risk — as long as they don’t do or say anything controversial — as there is no conflict within Russia and limited danger,” the source added.
“If the brand withdraws, or withdraws the franchise, the outlets will continue trading and will just sell whatever they can get their hands on that is in line with the original product. Signs probably wouldn’t even come down from over the door. Product won’t be brand-compliant, but what can the brand actually do? [They] can’t stop the trading and can’t litigate with any practical effect in this situation,” my source said, acknowledging that there is no illusion that Western hotel firms are no doubt going through an agonizing process of heart- and soul-searching.
This is not quite a situation of damned if you do, damned if you don’t, but it is a very tricky path.
Western hotel firms could not have established the business they have in Russia without having met some wonderful Russians who share a passion for our industry, unless I am being incredibly naïve, and it is probably the consideration of us all that 99.99% of Russians just want to lead happy lives and provide for their families.
Sanctions no doubt are required to put pressure in the right places, but as we all know there are lots of people who will become collateral damage if that outcome bears fruit.
Let us continue to hope this is over very soon.
Do you think the above rings true, or should hotels firms do more in the general stance against Russia?
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