MOSCOW—Russia’s domestic hotel industry is poised for good business, according to sources.
The Russian government’s COVID-19 strategy is to quickly limit the outbreak’s scale and evacuate all its citizens stranded in foreign countries—initially, some 100,000—by the end of March, and there is little in the way of national lockdowns. Russia has barred all international visitors up to at least 1 May.
The scenario changed slightly on 30 March, when President Vladimir Putin instigated quarantine regulations for Moscow, although new regulations are aimed at making people work and stay at home if they are able but do not stop Moscow residents leaving the city or Russians visiting Moscow. Many Muscovites have left, many for the Black Sea region.
Putin also announced the week of 30 March was declared a holiday to help reduce population movements and that quarantine would begin in 27 provinces, which cover about one-third of the country.
The holiday was extended to 30 April and now includes almost all Russian provinces. The exceptions of a few provinces are where no citizen has tested positively for COVID-19. Long-distance travel has not been subjected to any restrictions.
“The entire hospitality industry is suffering from lockdowns and the absence of foreign tourists,” said Evgenia Tuchkova, consulting department director at the St. Petersburg office of business advisory Colliers International.
Russian hoteliers have warned that the coronavirus epidemic has become a major blow in the country’s large cities, but the same is not happening outside of metropolises due to there being no travel restrictions for the domestic market.
Kirill Agapov, CEO of developer Umbrella Hospitality CIS, said that for “highly competitive markets … (COVID-19) has already led to closure of some hotels for an indefinite time, (but) there is some positivity in this situation, though, since the performance in the out-of-town hotels in Russia is up by 15% to 20% since mid-March, and this trend is expected to continue until the end of summer.”
Tuchkova agreed that domestic travel demand remains steady.
“On the background of the restrictions for traveling abroad, the demand for domestic tourism has indeed begun growing, in particular for leisure destinations in the Krasnodar Krai, Crimea and the Leningrad Oblast,” Tuchkova said.
Russian Black Sea resorts are also expected to see some benefit from the crisis.
“Umbrella Hospitality’s analytical department already now sees a significant growth in tariffs on the Black Sea resorts,” Agapov said. “We anticipate a 20% to 25% increase in revenue for that region for the period from June to September, as compared to the same period of the previous year.”
The demand for hospitality services in Crimea is on the rise, said Vadim Volchenko, minister of resorts and tourism for the Crimean region.
“In this regard, the local hospitality industry is putting a lot of efforts to enhance sanitary safety,” he added.
Vacations and bailouts
Marina Smirnova, senior consultant at business advisory Cushman & Wakefield Hospitality, said the upcoming Easter and summer holiday periods look promising.
“So far, we do not see booking cancelations for the hotels in Sochi, Krasnodar Krai and Crimea (regions). The market is looking forward with a careful optimism,” Smirnova said.
Guests are coming as they cannot currently go to international destinations such as Turkey, where 6 million Russians travel annually, according to statistics from the Russian Federal Customs Service.
A significant portion of that demand could switch to the Russian Black Sea resorts, as giving the closed borders there is no real alternative, she added.
“It’s too early to make forecasts about the upcoming season, but … hoteliers in Crimea are rather optimistic for, among other reasons, Russian airlines cut their tariffs and launched additional flights from continental Russia to Crimea,” said Vladimir Efimov, VP of the Russian Hotel Association. “The hoteliers in the Russian South expect this could generate an additional flow of tourists.”
The Russian government has made measures to support its hotels, including a delay in hoteliers having to pay sales taxes, tax holidays for some hotels and subsidized interest rates on bank loans.
Hotels in Russia also are enhancing their hygiene and sanitary measures, according to Alexandra Lilja Lindvik, area director of public relations and communications for Radisson Hotel Group.
“We are continually committed to maximizing our efforts and investment in all possible expanded hygiene, sanitation and precautionary activities … and updated training in employees to be vigilant and aware of possible signs,” she said.