Europe -  Moscow

For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:   2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001

The 2022 European Hotel Valuation Index is intended as a reflection of the hotel performance of the previous year. As such, the below overview of the Moscow market covers only up until the end of 2021, and changes in value represent the observed movements from 2020 to 2021. Russia’s invasion of Ukraine and the subsequent political and economic sanctions will undoubtedly have a significant impact on performance and hotel values in the short and medium terms but have not been factored into our value estimates as of the end of 2021. 

Moscow is the largest city in Russia (and on the European continent) and, as such, has one of the largest economies in Europe, generating over 20.0% of Russia’s GDP. It is the seat of power of the government and a major economic, cultural and scientific hub, all of which drive the city’s hotel demand. The city’s hotel market is primarily domestic and business-oriented, although leisure demand is increasing.

After several turbulent years stemming from a range of economic issues related to the devaluation of the ruble, falling oil prices and Western sanctions, the FIFA World Cup (which took place between June and July 2018) helped the Moscow hotel market achieve an incredibly strong performance in 2018, with RevPAR growth of nearly 30.0% in terms of euro and over 40.0% in local currency. During June and July alone, the city saw RevPAR triple from 2017 levels. While performance levels naturally dropped from the 2018 World Cup peak, Moscow maintained impressive occupancy and ADR throughout 2019, with the positive experience international guests had in 2018 carrying over.

Unfortunately, the turbulence continued with the onset of the COVID-19 pandemic. While GDP declined by only 3.1%, significant but relatively modest compared to many European countries, the hospitality industry was hit hard. Demand was half of 2019 levels and average rates dropped by more than 15.0% (local currency). The resulting RevPAR drop of more than 60.0% may look shocking at first glance, but it is important to note that this was one of the smallest declines amongst major European cities. Even when factoring in the large decline in the value of the ruble against the euro, from 72.5 to 82.3, the percentage decline in RevPAR in euro terms was in the mid 60s, still notably better than the majority of European capitals.

In 2021, Moscow hotels performed extremely well relative to the rest of Europe and, at nearly 60.0%, achieved the strongest occupancy of all major markets reviewed for the HVI. Despite limited European demand due to the various global travel restrictions and Russia not recognising Western vaccines, the fact that Europe also did not recognise the SPUTNIK vaccine helped to encourage strong domestic demand for Russia’s capital. Furthermore, Moscow and other major cities benefitted from reasonable demand from Middle Eastern and Asian countries. Average rates recovered strongly in 2021, increasing by more than 20.0% on 2020 and just surpassing 2019 levels in local currency. However, due to the less favourable exchange rate in 2021 compared to 2019, ADR remained significantly below 2019 levels, by approximately 15.0% when viewed in euro. Overall, 2021 values increased by 6.1% in euro (2.5% in local currency).

Looking at changes in supply, there were only three significant openings that we are aware of in 2021: the 147-room Hampton by Hilton Moscow Rogozhsky Val, the 268-room Moscow Marriott Imperial Plaza Hotel and the 82-room Vertical Boutique BW Signature Collection. Looking forward, there are some 4,900 rooms in the pipeline under construction or in planning, 1,500 of which will be in two hotels alone (the Jo & JOE Moscow Arbat and the Aparthotel Ye's Tehnopark).

There have been relatively few transactions in the past few years, and the prices of most of the properties that have transacted tend to either be undisclosed or rumoured. The only notable disclosed transaction of 2021 was the 150-room Hotel Peking, which traded for approximately €53.5 million (€357,000 per key).

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Senior Director
[email protected]
  • +44 20 7878 7722 (w)
  • +44 0 7725781037 (m)
Nikola Miljković
Associate
[email protected]
  • +44 0 2078787724 (w)
  • +44 0 7593572865 (m)