1. Total accommodation capacity of the hotel complex in moscow

According to the dofo collected via survey of the hotel com­plex conducted in the capital at the end of 2007, in Moscow there were 219 hotels with the aggregated accommodation capacity for about 72.5 thou, guests.

Besides, by the end of 2008 In Mos­cow there were expected to be inau­gurated 28 newly constructed hotels, which were at the final stages of con­struction, with aggregated accommo­dation capacity for 6,897 guests.

Therefore, by the end of 2008 in Moscow the total number of hotels was expected to reach 247 units. Most new hotels com­missioned in 2008 were expected to be of 3 or 4 stars categories.

It is necessary to notice that for the period of 2006-2008 in Moscow was registered gradual acceleration of an­nual commissioning rates of newly built hotels, which was due to increase of investment activities of private in­vestors in the hotel segment in the capital. That was result of the adopted by the Government of Moscow meas­ures for stimulation of influx of private investments in this segment of the real estate market in the capital.

Thus, for the account of commis­sioning of newly built hotels in the cap­ital, despite temporary closing down for reconstruction of several largest hotels in the city (including such hotels as «Russia», «Moskva», «Ukraine» and ■Minsk»), the hotel complex of Moscow still demonstrated gradual increase of the aggregate accommodation ca­pacity, which for last three years has grown by 9.3 96: from 65.9 thousand in 2004 to 72.5 thousand places in 2007.

It is important to note that newly built three stars hotels commissioned In Moscow for the last years favorably differed from the old type hotels of that category built during the Soviet period and all of those were attending mod­em requirements to the level of com­fort and quality of services provided to the accommodated guests.

2. Market situation in the hotel business in moscow

For 2006-2007 period hotels of all categories in Moscow have enjoyed relatively high room occupancy rates caused by the shortage of the offer of hotel rooms at the back­ground of the ever growing volume of the demand for ac­commodation facilities in the capital.

In many respects current dispro­portions that exist at the hotel mar­ket between the insufficient offer of hotel rooms and rapidly growing demand for accommodation services in the hotels in the city was due to particularities of historical develop­ment of the hotel complex in Mos­cow, where most of hotels were con­structed during the Soviet period and since than were never reconstructed. By now, most of those old-type ho­tels are not adequate any more for modern requirements to comfort, interior decoration and level of serv­ices needed to accommodate hotel guests and, therefore, require urgent reconstruction.

On the other hand, the invest­ment appeal of the hotel complex in Moscow, which has increased in recent years boosted by fast growth of average cost of accommodation in business-class hotels in Moscow, and also by adoption by the city authori­ties of several measures that stimu­lated influx of private investments in the hotel segment in the city real es­tate, has caused investment boom in the hotel complex in capital.

In those circumstances several larg­est hotels in the city (such as «Russia», •Moskva*, «Ukraine», «Minsk* and some others) were closed for recon­struction practically simultaneously and that has significantly reduced the volume of the offer of the hotel rooms in the city, particularly in the segment of 3^# hotels that are mainly used by the tourists. In those condi­tions the arisen deficit of the hotel accommodation facilities in the city which was only partly compensated by commissioning of newly con­structed hotels, has led to increase of average occupational index in the re­mained hotels, which was registered in the hotels of all categories in the capital for the last years.

Besides, many of newly built and reconstructed hotels were commis­sioned with higher category classi­fication, which consequently led to Increase of average accommodation costs in the hotel complex and indi­rectly stimulated occupational index in the old-type part of the hotel com­plex, which offers hotel rooms for lower rates.

Thus, however, despite higher ac­commodation costs in the newly built and reconstructed hotels, occupa­tional level in the high class hotels In Moscow for the last years remained at very high level, supported, mainly, by growing influx of business tourism In the capital coming both from the Russian regions, and from foreign countries.

Besides, for the referred period oc­cupancy rates of the hotels of all cat­egories was slightly affected by sea­sonal fluctuation of the demand and those were close to the maximum levels during the whole year.

Nevertheless, there were several slight seasonal variations of the monthly occupancy rates and as it is shown at the Fig. 16 for the hotels of all categories in Moscow and the lowest levels of monthly occupancy rates were registered in December and January, and starting from Feb­ruary to April there was gradual In­crease of the occupancy rates.

At the business-class hotels of 4-5 Stars In the following months are usually registered the highest oc­cupancy rates due to the Increased demand driven by the «plke» of the tourist season, followed by the gradual slow down of the occupancy rates by the end of the summer pe­riod. Later In the Autumn traditional boom of the business activities in the capital stimulate demand for accom­modation facilities in the capital and consequently lead to increase of the occupancy rates at the business-class hotels.

At the same time, in the 3 stars ho­tels dynamics of the occupancy rate was somewhat different and during summer months the average occu­pancy rates were relatively low, and those were starting to increase in the autumn, with the highest occupancy rates registered in September and November.

Therefore, for the period 2006- 2007 In the hotel complex In Mos­cow the highest monthly occupancy rates were registered in April, June, September and November, and the lowest ones in December and Janu­ary.

Besides, for 2007 in the segment of first-class hotels in Moscow com­pared to the previous year there was a small increase of average annual occupancy rate, which has reached 72.0 % and that was on 1.8 percent­age point more than the average oc­cupancy level during the previous period.

At the same time, in the segment of the middle class hotels there was an opposite occupancy trend, namely some decrease in the occupancy rate in the 3' stars hotels down to 74.3 % in 2007 from 78.3 % in 2006, which, according to the experts, was caused by excessive Increase of the accom­modation costs even the in middle class hotels, which were not meeting modem requirements to comfort and services provided needed for accom­modation of guests.

As for the dynamics of the hotel rooms rates In Moscow, for the last two years those were still Increasing with the growth rates that were much higher than the inflation rates. Thus, according to the Rosstate data the aggregated revenues of the hotel en­terprises from the lease of the hotel rooms In 2007 Increased by 19.9% compared to the previous year, while level of the official inflation was be­low 10 %.

Thus, for the referred period in the segment of the business-class hotels (5 and 4 Stars) notwithstanding very high initial rates, average rate for a standard double room by the end of 2007 increased in each category by 21.5 and 21.9%%, accordingly.

Those increases of the room rates in the business-classes hotels were sustained by growing In-comlng tour­ism, particularly from the non-CIS countries, as well as by activization of foreign-economic activities and by intensification of congress & trade- shows events in the capital, which all were boosting demand for business- class hotels' accommodations.

At the same times average room rate in the hotels of the 3 stars cat­egory by end of 2007 has reached US$200, which was two times higher than abroad (average cost of a stand- art double room in the 3 stars hotel in the largest cities abroad last year was about US$80-100 per night).

In the meantime, it Is worth mentioning that such high average rooms' rates are estimated based on extremely high rooms rates in recently built hotels with high qual­ity of Interior decoration and of the accommodation services provided, which share in the total capacity of the accommodation facilities of the hotel complex in the capital is yet in­significant. Therefore, due to the fact that in reality in most of the old-type hotels in Moscow room rates are sig­nificantly lower, the actual overnight stay costs much less than average room rates.

Thus, according to the Rosstate data, average statistical revenue col­lected by all hotel enterprises for one overnight stay for 2007 amounted to US$93, which is quite close to aver­age hotel room rates In the hotels in other European capitals.