As at the end of September 2007, the hotel sector of St. Petersburg numbered 103 hotels having in total 14 700 rooms (net of mini-hotels and hostels).

Table 1. Summary of St. Petersburg Accommodation Facilities

Source: Colliers International

No significant changes in the hotel rooms supply structure were registered in 3QU 2007 as compared to the previous periods (Chart 1).

Chart 1. Distribution of St. Petersburg Hotel Rooms by Category

Source: Colliers International

A little less than 60% of all hotel rooms are concentrated in the four downtown districts. A traditional leader is the Central District, providing for 27.4% of the aggregate supply (Chart 2).

Chart 2. Distribution of St. Petersburg Hotel Rooms by District

Source: Colliers International

Hotels under Construction and in Design Phase

In 3QU, one 3-star 49-room hotel, Lancaster Court Hotel (3 Fokina Ul.), operated by the hotel operator Amaranta (also in charge of the Admiralteiskaya Hotel), was opened. Thus, this is the first hotel among those opened in 2007 which does not fall into the mini-hotel category.

Chart 3. Increase in Hotel Rooms in 2007

Source: Colliers International

Due to the extension of the deadlines for completion of construction works, most major hotels announced to be opened throughout 2007 are expected to become operational in 4QU. (Table 2).

Table 2. Hotels under Constructions to be Opened in 4QU 2007

Source: Colliers International

All in all, as at the end of September 2007, there are 48 investment projects providing for construction or reconstruction of hotels with 7 412 rooms, as well as hotel development applications covering more than 100 facilities (with more than 9 600 rooms).
3QU 2007 was marked with the beginning of the construction of several multifunctional complexes in the business area Pulkovo-3, as well as the complex Adamant-Park. The hotel component of these projects is substantial. For example, as a result of the increasing activity in the south of the city, 20% of all hotels under construction are located in the Moskovsky District (against 3% as at the end of the first six months of 2007).

Chart 4. Rooms in Hotels under Construction, Break Down by District as at End September 2007

Source: Colliers International

Accommodation rates

Demand for hotel services and the costs of accommodation in St. Petersburg hotels have a pronounced seasonal nature. In comparison with the high season ("white nights"), a decrease in accommodation rates from July to October was observed in all hotel categories, in particular, by 29% in premium class hotels, by 24% in 4-star hotels, by 17% in 3-star hotels, and by 8% in economy class hotels.
The maximum rate per room (16 500 Roubles / 24 hrs) was registered in Grand Hotel Europe (5 stars). The range of rates within a certain category remains wide: the widest range (230%) is in the 4-star hotel segment (Table 6).

Chart 5. Accommodation Rates by Hotel Class, Roubles / 24 hrs

Source: Colliers International

Chart 6. Accommodation Rates by Hotel Class, Roubles / 24 hrs

Source: Colliers International

Table 3. Accommodation Rates by Hotel Class (1 January 2007 - 31 March 2007)

Source: Colliers International

Table 4 . Accommodation Rates by Hotel Class (1 April 2007 - 14 May 2007)

Source: Colliers International

Table 5. Accommodation Rates by Hotel Class (15 May 2007 - 15 July 2007)

Source: Colliers International

Table 6. Accommodation Rates by Hotel Class (16 July 2007 - 30 September 2007)

Source: Colliers International

SIGNIFICANT EVENTS

New Projects:

• By 2009, the company Tristar Investment Holdings intends to build in St. Petersburg a 5-star hotel complex with 186 rooms at 1/12 Voznesensky Prospekt. Its cost is estimated at $100 million. The hotel will be operated by Four Seasons Hotels & Resorts.
• RSU together with Desna Development, a subsidiary of Renaissance Construction (Turkey), has started the reconstruction of the building at 61-63 Ligovsky Prospekt to accommodate the hotel and business centre Renaissance Court Yard (4 stars, 144 rooms). It is planned to complete the construction works at the beginning of 2009.
• At 78 Fontanka Embankment, a 5-star 80-room hotel will be built as part of an investment project. The investor is SV-Consult, a subsidiary of PSG.
• The Tourist Hotel in the Moskovsky District will become a 3-star 269-room hotel after the reconstruction. The joint-stock company Tourist Hotel plans to make an extension to the existing building located at 3A Sevastianova Ul.
• The joint-stock company International Trade Centre is preparing its first developer project in St. Petersburg: a congress hotel with a 300-room hotel component will be erected on the territory of Lenexpo.
• The hotel operator Sokotel (Finland) announced that it would build five 4-star hotels in St. Petersburg having 200-300 rooms in total.

New Brands and Operators:

• InterContinental Hotels Group (UK) is entering the St. Petersburg hotel property market, planning to introduce InterContinental, Crowne Plaza and Holiday Inn brands within 3-5 years and become the most well-known name in the Russian market by 2010. At present, InterContinental Hotels Group intends to operate three 4-star hotels within multifunctional complexes with the total number of rooms in excess of 900, which are still under construction (Crowne Plaza within the Airportcity complex, Holiday Inn St Petersburg-Moskovsky Prospect, and a hotel within the Clover Plaza complex). They have announced a four-star 339-room Crowne Plaza hotel project in the building of the former Nikolsky Marketplace.
• The hotel chain Starwood Hotels plans to open, in mid-2008, its first W Hotel in Western Europe at 6 Voznesensky Prospekt. Furthermore, this operator will manage, this time under the Sheraton brand, a 4-star hotels with 360 rooms, making part of the multifunctional complex Adamant-Park.
• The US hotel chain Hilton Hotels Corp. declared its intentions to enter the hotel market of St. Petersburg. The corporation will only operate hotels to be built by third-party developers. An agreement for construction of a number of hotels in Russia with London & Regional Properties Ltd. has already been signed. The first Hampton branded hotel will be opened in St. Petersburg in 1QU 2008. The location of the hotel is still unknown.

New Players:

• Orco Property Group has established a EUR 250 million investment fund for acquiring hotels in Russia. It is planned to open a MaMaison Hotels & Apartments branded hotel in St. Petersburg.
• The Norwegian investment fund Linstow intends to build three hotels, 150 rooms each, in St. Petersburg by 2010. It is currently in search for sites and buildings suitable for the hotels. The St. Petersburg-based management company Rinaldi Hotels Group acts as adviser to the Norwegian fund.

Deals:

• The Dutch investment company SELINOS HOLDING B. V. has acquired a 10% stake in the joint-stock company Talion (owning a casino and two 5-star hotels in St. Petersburg) for EUR 40 million. The receipts (1.4 billion Roubles) will be used to complete the investment project providing for reconstruction of the Eliseevs Mansion at the intersection of Nevsky Prospekt and 59 Moika Embankment.
• The UK fund Northern European Properties Limited (NEPR) has acquired a 4-star 278-room hotel for EUR 82 million from another foreign investment fund, London & Regional Properties, which bought this hotel in 2006 from the holding company LenSpetsSMU holding (the developer of the Rostral Columns complex housing the hotel). The hotel is to be opened by end-2007 under the Holiday Club brand.