The operating performance of hotels in Moscow and St Petersburg has grown for the third consecutive year as a result of the increased tourist flow. The study shows that the hotel occupancy rate in Moscow increased by 3%, reaching a record 75% since 2015, and by 5.5% in St. Petersburg. The average revenue per room increased to 4,345 roubles – the highest level in the last three years.
According to figures from global real estate advisor, Colliers International, 21.5 million tourists visited Moscow in 2017, which is 13% more than in 2016, while 7.5 million visited St. Petersburg, 8.4% more in the previous year. The growth trends in hotel operating performance in both cities have held steady for the third year in a row.
The growth of average hotel occupancy
In particular, average hotel occupancy in Moscow has increased by 3 percentage points year on year, the price per room (ADR) increased by 1.6%, and the revenue per room (RevPAR) grew by 5%. Over the past three years, hotel occupancy in Moscow has grown 7.5%, reaching 75% – a record for the period since 2015.
In St. Petersburg, where tourist flow is more prone to seasonal influences, hotel occupancy remained at 2016 levels and was 68% in 2017. However, due to an increase in room prices during the high season, revenue per room (RevPAR) in St. Petersburg increased by 5.5%. The most significant price increase occurred during major sporting and business events in the city, such as the Confederations Cup and the St. Petersburg International Economic Forum (SPIEF).
Colliers International forecasts that average annual hotel occupancy in Moscow could grow in 2018 by 5% to reach 80%, and 3% in St. Petersburg, reaching 71%. Colliers experts expect that holding the World Cup in Russia will have a greater impact on the operational performance of the hotel industry in Moscow than in St. Petersburg as free rail travel and affordable flights will enable some fans to base themselves in Moscow and take a day trip to St. Petersburg. Colliers International forecasts that the average annual room price (ADR) in Moscow will grow 28%-30% to 5,930 roubles per day, which was the average rate for 2017, while St. Petersburg will see 22%-26% growth.
“After the economic crisis in 2014, the Russian tourism industry has bounced back and continues to develop steadily. The flow of tourists from China and South Korea has grown significantly, and interest from Western countries has been growing. In 2018, the FIFA World Cup, as well as the Eastern Economic Forum and SPIEF, have fuelled interest in Russia. This is now the most prosperous period in the last four years for hoteliers of Moscow and St. Petersburg. We expect that hotel occupancy and hotel revenue in both cities in 2018 will reach a five-year high,” said Evgenia Tuchkova, Associate Director of Business Development, Consulting Department, Colliers International in St. Petersburg.
More foreigners
The growth driver for tourist flow in Moscow is still domestic tourism, the major share in which is business travel (up to 75%). In St. Petersburg, the figures grew due to foreign visitors, the share of whom was more than twice that of Moscow, where 22% of the total number of tourists were foreign. In 2017, every second tourist to Petersburg was a foreigner.
Tourist flow 2017 (changes year on year)
| Moscow | St. Petersburg | |
| Russian tourists | +15% | -8% |
| Foreign tourists | +7% | +32% |
The key growth factors in Russia as a tourist destination are the weakening of the rouble, the upcoming FIFA 2018 World Cup, and widespread advertising of Moscow and St. Petersburg abroad to attract tourists from countries with which Russia has signed visa-free travel agreements. According to the forecasts of the Federal Agency for Tourism (Rosturizm), Russia will be visited by 1.5 million foreigners during the World Cup.
In recent years, interest in Russia among Chinese tourists has grown rapidly. According to the Russian Border Guard Service, the flow of Chinese travellers to Russia has increased by 38% over the past eight years, reaching 1.78 million in 2017. Steady growth in tourist flow has also been observed among South Koreans. Over the past four years, given the visa-free regime between the countries, the number of tourists from South Korea has more than doubled – from 135,000 in 2014 to 276,000 in 2017.
Statistics of visits to the Russian Federation by US and Canadian citizens also point to a growing interest in Russia. The number of tourists from the US increased 18% last year, with a 26% increase among Canadians. Western European countries showed more modest growth. In comparison with 2016, there was a 2.4% increase in visitors from Germany in 2017, 4.6% more from France, and the flow of tourists from the UK remained the same.
The most highly represented countries in inbound tourism*
*based on the number of inbound trips by foreign citizens to the territory of the Russian Federation excluding the CIS countries
Source: Border Guard Service of the Federal Security Service of Russia
Despite Moscow’s dominance as a point of entry for foreigners into the country, the increase in the number of foreign tourists in St. Petersburg is more significant at about 1 million people for the year versus 300,000 people in Moscow. Based on the number of arrivals of tourists directly to St. Petersburg, Finland (530,000) is in the lead, followed by Germany (250,000), Estonia (230,000), and the US (170,000). Tourists from China occupy fifth position in the St. Petersburg ranking, but the estimate may be misleading as most Chinese begin their journey through Russia in Moscow and arrive in St. Petersburg using internal routes.
