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Sochi Hotel Market Showed Operating Performance Growth in Both Clusters in 2016

MOSCOW, 01 February, 2017 – JLL presents the 2016 quality hotels market results in Sochi coastal and mountain clusters in upper segments .

“Quality Sochi hotels in both clusters have had a tremendous year once again – RevPAR gains of 61% in the mountain cluster and 39% by the sea YoY tell the story very well. However, the underlying reasons of this success are different for each cluster: while in the mountains the revenues grew mainly due to rising occupancy, by the sea it can be attributed to growing rates.” – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, says.

In 2015 there was a lot of support from the government to popularize the resort amongst the country’s travelling public. One just needs to look at the 2015 Event Calendar for Krasnodar Region, which resulted in peak levels of hotels operating performances in the months of events. This year the effect of familiarity started kicking in, it seems. Occupancies grew yet more; mountain hotels enjoyed a further 16ppt YoY growth (cumulatively, 28ppt over the Olympic 2014), and properties by the sea had 6ppt more occupied rooms then in 2015. Absolute numbers reached 53% and 48% respectively.

“If for 2015 we reported a YoY drop in ADR in Krasnaya Polyana hotels vs. the Olympic 2014, now we can firmly say that even without the support of a global-scale sporting event, the hoteliers managed to increase rates in 2016.” – Tatiana Veller comments. – “In 2016 the average daily rate in mountain cluster grew by 11% compared to 2015 and reached RUB 5,000 (vs. RUB 5,200 in 2014). ADR in the sea cluster also showed a healthy increase – by 21% compared to 2015, reaching RUB 9,800.”

There has also been movement in the room stock in Sochi in 2016 – two hotels in Krasnaya Polyana were rebranded to Azimut – Freestyle and Valset Apartments in Roza Khutor (totaling 568 rooms). There is also a first after 2014 international opening planned for 2017 in the market – a 345-room Courtyard by Marriott should start welcoming guests in the Sochi’s downtown.

“Today it is clear that the phenomenon of Sochi as a destination that peaks interest of Russians because of the infrastructure of the Olympic legacy, the weakening of the ruble and the increased cost of travelling abroad, is not going to be short-term.” – Tatiana Veller notes. – “The 2016 results of Sochi hotel market confirm that this all-season resort in the South of Russia firmly grabbed a position as one of the main touristic destinations of the country. Naturally, one may argue that reopening of the budget beach destinations such as Turkey could possibly have negative effect on hotel operational indices’ dynamics of this domestic resort. The logical answer for Sochi will be to start introducing all-inclusive concepts to stay competitive and satisfy the domestic travelers’ demand for this type of product.”