News

Based on the information provided by Deputy Director of the Committee for Foreign Trade Activities of the City Government of Moscow, Boris Basilievich Averianov at the Coordination Council on Tourism held on 28.02.03 at the Radisson Slavjanskaya in Moscow, it was estimated last year that the Moscow city hotels earned more than US $600 million. Average room occupancy in comparison with last year has increased by 3 percentage points to around 70 per cent for hotels in the upper segment, a level, which is closer to general performance achieved in major European business destinations. The number of room nights recorded for 2002 was estimated at 12.2 million, broken down into 66% domestic, and 34% foreign guests. Business clients continue to overwhelmingly shape the guest profile of clients staying in Moscow hotels by affecting the average length of stay, which dropped by 14.5% since 2001. In absolute terms, this is similar to 3.2 nights for 2002 as compared to 3.66 nights recorded for the previous year. The increase in the length of stay of the clients in Moscow hotels is considered to be one of the ways to optimize hotel revenue as a whole.

On a background of stabilisation of hotel demand, the extension of length of stay of the clients in hotels allows to raise receipts from room revenue. According to HCD Group experts, one of the possible ways to increase revenues is to promote organized group tourism during low periods of the year. Generally, tour packages for tour groups usually comprise more than hotel 3 nights. Though tour groups are popular segments during the summer months, not all hotels are ready to work with such clients, as the large guest volumes at significant discounted rates imply increases in operational expenses and erosion in profit margins. Other ways of increasing revenues include diversifying the targeted segments by promoting conference and exhibition activities in the city, and catering to exhibitors and visitors during major events during the year. These are usually more than 3 days. During large exhibitions such as PRODEXPO (Consumer Products Exhibition), MITT and other, almost all Moscow hotels positioned in the 3,4 and 5 star categories achieve between 90-100 % room occupancy. During other periods of the year, however, many hotels in Moscow forego opportunities to lock other demand segments to optimize their room revenue.

At the same time, only half (more precisely, 57,6 %) from all registered foreign arrivals in Moscow choose hotels as a form of accommodation. The remaining 42.4% of foreign arrivals, as well as their money walk past these forms of accommodation. Local hotelier must begin to turn their sales approach so as to influence the final result. More focused marketing targeting the appropriate demand segments will lead to stronger client influx, independently from positive repercussions associated with loosening of visa restrictions for tourists and conference activity growth in the city.