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Office 343-344, Stolechnikov Pereylok 11, 107031, Ìîscow, Russia, tel/Fax (495) 258-89-90, 258-89-91

Rambler's Top100
Rambler's Top100
Hotel Consulting and Development Group



With the exception of the Marriott Renaissance, in which the Moscow City government currently owns 51 per cent of the equity shares, it is a minority holder in other hotels, and thus cannot influence the board of director decisions of these joint-stock companies. In this context, the decision of the municipality to sell off its equity shares in these hotel assets did not bring the desired results. Despite various announcement in the press, the municipality’s offer to sell off its minority stakes in these hotels failed to arouse the interest of potential buyers. Eventually, the city government stock package proposal became matters of secondary importance and was soon forgotten.

But the privatisation process is far from closed. Though the city government had made public its intent to sell off its minority shares in hotel assets, the general level of disinterest from potential buyers originated from the fact that the city government’s failed to set a stock price for its equity shares. A year ago, not a single official announcement had been made in this regard. Recently, some new indications have appeared in the media. The Russian nickel conglomerate (Norilski Nickel), which is co-owner of hotel Baikal, an asset which was listed for sale last year by the Moscow City Government, has offered to sell its equity participation in the hotel joint-stock company for $3 Mio.US, or $343/m². Norilsk Nickel’s stake in the Baikal hotel represents 65,65% of the total equity shares in the asset.

Hotel Baikal was built in 1976 near the northern entrance of the Russian Exhibition Centre near ÂÄÍÕ and is composed of two buildings with 531 beds, a multifunction restaurant, and two lounge cafes. At the current moment, the hotel capacity stood at 393 rooms. The room tariffs varies between $6 and $23.

The city government currently owns 14.99% of the equity shares in this hotel. It is not known whether the municipality will be guided by the price, when it decides to auction off its stakes in the Baikal hotel. It is also not clear how Norilsk Nickel has determined the price of its participation in the Baikal hotel joint-stock venture. There are open questions as to whether the price is based only on the value of the hotel business, on the physical shell, or on both. Up to now, there have not been enough hotel real estate transactions to develop a trend on sales prices. The announcement in daily newspaper “Vedomosti dated 14.01.2003 of the sale by Norilk Nickel of one of its non-core business assets sets a precedent for more hotel transactions in the near future. As a result, demand for professional valuation services of hotel assets in Russia will also rise, with an emphasis shifting more on the value of the hotel business rather than just on the replacement cost of the physical shell. In contrast to a school, a government building or a hospital, a hotel is an income-generating asset, and thus the sales value should be placed on its operational profitability rather than just the value of its walls.

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