Market Reports

JLL Reports Q1 2017 Sochi Sea and Mountain Quality Hotel Market Results

ADR in the mountain and sea clusters almost equal

JLL

JLL presents the Q1 2017 Sochi quality hotel market results*.

“We thought, when reporting on the winter ’16-17 results, that we’ve seen the potential of this market already, but we’ve been proven wrong. The ski season in Krasnaya Polyana seems to have extended into the first spring month this year, and the strengthening rouble and stabilizing economy gave reasons to our compatriots to vacation more on the Feb 23rd – March 8th streak of holidays, it seems.” – Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, comments.

Mountain cluster hotels have registered a highest average quarterly occupancy in our recorded history – 72.5% vs. 70.4% a year earlier, 61.1% in 2015 and 46.4% in the Olympic 2014. That’s a more than 25 ppt increase in just three years! This came at an expense of a slight (7%, or RUB 600) drop in ADR in Q1 2017, to RUB 7,450, but this may very well have been a conscious measure by hoteliers there to attract volume and create loyal guests for the years ahead.

Q1 Sochi mountain cluster quality hotel market results, Upper segments
Graph - Q1 Sochi mountain cluster quality hotel market results, Upper segments

Source: STR Global, JLL

By the sea (in the downtown and Imeretinskaya Valley) market players have also enjoyed some growth in the number of rooms sold – a 2 ppt increase vs. YTD results of Q1 last year and a 10 ppt growth compared to 2015. “Here the average rate increased by 14.6%, or RUB 900. As a result, the seaside hotels almost closed the ADR gap with mountain resorts in their traditionally low season – RUB 7,100 by the sea versus RUB 7,400 up in the mountains – quite a unique situation. For reference, in Q1 2016, the rate in the sea cluster was almost one-fourth lower than in Krasnaya Polyana,” – Tatiana Veller says. – “This positively affected the profitability of hotels: RevPAR jumped up by 19% (about RUB 500) compared to previous year.”

Q1 Sochi coastal cluster quality hotel market results, Upper segments
Graph - Q1 Sochi coastal cluster quality hotel market results, Upper segments

Source: STR Global, JLL

“Both mountain and sea clusters in the past few years have shown positive dynamics even in ‘atypical’ seasons. An additional factor for Sochi’s success this summer, besides still weak national currency which limits Russians’ ability to travel abroad, should be the Confederations Cup in June, which will make use of sports and hotel infrastructure in four Russian cities,” – Tatiana Veller concludes.

*The analysis is based on STR Global data for quality hotels: in mountain cluster – from Upper Midscale to Upper Upscale segments, in coastal cluster – Upper segments.



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