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11 Jan 2013

Visitors prefer apartments

Accomodation for tourists

3* and 4* hotels do not get about 25% of their revenue, losing competition to "rent for a day" apartments, analitycal egancy EnterInvest concludes  in their Minsk hotel real estate market study.

3* and 4* hotels lose annually about $ 27 million of revenue due to severe competition with rental apartments: their cost is lower and the quality is on the same level as in Minsk hotels. According to experts the volume of hotel services market in the category of 3-4 stars is estimated at 97 million dollars. But main problem for hoteals are "luxury" apartments, which can compete with  5* hotels on the market.

Hotel and Apartment for rent Market in Minsk



According to the report, the average hotel occupancy rate in Minsk in 2008-2011 ranged from 45-55% and is expected to reach 59% by the end of 2012. Occupancy rate of cheap 3* hotels and inns without category could be up to 75-80%. Hotel occupancy is highly seasonal, with a peak in an early summer. However, a recent years new trend was the complete lack of rooms from late December to mid-January. An overwhelming number of guests - Russian tourists who spend their Christmas holidays in Belarus.


Hotel occupancy rate

Foreign visitors are the main engine of occupancy rate growth, while the number of Belarusians is practically unchanged. The most common length of stay in hotels - 1-3 days, as Minsk hotels major clients are businessmen, tourists and gamblers. This category of visitors constantly grows in number (about 15% each year) and spend for a weekend 3-5 thousand dollars (for comparison, the common tourist spends in Belarus 1-1,5 thousand dollars). At the same time, according to research sources, while only 13% of foreigners are choosing hotels and resorts to stay in the country.

According to the company EnterInvest, now 18 hotels are under construction or designing, in addition, a few new hotel projects are under discussion. Realization of launched projects will triple hotel services offer.
The main accelerator of demand growth is the lack of modern hotels in the Belarus capital: the room’s number indicator in 3-5 stars hotels is 4.5 times lower than the European at the average. This problem became particularly relevant in the light of the World Hockey Championship in 2014.

However, it's unclear how hotels will be filled after the world forum. The most expected scenario is the one in which offer abundance would put reduction of prices. According to experts, the fall in prices could reach
up to 20-30%.


Average price of hotels rooms and  apartments (in USD per day)

Currently, prices for rooms in Minsk hotels seem frankly overstated: in 3-5* hotels segment only Moscow and Kiev can "boast" of the higher cost of 2-bed rooms than the Belarusian capital. The difference in 1,5-2 times with Eastern European neighboring metropolises with a much better service quality in very noticeable: $ 244 for a 2-bed room in a 4* hotel in Minsk - compared to $91 in Riga, Warsaw -  $116 and $ 123 in Vilnius. Obviously that the premium segment is open for new players entry, and the fact of their presence in the market will affect beneficially the quality of the service, and on the price competition mechanisms effectiveness.

Tut.by
Translated by Irina Potrebko

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