The Russian hospitality market is braced for a swift rebound, making now the perfect time to invest in new projects and capacity expansion, according to the leaders of Moscow-based Cosmos Hotel Group.

Cosmos Hotel Group currently operates 19 hotels and 6,500 rooms in 15 Russian cities, which generated revenue in 2019 of 5 billion Russian rubles ($64.8 million).

Its hotels include in-house branded assets, including its largest hotel by room count, the 1,777-room Hotel Cosmos in Moscow. The firm also operates seven Park Inn by Radisson properties, two Holiday Inn Express hotels and three hotels outside of Russia, one each in Italy, Namibia and the Czech Republic.

Cosmos Hotel Group laid out plans to expand its business before the pandemic and has not altered them because of COVID-19, said Alexander Shvein, the firm’s president.

“As paradoxical as it sounds, the pandemic only strengthened our development plans,” he said.

He added Cosmos already had a diversified portfolio of both city and resort hotels, but by 2023 it plans to build 12 new hotels, including at Russia’s major resort destinations such as Kemerovo Oblast, Altai Republic and Lake Baikal.

Shvein said the expansion includes its own white-label hotels, such as a management agreement for the 2,000-room hotel GK Feya in Anapa on the Russian southern coast.

“By 2024, our room capacity will reach 13,000, making us hotel operator number one [in Russia by room count],” Shvein said.

While the pandemic wreaked havoc on the global hotel industry, it could have been far worse, especially in Russia, Shvein said.

In 2020, Cosmos saw a 40% slump in revenue compared to the previous year, but Shvein said 2021’s financial performance is likely to be only 20% lower than 2019’s, and pre-crisis numbers are forecasted to be achieved again in 2022.

“The vaccination factor will play the key role. Sooner this process will gain momentum, sooner we will see the full withdrawal of all restrictions,” Shvein said.

Russian officials forecast that most restrictions are likely to be lifted by the end of the third quarter of 2021. International flights are returning.

Cosmos has been facilitating online meetings and events for guests and business groups, which Shvein said should be converted to regular business before too long.

"Already now, we can safely say that business tourism is returning," he said. "Russia has softer quarantine restrictions compared to Europe. We [see] evidence that many companies miss face-to-face meetings and are beginning to return to conventional communications formats.”

He added that helping the effort is government policy, in particular the cash-back program in which tourists were reimbursed 20% of their travel and accommodation costs for 2020 Russian staycations.

“I want to mention the right timing and usefulness of this measure. It helped many not to leave the market. All our Russian hotels used it,” Shvein said.

Cosmos executives said that maintaining high quality is paramount to its development strategy.

“We understand perfectly well that increasing the number of rooms is not enough, that in order to withstand the competition, you must always be one step ahead,” Shvein said, adding that during the pandemic Cosmos has partnered with leading specialists to develop service standards that mirror best international practices.

He said this marks a relatively new experience for the Russian hotel industry and added that most local players now embrace international standards, financial models and strategies, with the main discipline where differences still exist being in marketing and promotions.

Cosmos has three sub-brands, the 5-star Cosmos Collection, 4-star Cosmos and 3-star Cosmos Smart.

“The leading role in ensuring competitiveness and economic efficiency belongs to human-resource management. In our strategy, a special place is given to the development of the competencies of employees who are part of our company’s capital,” Shvein said.

In terms of new employee standards, the first of its hotels to go through new accreditation and service standards is the Cosmos Collection Izumrudny Les, where more than 300 employees underwent several months of training, he added.

Cosmos also is the first Russian hotel group to launch a travel agency, Cosmos Travel, with the two businesses expected to achieve a strong synergy in the years to come.

Chavdar Stoyanov, managing director of Cosmos Travel, said his part of the firm has a separate operations and profit-and-loss account within the Cosmos Hotel Group. It also is the largest Russian destination management company and thus works with all Russian hotel suppliers.

“There are benefits for both the hotel group and the DMC business from being part of a strong united holding," Stoyanov said. "By investing in hotel and tourism infrastructure, we get to offer these unique properties to international travelers first and customize their experience, which also leads to increased occupancy.”

Stoyanov said interest in travel to Russia had been steadily increasing since the massive investments in tourism infrastructure related to the 2014 Olympic Games in Sochi and the 2018 FIFA World Cup across Russia.

He said the mixture of unique cultural heritage, modern cities and vast areas of nature has attracted more and more tourists from all over the world.

The pandemic is not going to be a game-changer in the inbound tourism market in Russia in the long-run, Shvein said. This creates a clear rationale behind Cosmos’s expansion plans.

“Once tourism resumes, we will see the same rates of [inbound tourist] growth. Russia is ready to welcome these tourists,” Stoyanov said.