Amid Russia's invasion of Ukraine and under public pressure, retail companies such as McDonald’s, Coca-Cola and KFC, among many others, have temporarily stopped sales in Russia.
But Western hotel firms, while condemning the military conflict, are not prepared to abandon franchise contracts in Russia quite yet, and are closely watching developments in that region of the world.
A spokesperson at France-based Accor told Hotel News Now that the global hotel company will “continue to operate in Russia in some capacity as we play a key role in supporting employees, local communities, [non-governmental organizations] and international media on the ground.”
“We have never left a country in turmoil and presently have no plans to do so,” the spokesperson said.
Accor has 53 hotels and 9,065 rooms in Russia across brands Adagio, Ibis, Ibis Budget, Ibis Styles, Mercure, Mövenpick, Novotel, Pullman, Rixos, SO and Swissötel.
The global hotel brand has decided to suspend all planned openings and future developments in Russia.
“In addition, we are suspending any loyalty partnerships with Russian companies," the spokesperson told HNN. "Then, all management operations, booking, distribution, loyalty and procurement services to hotels for which owners are included in any international list of sanctions are suspended. They will not be distributed anymore on Accor’s distribution platforms.”
Before the crisis erupted, Accor said in a news release that it had intended to add to its Russian portfolio, with hotels in its development pipeline including the Novotel Moscow ComCity, Ibis Styles Kogalym Russia and Mövenpick Resort & Spa Anapa Miracleon, among others.
In a statement provided to HNN, IHG Hotels & Resorts said, “We have 28 hotels in Russia that continue to operate under long-term management or franchise agreements.
“IHG hotels are often safe places of refuge in times of adversity, often for the world’s media and first responders. We always prioritize the safety of our guests and colleagues and review how we support them and our hotels' owners. Of course, we continue to monitor the evolving situation.”
Other hotel firms have issued statements following Russia’s invasion of Ukraine.
Hyatt Hotels Corp. issued an updated statement Wednesday: "We have made the decision to suspend our development activities and any new investments in Russia, effective immediately. We will continue to evaluate hotel operations in Russia, while complying with applicable sanctions and U.S. government directives as we hope for a resolution to this crisis. Understanding that many people in Russia face challenges and uncertainty about their future as well, we are determining how best to support and care for our hotel colleagues and current guests in the country.”
Also Wednesday, Hilton announced it will close its Moscow office and suspend new hotel development in Russia, but continue to pay employees at its Russian hotels. The company also said it would donate 1 million room nights to Ukrainian refugees, along with a $50,000 contribution to World Central Kitchen and Project Hope as part of humanitarian efforts.
Marriott International announced Thursday in a statement that it, too, will close its Moscow office and suspend the opening and development of new hotels in Russia.
"We have made the decision, effective immediately, to close our corporate office in Moscow, and pause the opening of upcoming hotels and all future hotel development and investment in Russia," Marriott said in the statement. "We have been closely monitoring the deteriorating situation in Ukraine, Russia and neighboring countries, and remain in regular contact with our teams on the ground, as we work to comply with sanctions and applicable laws. Our hotels in Russia are owned by third parties and we continue to evaluate the ability for these hotels to remain open."
Marriott also announced it will continue to support humanitarian efforts in Ukraine and set aside $1 million in relief of Marriott employees who have been affected by the war.
Isolation
Even if hotels remain open, hoteliers in Russia are having an increasingly fraught time.
On the cusp of the invasion, hoteliers said they feared the crisis would erode the gains the Russian hotel industry made in 2021, in which average daily rate has climbed to 5,893 Russian rubles ($74.05), a 2.2% increase over 2019’s ADR of 5,767 rubles.
Lada Samodumskaya, general manager of Hotel Baltschug Kempinski Moscow, said that “the forecast for 2022 is hypertrophied uncertainty.”
Blake Anderson-Buntz, managing partner at business advisory Horwath HTL, said hoteliers in Russia face many challenges, including high inflation; rising interest rates complicating financing for projects; staffing shortages as employees flee the industry; and government aid that is too little, too late.
Anderson-Buntz said online travel agencies also are ceasing business to and from Russia.
“[That] is a fact. The national direct investment fund has been instructed to build a Russian version of Booking.com,” he said.
The majority of hotels in Russia are independent, not branded, at more than 70% of supply.
According to STR, CoStar’s hotel analytics company, there are 133,012 rooms in 1,583 independent hotels in the country.
The top five hotel brands operating in Russia, according to STR and a review of publicly available data, are Radisson Hotels Group, Accor, Marriott International, IHG Hotels & Resorts and Moscow-based Azimut Hotels.
Radisson’s website said it has 38 hotels and 10,070 rooms in Russia across brands Park Inn by Radisson, Radisson; Radisson Blu and Radisson Collection.
Hilton, Moscow-based AMAKS Hotels & Resorts, Wyndham Hotels & Resorts, Hyatt Hotels Corp., Best Western International and Finnish hotel company Sokos also have presence in Russia.
Several other hotel firms and business advisories were asked for comment but had not replied by press time. This includes Ukraine’s largest branded hotel firm, Kyiv-based Reikartz Hotels, which has 62 properties in the country, as well as eight across Georgia, Germany, Kazakhstan and Sweden.