Occupancy rates in luxury hotels plummeted in 2020, with this being reflected in the huge decline in current value terms. As Russia and the rest of the world began to rollout vaccination programmes consumer confidence in travel showed signs of a recovery, with this being supported by an easing of restrictions.
As already noted under experiential luxury, despite the challenges facing operators of luxury hotels, many of them increased their prices in 2021. Many luxury hotels have relied on their loyal customer base since the onset of COVID-19, who are unlikely to change the hotel they visit even if prices rise.
With the constantly shifting landscape with regard to the COVID-19 pandemic, new restrictions and quarantine measures are constantly being updated with regions responding to spikes in cases and hospital admissions. For example, the authorities of the Krasnodar Territory and Crimea tightened the requirements for the accommodation of tourists right in the middle of the summer season in 2021 as they responded to a rise in cases.
Luxury hotels is expected to continue on the path to recovery over the forecast period, with many of the leading operators reporting positive signs in 2021. Nevertheless, the evolution of the pandemic will play a key role in how the category performs due to the main drivers for growth being focused on travel, tourism, and MICE projects – all of which have been significantly negatively impacted by COVID-19.
The reopening of international borders and the removal of travel restrictions would allow foreign tourists to come back to Russia which would have a significant positive effect on occupancy rates at luxury hotels. While many budget and mid-tier hotels in Russia place a heavy reliance on domestic bookings the same is not true for luxury hotels, which relied on foreign visitors for around 60% of their business prior to the outbreak of COVID-19.
High standards of sanitation and the promotion of these standards will be crucial in encouraging guests to return, with many people still fearful of spending significant amounts of time away from the home. Given the economic pressures created by COVID-19, players will likely also have to look to optimise their costs and to limit any price increases in order to present a competitive offering.
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Understand the latest market trends and future growth opportunities for the Luxury Hotels (5-star plus) industry in Russia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Luxury: includes luxury and upper upscale hotels. Would generally include 5-star hotels and above, but may include some “4.5-Star” outlets, provided that the brands positioning warrants it. The luxury classification is primarily determined by the brand’s positioning and marketing, which will be at the high-end. Brand examples include Marriott, Hilton, Sofitel and InterContinental.
See All of Our DefinitionsThis report originates from Passport, our Luxury Hotels (5-star plus) research and analysis database.
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