Regional Hotel Chain (RHC), a portfolio company of VIY Management, plans to invest up to US$150 in its further hotel development in 2015.
As part of the plan, over the next several years RHC plans to open 30 hotels in Russia under global brand operators. Currently, RHC is working with IHG, Marriott International, Carlson Rezidor Hotel Group and RIMC CIS.
RHC wants to further increase its presence in Moscow, where it already manages a Marriott hotel with Andrey Yakunin, partner at VIY Management, saying between two and five hotels will be built in Moscow during the next two years. “In recent years the situation with land in Moscow has significantly improved,” Yakunin said. “According to our plans, a new hotel will soon be opened in one of the Moscow airports.”
At the same time, according to RHC CEO Michael Johnson, the company is also considering purchasing existing facilities to grow the company.
At present, RHC operates seven hotels in Russia, including several Park Inns, a Holiday Inn Express and Courtyard by Marriott. During the next several months, new hotels will open in Volgograd, Naberezhnye Chelny and Novosibirsk under the Park Inn by Radisson and Holiday Inn Express brands.
The value of assets managed by RHC is estimated at US$400 million. According to Yakunin, the company will continue its active development during the next several years. As part of these plans, the company plans to acquire a hotel 150-room hotel in Munich.
Yakunin added that RHC is holding talks with potential investors, including some companies from Asia, and in particular China.
So far, the majority of funds for RHC projects have been allocated from the Russian state banks, such as Sberbank. However, due to the recent increase of interest rates up to 12% to 13% in the majority of Russian banks, their allocation of funds has become no longer profitable for the majority of Russian hotel operators.
At the same time the current recession in Russia may prevent implementation of some of the company’s expansion plans. Johnson said that, according to initial plans of the company, hosting the Sochi Winter Olympics 2014 should have significantly stimulated an interest of foreign investors to the country and created conditions for an increase in tourism. However, the current crisis and devaluation of national currency caused by sanctions are forcing the company to revise plans of its further development in Russia for the next two years.
Johnson added that 2015 to 2017 will be challenging for several RHC hotels, in partiucular Park Inn Sochi and Kazan due to the seasonality of the business and an excess of supply in the market.