Few Hotels Finished Race To Open by May


Only three of the dozens of hotels in Sint Petersburg slated to open in time for the city’s 300th anniversary have opened. Even such a slow pace is revolutionary for this market. In addition to the big names, the city also gained 20 new mini-hotels.

The 230-room, three-star Dostoyevskaya Hotel that opened at 19 Vladimirsky Prospect in early December cost around $20 million. The 93-room, five-star Grand Hotel Emerald at 18 Suvorovsky Prospect opened its doors at the end of October at a cost of $20 million. The Emerald is operated by Neval, a Russian company, and is part of Summit Hotels & Resorts. Reconstruction of the building at 4 Pochtamtskaya Ulitsa for a 100-room Renaissance hotel was completed in the fall. The cost of this project is estimated at $8 million.

In contrast, the previous decade saw only two new hotels in the city – the four-star Radisson SAS in 2001 and the five-star Nevskij Palace in 1993.

Roman Lvov, chairman of Caspian Developers in St. Petersburg, said City Hall made the new hotels possible. In 2001, the governor issued a resolution covering allocation of buildings and lots for construction of hotels at market cost. ‘The goal of the resolution was to make it easier to get real estate for new hotels that would be opened in time for the tercentenary’, Lvov said. ‘It didn’t work. There was a real boom and everyone grabbed lots for hotel construction’, he said. Most of the companies that received lots didn’t understand what they were getting themselves into at the time, he said. As a result, some projects were never completed, and others dragged on indefinitely.

Even successful developers were forced to review their deadlines when faced with unexpected obstacles. For example, the shopping center where the Dostoyevskaya Hotel is located was not hooked up to heating and electrical networks on time, which delayed its opening.

The Europe Hotel Co., which runs the Grand Hotel Europe, planned to build four cottages with apartments on Krestovsky Island by summer 2003. The opening was rescheduled for the following year. Andrei Mikeshin, general director of Europe Hotel, explained that construction was behind schedule due to undeveloped utilities networks, and also because of concerns raised by the city’s committee on state control, use and protection of monuments. The Grand Hotel Emerald faced similar problems and was forced to open in October rather than May.

Experts think the demand for expensive hotels will be met by the Emerald and the Renaissance. ‘Maybe St. Petersburg can handle one or two more five-star hotels’, Lvov said. ‘But it’s obvious that there aren’t enough four-star hotels in the city center to ensure balance on the market.’

‘We are still able to fill [new four-star] hotels’, said Natalya Belik, public relations director at Corinthia Nevskij Palace Hotel. ‘But if there are more of them, then the market will take over and rates will fall.’ She thinks the mid-range hotel market needs developing.

Lvov says St. Petersburg needs around 30,000 quality beds for tourists, 70 percent of which should be in mid-range hotels. Statistics show that St. Petersburg has around 130 hotels with a total of 30,000 beds.

The mini-hotel market was the most successful in 2003, experts say. This includes three-star equivalent venues with a few dozen beds. Alexei Musakin, general director of Pervaya Kompaniya, which manages the Shelfort mini-hotel, said at least 20 mini-hotels opened this year. Musakin said St. Petersburg counts between 60 and 70 mini-hotels with a total of 1,400 beds. The market can handle just as many more. One 20-room hotel costs about $1 million to build. The investment can be recovered within two or three years thanks to rising prices on real estate in the city center.

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