HVS Moscow has published the 2013 Russia, CIS, and Georgia Hotel Valuation Index. Giving owners a view of the region from a valuation perspective, this publication presents historical and forecasted value trends across 14 markets in Russia, the Commonwealth of Independent States, and Georgia.
According to the HVI, the recovery pace of the hotel markets in Russia, the CIS, and Georgia has slightly improved with a 1 percent growth rate across the region in 2013, compared to a 1 percent decrease in 2012, with 8 of 14 markets showing positive growth figures this year.
“The HVI also shows that despite the pressure on average rates, the growth of value in Saint-Petersburg luxury and upscale segments will be one of the strongest in the region,” says Tatiana Veller, managing director of the Moscow office of HVS.
Moscow’s luxury and upscale segment values are set to decrease for the first time since 2010, a result of continuing pressure on average rates.
Fueled by increasing travel volumes in Russia, CIS, and Georgia, along with several major sports events taking place in the region, demand for quality hotel accommodation will increase. With many international chains penetrating the region in the next few years, HVS Moscow expects most markets to absorb the supply and allow hotel values to grow. The expected compound annual growth rate in 2014-2018 is 6.4 percent across the region, with five markets out of 14 forecasted to be higher than 8 percent within the next five years.
For the first time, this year’s edition of the Russia, CIS, and Georgia HVI introduces the Volatility Index of hotel values over the past six years starting in 2007. This measure allows investors to understand the overall risks associated with hotel investments, as higher volatility implies higher risks.
“Half of the markets we cover have exhibited a volatility index exceeding 23 percent,” says Alexey Korobkin, HVS Moscow associate director and co-author of the HVI. “By comparison, only five out of 32 European markets which are covered in our European HVI exhibit volatility of more than 23 percent.”
