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Russian Hotel Sector Experiences Growing Investment
Interest in ready-made hotel projects from large hotel operators and specialized companies is on the rise in Russia. This surge in investment is driven by a combination of factors, including a strategic shift in real estate investments, strong domestic capital involvement, and industry-wide trends favoring hospitality growth.
In the first half of 2025, Russia saw a shift in real estate investments from residential to commercial sectors, including offices, warehouses, and hotels. Although hotels accounted for only 5% of total investment, this strategic move indicates a growing interest in the hospitality industry.
The majority of real estate investment activity in Russia during this period was driven by Russian entities, suggesting strong domestic capital involvement in hotel and other commercial real estate development.
Globally, 2025 is seeing a revival in business and international travel, coupled with a tight hotel supply leading to higher revenue per available room (RevPAR). This trend is likely to encourage hotel investments in Russia as well.
Investments in Russian hotel real estate increased by 27% year-on-year to 15 billion rubles, contributing to the modernization and expansion of the hotel industry. However, it's important to note that recent reports indicate a fall in investments specifically in Russian hotel real estate, with investments dropping almost 40% to 11 billion rubles. This suggests that while some segments or submarkets may show notable investment growth, overall investment patterns are mixed and influenced by high mortgage rates, economic conditions, and regulatory changes affecting broader real estate sectors.
Despite the decrease in hotel occupancy, hotel operators are able to offset it due to the increasing cost of accommodation. Hotel operational expenses are rising, as noted by Denis Platoshkin, head of the capital markets department at Nikoliers consulting company.
Notable growth was seen in the Ryazan region, where hotel revenues increased by 62% year-over-year to 2.6 billion rubles. In Moscow, hotel revenues increased by 7% year-over-year to 72.7 billion rubles, and in St. Petersburg, hotel revenues increased by 20% year-over-year to 40 billion rubles.
In luxury Moscow hotels, the daily rate increased by 24% year-over-year to 37,100 rubles, while the average daily rate of a hotel room in Moscow increased by 11% year-over-year to 12,000 rubles. However, both luxury and budget hotels experienced a decrease in occupancy in the first half of 2025.
Programs for the comprehensive development of territories and labor markets contribute to the growth in investment activity. The total turnover of hotels in the first half of 2025 across Russia increased by 15% year-over-year to 500.2 billion rubles. Domestic tourism trips increased by 6.5% to 32 million in January-May 2025.
Investment activity is driven by opportunities within state programs supporting the tourism industry. The volume of hotel deals increased by 24% to 6.9 billion rubles, and 367 hotels with a total of 78,000 rooms are being created in Russia under a program of preferential lending.
In the Novosibirsk and Kaliningrad regions, hotel revenues increased by 43% and 5.3 billion rubles respectively. Hoteliers are urged to obtain stars, and the profitability of hotel real estate is showing growth, attracting more investors to the segment. Olga Shirokova, partner at NF Group, predicts that investments in hotel real estate will continue to grow due to increased inbound tourist traffic.
However, the volume of hotel construction in Moscow is expected to decrease by 12% year-over-year in 2025, leading to a potential shortage of supply, especially during peak demand periods. This could create opportunities for existing hotels to capitalize on the increased demand and attract further investment.
In conclusion, the Russian hotel sector is experiencing growing investment, driven by a strategic domestic shift towards commercial properties amid challenging residential market conditions, supported by tourism recovery trends and improved investment returns in hospitality. These investments are helping modernize and expand the hotel industry in Russia, potentially increasing profitability and attracting further capital. However, overall investment patterns are mixed and influenced by high mortgage rates, economic conditions, and regulatory changes affecting broader real estate sectors.
Sources:
- Real Estate Market in Russia: Q2 2025 Review
- The Attractiveness of Hotel Apartments and Commercial Hospitality Properties as Investments
- Russian Hotel Real Estate Investments: Q2 2025 Update
- Global Hotel Renovations and Repositioning Trends in 2025
- Hospitality Market Trends in 2025: A Global Perspective
The surge in commercial real estate investments, driven by domestic capital involvement and industry-wide trends, has resulted in a growing interest in the hospitality sector, as indicated by the rise in hotel investments in Russia. In line with global trends, the revival of business and international travel, coupled with a tight hotel supply leading to higher RevPAR, is likely to encourage further investment in Russian hotels.
The increasing cost of accommodation and revenue growth in regions such as Ryazan, Moscow, and St. Petersburg, coupled with opportunistic investments under state programs supporting the tourism industry, are attracting more capital to the hotel sector in Russia, potentially leading to increased profitability.
