Hotel business in Russia

Hotel business in Russia

Should I open a hotel

According to the EBITDA formula, the profitability of a business class hotel is 20-30%. Average payback period is 4–5 years. Hostels and motels pay off much faster.

The hotel business in Russia in 2021 is well developed and has a high level of competition. According to Rosstat, there are almost 22 thousand hotels in the country, most of them are concentrated in large cities, in resorts and in the venues of the last World Cup.

This does not mean that the hotel industry is oversaturated. According to experts, in the coming years, tourism is expected to develop actively in the Crimea and Krasnodar Territory. Inexpensive roadside motels will be in demand in almost any city where important highways and transport hubs pass. And budget hostels are just beginning to develop and have great potential. Today we will look at the features of the hotel business and the algorithm that will allow you to open your own hotel from scratch.

Types of hotels

Let's consider the most relevant hotel formats for Russia.

  • Resort hotels. As the name suggests, these are establishments located in the resort regions of the country. Guests who come here want to relax, not solve business issues. Therefore, special attention should be paid to additional entertainment services - on the territory you can open a restaurant, swimming pool, gym, sauna, tennis court. In Russia, there are even complexes with their own water parks. Your business, a hotel in a resort, will require a solid investment.
  • Mini hotels. This is a standard hotel format, where usually nothing else is provided except for rooms, a reception and a cafe. The capacity of mini-hotels is up to 50 rooms. Breakfast is often included in the price.
  • Hostels. Budget hotels that work in a hostel format - from 5 to 20 people can be accommodated in one room, and visitors prepare food themselves in the shared kitchen. Hostels must have bathrooms (shared), if desired, rest rooms. Hostels are becoming more and more popular, because this is the most budget option for a tourist. This hotel format assumes a quick start-up and relatively low investment for the owner.
  • Motels. Budget roadside hotels, designed mainly for drivers who are passing through the city. They are distinguished by unassuming furnishings. To open such a hotel from scratch in Russia does not require large investments.
  • Guesthouses (guest houses). Small cozy family-type hotels. Usually they are opened by married couples, they also often act as maids and are engaged in cooking.
  • Business hotels. The establishments are aimed at business class representatives who come to solve their business issues, negotiate and so on. Business hotels have separate conference rooms with the necessary office equipment, and the rooms are equipped with the latest fashion.
  • Sanatoriums, hospitals, boarding houses. In such establishments, in addition to accommodation and meals, they offer medical and wellness procedures. It should be noted that sanatorium-type establishments require significant investments - for a medical license, the selection of medical personnel, and the purchase of expensive medical equipment.

Which format should you choose? First, it depends on the size of the investment. Guest houses, motels and hostels will require relatively small amounts and pay off faster, but large hotels will be a serious test for the budget. Secondly, it is necessary to take into account the specifics of the region. It hardly makes sense to build a large hotel in a small mountain village - the guesthouse format will fit perfectly here. In general, business hotels and large hotels are best built in cities with a population of one million or more.

How to start organizing a hotel business

As with any business, the hospitality business begins with a thorough analysis of the market in your city. For these purposes, you need to use the services of financial analysts and marketers. They will assess risks, analyze the state of affairs of competitors, potential and prices. Further, based on the findings, you can draw up a business plan with individual calculations.

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