ST. PETERSBURG - AccorHotels may cut expansion in Russia after 2017 because of the country's high interest rates which have pushed up the cost of financing hotel construction, its most senior executive for the region said in an interview.
Financing costs surged in the country last year following sanctions imposed on Russia for its role in the Ukraine crisis and after the Central Bank had to increase interest rates in response to a steep fall in the ruble.
Alexis Delaroff, AccorHotels' Chief Operating Officer for Russia and the Commonwealth of Independent States (CIS), told Reuters the company would not revise expectations for the next two-and-a-half years and expected to have a total of 50 hotels in the region under its management by 2018.
"What will change is our plans for 2018-2020 because if you don't lay new projects and don't begin construction today, in 2018 they definitely won't open," Delaroff said at the St. Petersburg International Economic Forum.
"And all this is due to the fact that the cost of financing of the construction is overwhelming today," Delaroff said. "Too expensive, it is impossible to get over such interest rates. If in 2015 and 2016 we will open between eight and 10 hotels (annually), I think in 2018-2020 it will be half of this," he said.
AccorHotels is Europe's largest hotel group, whose brands include the luxury Sofitel and the budget chain Ibis. It has 29 hotels in former Soviet Union states, of which 27 are in Russia, one in Ukraine, and one in Kazakhstan.
Delaroff said Russia would continue to be its main growth driver in the region up until 2018 as it would account for 80 percent of new openings.
After 2018, the balance of new openings would likely shift towards the CIS, a loose grouping of former Soviet republics.
Worldwide, AccorHotels is present in 92 countries with more than 3,700 hotels across 14 brands, according to the company's website.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
