Transcript Russia’s Hotel Projects and Investments Sven Osmers Head of KPMG’s Real Estate practice Russia & CIS April 10, 2014

Russia’s Hotel
Projects and
Investments
Sven Osmers
Head of KPMG’s Real Estate practice
Russia & CIS
April 10, 2014
Сontent
Overview of existing hotel supply
and pipeline projects in Russia
Overview of major hotel brands
activity in the Russian market
Hotel investments in Russia
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
1
Overview of
existing hotel
supply and pipeline
projects in Russia
Branded Hotel Rooms stock in Russia (2001 – 2018)
60 000
56500
55 000
50 000
45 000
40 000
35 000
30 000
25 000
20 000
15 000
10 000
5 000
2875
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: KPMG analysis
Room inventory beginning of the year
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Room inventory yearly increase
3
Branded hotels in major cities
Moscow
14,000
12,000
21,845 ( 97%
)
11,069
Population, thousand
10,000
8,000
St. Petersburg
6,000
8,861 (28%
6,911
)
4,000
Regions
12,828 Sochi
4,168
5,056 (66%
2,000
)
3,042
0
0
Source: KPMG analysis
5,000
Future room inventory
10,000
15,000
Future room inventory
21,845
10,834
20,000
25,000
Existing room inventory
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
4
Major regional Hotel markets
1,600
Novosibirsk
763
Ekaterinburg
1,342
1,142
Nizhniy Novgorod
188
1,400
Omsk
Population, thousand
1,200
523
Samara
918
168
1,168
578
815
1,310
Kazan
606
1,336
Voronezh
1,000
220
Krasnodar
1,022
163
140
Rostov-on-Don
800
Irkutsk
486
600
Tyumen
495
208
581
705
155
400
Lipetsk
345
Kaliningrad
527
Belgorod
Kaluga
200
0
Source: KPMG analysis
200
400
Future room inventory
600
800
Future room inventory
606
1,310
1,000
1,200
1,400
Existing room inventory
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
5
Overview of major
hotel brands
activity in the
Russian market
Projection of Branded Hotels
Rooms inventory leader by 2018
Hotel network leader by 2018
CARLSON REZIDOR HOTEL GROUP
ACCOR
Accor
Rezidor
Accor
Marriott
InterContinental
Hilton
Kempinski
Sokos
Hyatt
Wyndham
Golden Tulip
Lotte
Corinthia
Fairmont Raffles
Vienna Intl
Four Seasons
MaMainson
Other
Rezidor
Hilton
InterContinental
Marriott
Starwood
Hyatt
Wyndham
Kempinski
Golden Tulip
Lotte
Sokos
Rocco Forte
Vienna Intl
Other
-
2,000 4,000 6,000 8,000 10,00012,00014,000
Rooms
Existing
Future
-
10
Existing
20
30
Hotels
40
50
60
70
Future
Source: KPMG analysis
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
7
Segmentation: Top performers Vs. Russian regions
Moscow, St.-Petersburg, Sochi
Midscale,
33.7%
Russian regions
Luxury,
25.8%
Luxury,
31.0%
32%
33%
22%
Midscale,
45.6%
53%
25%
35%
Upscale,
28.7%
Upscale,
35.3%
Source: KPMG analysis
By 2018
Q1 2014
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
8
Investing in branded hotels: factors to consider
CONCEPT
■ New development/
reconstruction
■ Optimal room inventory
(from 120 up to 300
rooms)
■ Average room size
(mid-scale hotel:
22-28 m²)
■ Gross build area
per room (mid-scale
hotel: 40-67 m²)
■ Population of the
city more than
300 000 people.
■ Cities (regions) with
existing properties
under same brand
(specifically recreational
properties)
■ Location that makes
business sense for
the Hotel property
■ Visibility & accessibility
LOCATION
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
9
Hotel investments
in Russia
To brand or not to brand?
THOROUGH FEASIBILITY
ANALYSIS
BRANDED
Decision
INDEPENDENT
Efficient business
processes
More control over
operations
Easier access to financing
and easier exit
Less CAPEX
ADR and Occupancy
increase due to brand
recognition
Lower marketing and
reservation costs
Operational risks
decrease
Flexibility in pricing and
positioning
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
11
Level of influence on efficiency of the hotel project
FEASIBILITY
ANALYSIS
PROJECT
DOCUMENTATION
■ HBU
CONSTRUCTION
■ Shell and core
construction
■ FF&E
■ Market analysis
■ Concept
development
PREOPENING AND
COMMISSIONING
■ Staff recruiting
■ Training
■ ROI analysis
■ Set up of
business
processes
■ Hotel
management
decision
■ Start of sales &
marketing
activities
■ State permits
■ Design
Influence on the project efficiency
Source: KPMG analysis
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
12
Drivers for hotel development in Russia
Infrastructure development: Special
Touristic Economic Zones
Number
of Keys
Destination marketing:
Major goal a/p Federal program
Industries Development:
Automotive cluster in Kaluga
FIFA World Cup 2018:
19,000 Hotel Rooms
Sochi Olympics 2014:
12,000 Hotel Rooms
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
13
Hotel projects financing sources
Financing
sources
In Russia
30-40%
D/V
Rarely
used
Debt financing
Co-investment
Mainly
refinance
Governmental
banks
Private banks
Strategic funds
Majority
of hotel
projects
Portfolio funds
Very few
exist
Source: KPMG analysis
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
14
Debt financing: what banks look at?
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
15
How we can help
Advisory services provided by KPMG
for the hospitality and leisure industry
■ Feasibility analysis and Valuation
■ Market analysis
■ HBU analysis of land plots
■ Concept development
■ Assistance in the raising of finance and
investment planning
■ Operator selection and negotiating
operating agreements
■ Analysis of Hotel operations and
performance, recommendations to
optimise performance
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
16
Thank you
Sven Osmers
Director
Head of Real Estate Russia & CIS
KPMG
Tel:
+7 (495) 937 4477
Fax:
+ 7(495) 937 4400
E-mail: [email protected]
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© 2014 ZAO KPMG, a company incorporated under the Laws of the
Russian Federation, a part of the KPMG Europe LLP group, and a
member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
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