A Hotel's Saga Winding Down

MTThe four-star, 218-room Marriott Courtyard's three buildings include a historical structure on Voznesensky Pereulok.
One of the most long-delayed hotel projects in Moscow, the 218-room Courtyard Marriott, at 7 Voznesensky Pereulok, will finally open its doors to guests this summer.

Even though the building was completed nearly 1 1/2 years ago, it has never opened as a hotel. Instead, builder and owner Baltic Construction Company, due to reasons that were never made public, offered it up for sale for a whopping 60 million euros ($73 million).

No buyer has been found, though, and the hotel will welcome its first guests as soon as the end of July, said the Courtyard's general manager, Marco Fien.

The four-star hotel consists of three interconnected buildings, including a two-story historical building facing Voznesensky Pereulok, and cost an estimated $35 million to build. It features two restaurants, four conference rooms totaling 300 square meters, a 360-square-meter atrium with a capacity of up to 400 people, and underground parking for 65 cars.

The hotel will be operated by U.S. hotel giant Marriott International, which directly manages only one other hotel in Moscow, the 475-room Renaissance. The three Marriott hotels in the city -- the Marriott Tverskaya, the Marriott Royal Aurora and the Marriott Grand -- are operated by a franchisee, Interstate Hotels & Resorts. The estimated rack rate will be $295 per night, Fien said.

Located across from St. Andrew's Anglican Church and near the Moscow Conservatory, the Courtyard's location could be one of the best of any hotel of its class in Moscow. For example, the Novotel City Center and the recently opened Holiday Inn Lesnaya are located much further from the historical center -- near the Novoslobodskaya and Belorusskaya metro stations, respectively.

"The hotel will be catering to transient business travelers; this is what the Courtyard brand is all about," Fien said, suggesting that the hotel's proximity to the Japanese Embassy could help it capture some of the business travel demand coming from Japan, in addition to the expected Western clientele.

Fien was confident that due to growing demand and lack of quality accommodation, the hotel would easily "carve out its niche on the market."

The Courtyard opening was "a long time coming," said Scott Antel, head of Ernst & Young's Hospitality Consulting and Legal Advisory Group.

"This is not the time to be doodling around on opening, when you have such a market," he said, referring to record-setting occupancy rates and revenues for Western-standard hotels citywide, driven by a shortage of quality accommodation.

Occupancy rates at Moscow hotels well exceed 70 percent, while the average room rate is currently $250, according to Ernst & Young figures.

Marina Usenko, vice president at Jones Lang LaSalle, estimated that with an average room rate of $200 and 65 percent occupancy, a hotel such as the Courtyard would be capable of bringing in at least $7 million in profits after its first year of operations.

"This is an excellent location," she said. "For the next three to five years, at the very least, they will not face competition in Moscow."

The presence of other Marriott hotels in Moscow allows cross-selling. For that reason, as well as being part of Marriott's global reservation system, the Courtyard should not experience any occupancy problems, said Stephane Meyrat, senior consultant at Hotel Consulting & Development Group.

"It will take a slice of the market without breaking it back too much," he said.