Novotel Set to Move Into Landmark

MTGostiny Dvor's renovation included one section specifically designed for a hotel, but the plans never came to fruition.
With the Rossiya Hotel soon closing, developers are rushing to fill the gap in Moscow's hospitality industry. The most recently announced project is a 220-room Novotel, which will be located inside the Gostiny Dvor exhibition and retail complex near Red Square.

Gostiny Dvor, located between Ulitsa Varvarka and Ulitsa Ilinka just a few hundred meters away from the Kremlin wall, underwent an extensive renovation in the late 1990s, which added a glass cupola over the 13,000-square-meter atrium in the 18th-century landmark.

The original redevelopment plan for the complex included a hotel on the corner of Ulitsa Varvarka and Khrustalny Pereulok and right inside the Gostiny Dvor building, but it never came to fruition -- even though that part of the complex was designed for a hotel.

Finally, years after the ambitious renovation, work on the 20,000-square-meter hotel has started, said Cameron Sawyer, president of GVA Sawyer, the project's developer.

The hotel, which will feature a restaurant, bars and meeting rooms, will be located on the upper two floors of the part of Gostiny Dvor facing Ulitsa Varvarka, and on all the floors in the segment on Khrustalny Pereulok, he explained.

The hotel is a joint project of Torgovy Dom Shatyor, which manages Gostiny Dvor, and City Hall. Torgovy Dom Shatyor is currently securing financing for the project from international banks, Sawyer added.

The total cost of the project will be $45 million. The hotel will cost about $20 million to build and is scheduled for completion in late 2007. The part of Gostiny Dvor where the hotel will be built, City Hall's contribution to the project, is valued at $25 million. The city will own 49 percent of the hotel once it is completed.

The hotel will be managed by French hospitality giant Accor under the Novotel brand.

Accor, which also owns such hospitality brands as Sofitel and Ibis, already operates two Novotels in Moscow -- one at Sheremetyevo Airport and the other near the Novoslobodskaya metro station in the city center. The company is planning to open many more hotels over the next few years, in Moscow, St. Petersburg and large regional cities, such as Novorossiisk and Yekaterinburg.

"This is going to be an extremely high-visibility project, located inside the historic landmark that is Gostiny Dvor," Sawyer said. "This will also be the only four-star hotel within the Boulevard Ring."

Virtually all hotels located in Moscow's historic center, particularly in areas surrounding the Kremlin, are five-star upmarket properties.

"This is an excellent spot. And the hotel's location inside a historic property adds a bit of character to the project," said Michael O'Hare, partner at Horwath Consulting.

The decision by Accor to operate the hotel under its four-star Novotel brand, as opposed to its higher-end Sofitel brand, is explained by the difficulties of converting an existing historic building into a five-star hotel, said Vladimir Ilichev, development director for Russia and the CIS at Accor.

Another reason is that there is sufficient demand among Gostiny Dvor's exhibition participants and tourists to justify a four-star property on that spot, he added.

"It was the right move to pick a four-star brand," said Marina Usenko, vice president at Jones Lang LaSalle Hotels in Moscow. "A tourist-oriented hotel on that site will be better than a posh five-star one."