Vacancies Exist for Airport Hotels

When a snowstorm in Moscow last February forced 24 flights to be redirected to Nizhny Novgorod, over 1,500 passengers spent the night at a dark, unheated terminal with no electricity.

The incident gave the Volga city's airport a bad name, but the problem is much deeper than it may seem: Unlike their Western counterparts, which often often have as many as a dozen different hotels nearby, Russian airports rarely have the facilities to accommodate transit travelers or distressed passengers.

For example, Sheremetyevo Airport, the country's largest, has only two hotels -- the 200-room Sheremetyevo-2, which was built together with the terminal that shares its name in the late 1970s, and the 499-room Novotel Sheremetyevo, one of the city's oldest Western hotels, which opened its doors in 1991.

The Novotel Sheremetyevo remains the only internationally branded airport hotel in the country, where even Soviet-era airport accommodation is in very short supply. Some cities with more than 1 million inhabitants, such as Kazan, do not have any airport hotels at all.

"I don't think anyone thought of hotels when airports were constructed in the Soviet era, as accommodation was chiefly designated for city centers," said Scott Antel, partner at Ernst & Young and head of its Hospitality Consulting and Legal Advisory Group. "Building full-service facilities is more of a Western-type planning concept."

"Honestly, it seems there is not much demand for airport hotels in Russia," said Rob Stoddard, vice president at Monab Development. "Moscow is a big city, but its significance as a transit point is relatively limited."

Indeed, 13 million passengers passed through Sheremetyevo last year, paling in comparison with London Heathrow's 67 million, Frankfurt's 52 million or Paris Charles de Gaulle's 51 million.

Still, indicating that there is room for growth on this market, Novotel Sheremetyevo has the highest occupancy rate of any hotel in Moscow, at 95 percent year-round. While airline crews and transit passengers account for a large percentage of guests, the hotel also benefits from strong demand for conference and banqueting facilities.

"Many companies find airport hotels more suitable for quiet business meetings than congested city hotels," said Stephane Meyrat, senior consultant at the Hotel Consulting & Development Group.

Apart from Sheremetyevo's smaller capacity, there is also a cultural difference, Stoddard said. "In the United States it is very common for a businessman to fly in, stay at the airport hotel in New York or Los Angeles, have his meetings, and leave on the following day," he said. "But here in Russia you are only beginning to see something similar, albeit on a much smaller scale."

Another reason why Russia does not see more airport hotels is extra costs associated with their development.

"The land near the airports is not cheap, thus discouraging would-be hotel operators," Meyrat said.

Other issues add to operational challenges. Airport hotels offer special menus and room service that cater to their guests' hectic schedules, according to Luc Gesvret, general manager at Novotel Sheremetyevo.

"At airport hotels, you often find people having dinner when others are having breakfast," he said.