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. Last Updated: 07/27/2016

City Approves Plan To Remodel Rossiya

The Moscow government has approved a $235 million plan to turn the Rossiya hotel, a 3,080-room Soviet-style monster famed more for its cockroaches than its view of the Kremlin, into a Western-standard establishment including three separate hotels, a business center and even a helipad, officials said Monday.

Under the program, which was signed by Moscow Mayor Yury Luzhkov last week and obtained by the Moscow Times on Monday, Rossiya, one of the world's largest hotels, will be divided into a 3-star, a 4-star and a 5-star hotel.

"Reconstruction is urgently needed, this is obvious," said Sergei Smirnov, the director of the Rossiya and one of the reconstruction plan's designers. "All our rooms look the same, like barracks."

He said that after the reconstruction, which is expected to bring the hotel's services up to international standards and boost revenues, Rossiya will also include a shopping center and an underground garage. The price for a single room, which now stands at a mere $11 per night, would range from $60 up to $500.

The Rossiya complex, built in 1966, once catered to the VIPs among Russian travelers, including members of the Supreme Soviet and high Communist Party officials. Its concert hall and movie theater hosted some of Russia's most celebrated artists and film premi?res.

Lately, however, the Rossiya has fallen on hard times. Earlier this year, an infestation of cockroaches and mice forced city sanitation officials to close the hotel down for two months.

Smirnov said that the current low room prices do not cover rapidly growing operational costs and profits are constantly falling.

"Our running water is just like beer in terms of costs," he said. Even though the combined number of rooms at the three new hotels will be reduced to 1,800, the reconstruction program forecasts that higher room rates will boost annual revenues to the city budget to $22-23 million from just over $2 million now.

Financing for the project would come from Russian and foreign private investors, as well as from mortgage loans with the Rossiya's assets, which are estimated at $150 million, as collateral, the program says.

Under the Moscow government resolution, city officials and the hotel's management have to work out by the end of October an investment competition for the rights to carry out the first stage of the four-year renovation. Expected to cost $60 million, the first stage would turn the northern part of the Rossiya into a 4-star hotel with some 5-star rooms.

While hoping to attract large-scale private investment into the project, the city government seems reluctant to share its property rights.

It plans to establish a city-owned Rossiya holding company that would maintain control "at the initial stages" of the reconstruction, though the plan says that large investors would eventually be able to acquire a stake in the company.