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. Last Updated: 07/27/2016

Hotel Sector Undeterred by Murder

The murder of Paul Tatum against the backdrop of his dogged fight to keep his stake in the Radisson Slavjanskaya Hotel may have put a chill in Moscow's foreign business community, but major players in the city's lucrative hotel sector say it won't affect their development plans.


"As tragic as it was, this will not influence our business objectives in Moscow," said Nick Ward, vice president for international development for Marriott International Inc.


He said this week that the international chain will proceed with planned projects that include an "over $100 million" plan to take over and rebuild the Intourist Hotel on Tverskaya Ulitsa.


Moscow city officials, with whom Tatum was fighting a legal battle over ownership of the Radisson, also said his murder would have little effect on hotel development plans.


"I don't believe this event should have any negative influence over the actual privatization process of hotels in Moscow," said Alexander Vakhovsky, head of the hotel department of GAO Moskva, which manages the city government's assets.


Vakhovsky said the city plans to privatize about 20 Moscow hotels during the next two years. Besides the Intourist, they include the National, Belgrade, Budapest, Warsaw, Peking and Ukraine.


As for the risks confronting foreigners who do business in Moscow, Vakhovsky cited an old Russian proverb. "One who is afraid of wolves should not walk in the forest," he said. "This is not the first time a horrible incident has taken place here."


Tatum's company, Americom Business Centers, helped found and held a 40 percent stake in the Radisson Slavjanskaya Hotel joint venture. He was gunned down Nov. 3 near the hotel, for which he had fought a four-year ownership battle with Radisson and the City Property Committee.


So far the police have neither announced any arrests nor said publicly whether they have any suspects. Though gangland style killings are frequent in Russia, Tatum's murder marked the first time a high-profile foreign businessman has been the target of what is widely assumed to have been a contract killing.


But his assassination "won't make a difference for people with investment plans," said Toby Latta, a consultant for the Control Risks Group, a London-based company that specializes in assessing political and security risk. He said investors are well aware the business climate in Russia can by "quite violent." So far the foreign business community had been spared from that kind of violence, because their stakes on the whole have been smaller with less personal involvement," Latta said.


He added that the high profit potential of the real-estate and hotel business in Moscow was a leading factor in making the sector "more risky than others."


"Property in Russia is a hot issue," he said, but added: "Big corporations are used to working in such an environment."


In addition to the Intourist Hotel project, Ward said Marriott will have "its flag flying over the [Tverskaya] Grand Hotel in time for Moscow's 850th gala anniversary." The Grand Hotel, after renovation by the Moscow construction company Mospromstroi, will be franchised by Marriott and operated by the American company Interstate Hotels, he said.


The French Meridien international hotel chain, which manages the luxurious National hotel near Red Square, also said its business plans will not be affected by the Tatum murder. "I don't see why our project should be put into question because of that," said a Meridien representative in Paris who did not wish to be identified.


French Meridien plans to become the operator of the Moscow Country Club, a golf and hotel complex that is due to open sometime next year.