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. Last Updated: 07/27/2016

Minsk Renovation Aims at Mid-Range Market

One of Moscow's most prominent hotel monstrosities may soon become a reasonable option for overnight stay, and further open the mid-range market.

With $7 million in credit from the World Bank issued through Rossiisky Kredit bank, the dingy Minsk hotel on Tverskaya Ulitsa is being redone as an international-standard three-star hotel.

With the refurbishment, the hotel is hoping to attract the kind of client left stranded by the current gap in the market between high-end and very low-end establishments.

"Tverskaya is littered with five-star hotels. But there is nothing for the middle class," said Sergei Abramov, deputy general director of the Minsk. Rossiisky Kredit bank owns a controlling stake in the hotel.

Moscow, which has some 200 hotels is experiencing a growth in tourist population that should reach 40 million by the year 2010, by the city's estimates.

With luxury accommodations continuing to maintain 70 percent occupancy rates despite exorbitant prices, there has been little incentive for investors to build mid-range hotels.

"The market is changing now. Small mid-ranged hotels are opening up, and within two to three years there should be several three-star hotels," said Galina Ryltsova, a hotel analyst at Arthur Anderson.

Two small-scale three-stars have opened -- Hotel Yekaterina and Hotel Rus -- but Minsk could be the first large three-star in the city. Holiday Inn is also putting the finishing touches on a 180-room mid-range hotel on the outskirts of the city.

Ventures like these may finally push down the average price of Moscow rooms, which has hovered around $227 a night for the past five years. But even with increased competition, Minsk is in a choice position to exploit the mid-level market.

"Sure we could spend $17 million and get an extra two stars. But we think this moderate path is the most profitable. A smaller amount of money will go a longer way in the end," Abramovsaid.

The renovation should double hotel profits, he said, while declining to say what the current figures were. He estimated the Minsk's 50 percent occupancy rate would increase to 70 percent.

The hotel won the $7 million credit in January. Since then, it has renovated 10 rooms as a trial run for the complete makeover.

Abramov said the hotel's rates run from $30 to $100 a night and that after the renovation they will be only slightly higher.

The cheapest rooms will be about $50. These will still have old furniture, but will each have a television, refrigerator, desk and towels.

Renovation will involve tearing down walls and rebuilding much of the inside, as the rooms are currently too small to meat international three-star standards. The number of rooms will be reduced from 350 to 230.

The more expensive of the renovated rooms will go for $100 to $150 a night. These will more resemble middle-America motel rooms. The furniture will be new and varnished, and each room will have an abundance of towels.

But the harsh glass and metal facade will remain unchanged, Abramov said, because the cost of renovating the outside would be prohibitive.

The work should be complete within two years, Abramov said.

Minsk is registered as a three-star hotel. In Russia this means that there is a guard at the door, a bar and a restaurant. There should also be an entrance to the restaurant from the street and from the hotel. In every room, there should be a television, and in two-room suites -- a refrigerator. Sheets must be changed once every three days, and towels every day.

After renovation, the number of stars won't change. But the standards, will. There are about 30 three-star hotels in Moscow by Russian standards but only a handful are up to international standards, including the Kosmos hotel in the north of the city and the Rossiya hotel near Red Square.

In comparison, a Russian five-star hotel adds to the package a fitness center with a pool, a banquet hall, no less than two restaurants, an all-night cleaners and room service. Each room should include a robe, slippers and a bath, and sheets must be changed daily.

Prices for five-star hotel rooms start at about $200.