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. Last Updated: 07/27/2016

A Park Hyatt Joins City's 5-Star Cast

MTThe $50 million Ararat Park Hyatt will open its doors on Neglinnaya Ulitsa in October.
International hotel chain Hyatt will open its first hotel in Moscow in October, a $50 million-plus, five-star hotel to be known as the Ararat Park Hyatt at 4 Neglinnaya Ulitsa in the heart of the city.

It will be the second international-standard hotel to open in the capital this year after the 255-room Novotel Center opens in early September.

The 25,000-square-meter, 219-room Ararat hotel going up across from the Metropol hotel and a street over from the Bolshoi Theater will be the 19th hotel to open worldwide in the Park Hyatt chain, the most upscale Hyatt brand, said Jiri Kobos, general manager of the new hotel.

"It will be a small, world-class, residential-style or boutique hotel with international flair," he said in a written reply to questions.

"Park Hyatt Moscow will predominantly cater to the frequent international traveler seeking five-star international standards in Moscow. We expect 90 percent of the business to be generated by individuals and the remaining 10 percent to come out of the group segment."

Kobos declined to reveal room rates, saying they will be in line with the market at similar quality hotels in Moscow.

Scott Antel, partner in charge of Ernst & Young's hospitality consulting group for Russia and the Commonwealth of Independent States, said he expected the new hotel to join the Marriott Royal, Marriott Grand, the Baltschug Kempinski and the National hotel at the top end of the Moscow market.

He expected, therefore, the Ararat's rates to average $220 to $275 per double room per night. "The quoted rate is probably going to be $325 or more, but very few people are going to pay that," he said, adding that discounting, group rates and other specials would lower the price per room.

The Chicago-based Hyatt chain operates 200 hotels throughout the world.

"Hyatt tends to run upmarket properties; this is their niche," Antel said. "They have been trying to get into the [Moscow] market, but they don't take just anything."

Although the hotel will be the chain's first in Russia, Hyatt Hotels & Resorts already operates in Bishkek, Kyrgyzstan; Almaty, Kazakhstan; Baku, Azerbaijan; Warsaw, Poland; Budapest, Hungary; and Belgrade, Yugoslavia. Kobos said the company is also eyeing other Russian cities, including St. Petersburg, Nizhny Novgorod, Kazan, Yekaterinburg, Samara, Novosibirsk and all the capital cities of the CIS countries.

Moscow has a number of five-star hotels, and it is often said that what the market really needs is three-star hotels that cater to family and budget travelers.

But Kobos said there is still demand for more top-end hotels.

"Occupancy levels in five-star hotels have been on the increase since 1998," he said. "The number of frequent international travelers, as well as local customers who have learned to appreciate five-star standards during the last decade, is on the increase, not only in Moscow, but in Russia overall. This demand is not expected to subside during the coming years."

Antel agreed with Kobos, saying that the top hotels had the best occupancy rates. He expected the other five-star hotels to respond to the competition by altering their rates.

But Yevgeny Bezel, director of sales and marketing at the Baltschug Kempinski hotel, said Moscow's top hotels have their regular clients and will not be unduly affected by the arrival of a new player.

While the 1998 financial crisis had resulted in discounting, rates have recovered to a level that can be sustained, Bezel said.

The Ararat Park Hyatt has been under construction for about three years and has 16 luxury suites, four bars, two restaurants, underground parking, a health and fitness center and eight conference rooms.

It was originally billed as the Moscow Bolshoi Hilton, but the developers say they have no relations with Hilton.

Hilton signed a management contract with the Ararat Joint Stock Co., which owned the hotel in February 2000.

No comment was available from Hilton on what happened to the contract or on its plans for Russia.

The hotel is now owned by ZAO InterRus-M, a consortium of private Russian companies that has funded the building through its own means and through bank loans, InterRus-M said.

Neither Kobos nor InterRus-M would reveal how Hyatt was selected or information on any financial involvement by the chain.

The hotel was built by the Lusine construction company, whose owners are Armenian, and this has been reflected in some of the hotel's features. This includes one of the restaurants being Cafe Ararat, an Armenian specialty restaurant that will be a replica of the historical Cafe Ararat, a Moscow landmark that was on the site of the hotel during the 1940s.

The building was designed by Masterskaya 22, a division of Mosproyekt-2, part of City Hall's architecture department. The interiors were designed by Russian, English, American, Italian and Armenian architects.

Lyudmila Kazanova, spokeswoman for Le Meridien, which operates the National hotel, said the Ararat's success will depend as much on how clients respond to the Park Hyatt chain in other locations as to how the Moscow hotel performs. She added that because Hyatt is new to the city's market, it will take some time for this to become clear.

The Baltschug's Bezel agreed that the hotel's position will not be immediately clear. "The real test of its success will not be in its performance in the first few months. It will depend on it finding its own niche in the market and building on that steadily," he said.