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. Last Updated: 07/27/2016

Hotel Campaign a Work in Progress

MTWorkers painting the facade of the Ritz-Carlton in central Moscow. The Ritz is located on Tverskaya Ulitsa just a few hundred meters from Red Square.
Despite the bold predictions of City Hall officials, so far the dream of more affordable hotels in central Moscow is still just that -- a dream.

One problem could be the lack of competition between hotel developers in Moscow -- some 30 hotels are owned by a company partly controlled by the Moscow city government, Interfax reported.

In September, a city official said 100 new hotels would be built in Moscow's Central Administrative District by 2010. Seventy percent to 80 percent of these hotels would have three-star ratings.

But in September 2003, the city said it would double the number of hotel rooms in Moscow to 130,000 by 2005. Mayor Yury Luzhkov earlier this year put the current number of hotel rooms at 70,000.

That number has grown by just 1,200 in the past twelve months, according to Colliers International, partly because the city lost some 3,000 rooms with the demolition of the Hotel Rossiya near the Kremlin.

Government officials have said the hotel scene is improving, and the city passed rules earlier this year providing for a 1 percent interest rate for the first few years of a long-term lease.

But the loss of the Rossiya also represented the loss of budget hotel rooms, which went for as little as $60 per room per night for large groups. Almost every single hotel project in the vicinity of the Kremlin and Tverskaya Ulitsa is geared toward the luxury traveler willing to drop several hundred dollars for a night in a prime location.

The Ritz-Carlton, scheduled to open with 300 rooms on the old Intourist site in March, will bring, the company said, "an unheard-of level of conspicuous luxury to the capital."

But the hotel might also bring an unheard-of level of room rates -- an estimated $850 per night, Colliers reported.

The typical business-standard hotel room in Moscow cost $305 per night in 2005, up 36 percent from the previous year and higher than corporate travel rooms in London, New York, and Rome, Business Travel International said.

City officials have said they are aware of how expensive many hotels are, and they appear to see high-end hotel rooms as more than compensating for a lack of mid-market options.

At a recent conference, for example, Deputy Mayor Iosif Ordzhonikidze said: "All the hotels in Germany made less money combined during this year's World Cup than Moscow's hotels did in the same period."

More affordable hotels could help the city woo 5 million tourists by 2010. Some 2.3 million tourists visited the city in 2005, down from 2.5 million in 2004.

"If you're a budget tourist and you're coming here, and the cheapest place you can stay is $300 a night, then why not go to Warsaw?" said Stephane Meyrat, a hotels expert at Colliers.

Declining tourism is no surprise for a city quickly gaining a reputation as one of the most expensive in the world, with comparably expensive hotels.

A few new hotels could change that reputation, however. In March, developer City Hotel will open about 150 rooms at the new Best Western Sherrizone, near Sheremetyevo Airport.

The hotel will have three-star accommodation and a rate of no more than $150 for standard rooms, a company press release said. City Hotel, which owns the rights to the Best Western brand in Russia, is looking to open up to 10 Best Westerns nationwide by 2009.

Best Western is not the only Western brand hoping to appeal to budget-minded travelers to Moscow.

Holiday Inns have been springing up around the city, many located just outside the city center, near the Third Ring Road. The towering Holiday Inn Sokolniki opened near the Sokolniki metro station, and the Holiday Inn Sushchevsky sits near Rizhsky Station. These hotels are extremely attractive to budget-minded European business travelers who do not mind hopping on the metro to get to a meeting in the city center, analysts said.

Meanwhile, Hilton will open its first Moscow hotel in the old Leningradskaya Hotel, a Stalin-era skyscraper near the Leningradsky, Kazansky and Yaroslavsky railway stations. Rooms will go for an estimated $250 to $280 per night, according to Colliers.

While foreign tourists find it easier to book with international chains, experts said there were still a few budget deals left within the Garden Ring. Rooms at the Tsentralnaya, a one-star hotel near the Bolshoi Theater, go for less than $100.