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. Last Updated: 07/27/2016

Intourist Bids to Build Regional Hotel Chain

Intourist is in the running to build a chain of three- and four-star hotels in a number of towns throughout the country's Central Federal District, a spokesman for the company said Friday.

The plan involves the company developing "12 to 14 projects at a three- and four-star level" in cooperation with local governments by 2011, Intourist president Alexei Arutyonov said in a statement, Kommersant reported last Tuesday.

The potential chain would include hotels in a number of "Golden Ring" towns around Moscow, such as Vladimir, Yaroslavl and Kostroma -- favorite destinations for tourists looking beyond the capital.

None of the proposed hotels is penciled in for Moscow, however, where commentators have long bewailed the lack of budget hotel accommodation.

Despite reports suggesting that Arutyonov's statement represented a done deal, Intourist spokesman Alexei Shalov was quick to stress that the company was only one of several firms bidding for the project.

"We are not hiding any information from anyone, we just do not want to lose face," Shalov said. "Apart from Intourist, there are a number of other interested parties taking part in the tender."

With the project still at an embryonic stage, Shalov was not keen to elaborate on the project in case the company's bid was accepted. Although he said any figures mentioned at this moment were purely speculative, he suggested that total investment in the project could reach $200 million.

He said Intourist expected the winning bid to be announced over the next few months. He was unable to say who the other parties bidding were, but he doubted that any foreign companies were involved.

According to Intourist's proposal, any hotels built would conform to Western standards and would be aimed at tourists from abroad as well as Russians, Shalov said.

Despite the thought of Intourist conjuring up images of cockroaches, bad service and KGB control in the minds of many Westerners as a result of its Soviet past, Shalov said perceptions were shifting.

"This is the 78th anniversary of Intourist and we are calling it our platinum year," Shalov said, explaining that platinum is the 78th element in Mendeleyev's periodic table.

"As the image of Russia has improved, so has the image of Intourist, and we are proud of our heritage," he said.

Plans to develop a chain of mid-range hotels outside the capital comes against the backdrop of a severe lack of affordable hotel rooms in Moscow.

Stephane Meyrat, a hotels analyst at Colliers International, cited a list of three-star hotels, including the Rossiya, Intourist, Moskva and Minsk that had been pulled down around the city.

"Four thousand rooms have been wiped off in a few years with no renewal of that positioning," he said.

Pointing to expensive leases and difficulties gaining municipal approval for development contracts, Meyrat said three-star hotels were not considered financially viable within the city's central district. As a result, plots for three-star hotels have been pushed to the periphery of the town, he said.

Asked whether Intourist had any plans for a similar chain of budget hotels in Moscow, Shalov said that with the number of other companies eyeing up the market, towns outside the capital offered a better opportunity.

Meyrat listed a number of major Western firms keen to fill the breach in Moscow.

"Mostly, the brands that you find in the West you will also find in Moscow, mainly because the people who are the developers tend to be the Russians and the ones who are going to be operating these hotels will be the foreign brands," he said.