Industry Update
Press Release25 September 2012

Russia Needs to Overcome Regulatory and Bureaucratic Hurdles to Realise Hotel Development Potential

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Horwath HTL

There is enormous potential to develop hotels in Russia, but that potential continues to be hampered by bureaucracy and a regulatory framework that is not conducive to growth. This was the key finding at the Russia round table discussion held at the second annual Hotel Investment Conference held in London last week. The Panel was hosted by Michael O'Hare, Managing Director of Horwath HTL Russia and was joined by Patrick Fitzgibbon, Senior Vice President of Development for Hilton Worldwide (Europe and Africa) and Arlid Hovland, Senior Vice President for Business Development for the Rezidor Hotel Group.

The session covered several topics that are key to the current investment climate as the three experts gave their view on the current situation and what needs to be done to improve it. Russia was also compared to two other development hot spots, Russia and Turkey to compare and contrast business practices and ease of use in getting business done. In addition to the challenges of dealing with a young and relatively bureaucratic country, Russia also struggles with a negative image of a place that is difficult to do business and subsequently harder to attract foreign investors. However, the group used the tremendous amount of development around the Sochi Olympic site as an example of what can be achieved in the right conditions.

Michael O'Hare said, "The panel highlighted all the attractions and all the frustrations of doing business in a country like Russia. The fact of the matter is that Russia has enormous potential, with huge numbers of secondary and territory markets with populations well in excess of 1 million with very little brand presence. Some of the international brands, including Hilton and Rezidor, have pipelines in some of those markets, but Russia still needs to do more in order to fully realize the potential. In addition to the bureaucratic challenges that investors face, there are some touristic challenges to be overcome as well, with Visa's causing problems and no open sky agreement that would attract larger air carriers into these secondary attention. Having said that, all the development currently being done around the Olympic site at Sochi is a very clear indication of what can be achieved with the right conditions are in place."

Related Event

Russia Hotel & Tourism Investment Conference 2017

Radisson Blu Belorusskaya — Moscow, Russian Federation
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About Horwath HTL

Horwath HTL is the world"s largest hospitality consulting brand with 45 offices across the world providing expert local knowledge. Since 1915 we have been providing impartial, specialist advice to our clients and are recognized as the founders of the Uniform System of Accounts which subsequently has become the industry standard for hospitality accounting. We focus one hundred percent on hotels, tourism and leisure consulting and have successfully completed over 16,000 projects.  If you have any questions, please contact James Chappell, Global Business Director at [email protected].

James Chappell
Global Business Director
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