OCTOBER2010 125 ELKEGEIEREGGER,AssociateDirector SAURABHCHAWLA,AssociateDirector HVSLONDONOFFICE
HotelValuesinRussia,theCISandGeorgia 2009 Theobjectiveofthispublicationistoprovideanindicationofhotelvaluesandtrendsinthemainmarketsof Russia,theCISandGeorgiaandtoshowhowvaluesintheregionhavebeenaffectedbytheglobaleconomic crisis,andthesubsequentreductionintradingandinvestorappetite.thispublicationalsooutlinesthehvs valuationmethodologyforhotelsthathasbecometheindustrystandardthroughouttheworld. ArticleOutline Almaty,Kazakhstan Astana,Kazakhstan Baku,Azerbaijan Kazan,Russia Introduction Kiev,Ukraine Moscow,Russia RostovonDon,Russia Samara,Russia StPetersburg,Russia Tbilisi,Georgia Yekaterinburg,Russia Yerevan,Armenia HotelValuesintheRegion 2
Table1 MainConsiderationsforHotelValuation RevPARPerformance RevenueMix(Rooms,foodandbeverage,other) Cos tstructure/netoperatingincome HotelMarketStructure(brandedand/orqualitysupply) PlannedNewSupply(confirmed) MarketOutlook InvestorSentiment Table3 HVSEstimatesofHotelValues( ) 2007 2008 2009 Moscow 518,000 466,000 310,000 StPetersburg 422,000 397,000 216,000 EuropeanAverage 274,000 245,000 212,000 Ba ku 292,000 245,000 205,000 Kiev 427,000 376,000 194,000 Alma ty 418,000 293,000 190,000 Astana 329,000 224,000 179,000 Average Russia,theCIS andgeorgia 280,000 239,000 161,000 Tbilisi 273,000 213,000 156,000 Yekaterinburg 143,000 148,000 106,000 Kaza n 119,000 130,000 102,000 RostovonDon 126,000 133,000 96,000 Samara 156,000 145,000 88,000 Yerevan 134,000 100,000 85,000 Source:HVSLondonOffice Table2 ListofCitiesConsidered Armenia Azerbaijan Yerevan Baku Georgia Kazakhstan Russia Tbilisi Almaty Astana Kazan Mos cow RostovonDon Samara StPetersburg Yekaterinburg Ukraine Kiev 3
Table4 ValueRanking 2007 2008 2009 Moscow 1 1 1 StPetersburg 3 2 2 EuropeanAverage 8 5 3 Baku 6 6 4 Kiev 2 3 5 Almaty 4 4 6 Astana 5 8 7 Average Russia,theCISand Georgia 7 7 8 Tbilisi 9 9 9 Yekaterinburg 11 10 10 Ka za n 14 13 11 RostovonDon 13 12 12 Samara 10 11 13 Yerevan 12 14 14 Source:HVSLondonOffice Table5 ValueChangeinEuro200809(%) Growth/Decline 2008 2009 Kiev 12% 48% StPetersburg 6% 46% Samara 7% 39% Almaty 30% 35% Moscow 10% 33% Average Russia,theCISandGeorgia 15% 33% Yekaterinburg +3% 28% RostovonDon +6% 28% Tbilisi 22% 27% Ka za n +9% 22% Astana 32% 20% Baku 16% 16% Yerevan 25% 15% EuropeanAverage 11% 13% Source:HVSLondonOffice Table6 ValueChangeinLocalCurrency200809(%) Growth/Decline 2008 2009 StPetersburg 5% 34% Tbilisi 23% 29% Samara 6% 27% Almaty 26% 25% Kiev 2% 24% Baku 21% 21% Average Russia,theCISandGeorgia 21% 20% Moscow 9% 20% Yekaterinburg +5% 13% EuropeanAverage 11% 13% RostovonDon +7% 13% Astana 28% 7% Yerevan 28% 5% Kazan +10% 5% Source:HVSLondonOffice 4
MarketOverviews Moscow,Russia StPetersburg,Russia Baku,Azerbaijan Kiev,Ukraine 5
Almaty,Kazakhstan 6 Astana,Kazakhstan. Tbilisi,Georgia
Kazan,Russia RostovonDon,Russia Yekaterinburg,Russia 7
ChallengesfortheValuerintheRegion Samara,Russia Yerevan,Armenia 8 TheHotelValuationMethodology 1 DefinitionofMarketValue: theestimatedamountforwhich anassetshouldexchangeonthedateofvaluation[here,31 December2009]betweenawillingbuyerandawillingseller in an arm s length transaction after proper marketing whereinthepartieshadeachactedknowledgeably,prudently andwithoutcompulsion. AppraisalandValuationStandards
Income Capitalisation approach Cost approach Table7 IndicativeConstructionCosts( ) Countries Economy Midscale Upscale Upper Upscale Ukra ine 35,000 75,000 105,000 160,000 Kaza khs ta n 45,000 135,000 190,000 Russ ia 60,000 90,000 115,000 155,000 Armenia 160,000 Azerba ija n 80,000 Georgia 55,000 150,000 200,000 Source:RichardChancellor,2010 Sales Comparison approach Table8 RecentHotelTransactionsintheRegion( ) Property Location SaleDate Number ofrooms Estimated Price PricePer Room BudapestJSC(55%stake) Moscow March2009 137* 45,900,000 335,000 ParkInnEkaterinburg Ekaterinburg July2008 160 22,500,000 141,000 TheSadovayaHotel StPetersburg January2008 70 7,000,000 100,000 IrisCongressHotel(50%stake) Moscow October2007 98* 43,800,000 438,000 SheratonMetechiPalaceHotel Tbilisi June2007 140 49,400,000 353,000 * Pro rated room count based on stake percentage acquired. Source: HVS Research Selected Transactions 9
ConclusionandOutlook Note: This publication serves as a value indicator only in order to provide a point of orientation for owners and investors. As experienced with the European HVI, this publication s reliability increases as more and more hotels contributetheirdataandthemarketsreachagreaterdegree ofstability.noinvestmentdecisionshouldbebasedsolelyon the information contained in this article. For feasibility studies, valuations and strategic advice, please contact Elke GeiereggerorSaurabhChawla. Table9 Russia,theCISandGeorgia/EuropeanHVIValueComparison2009( ) Riga Tallinn Samara Rostov on Don Zagreb Belgrade Sofia Yerevan Kazan Yekaterinburg Bucharest Lisbon Budapest Birmingham Bratislava Manchester Frankfurt Prague Dublin Warsaw RUSSIA/CIS/GEORGIA AVERAGE Brussels Tbilisi Berlin Hamburg Vienna Athens Munich Almaty Copenhagen Astana Kiev Baku Edinburgh Stockholm EUROPE St Petersburg Barcelona Madrid Amsterdam Moscow Milan Istanbul Rome Zürich Geneva London Paris 0 100,000 200,000 300,000 400,000 500,000 600,000 10
AbouttheAuthors Elke Geieregger Email: egeieregger@hvs.com Direct Line: +44-20-7878-7747 Saurabh Chawla Email: schawla@hvs.com Direct Line: +44-20-7878-7708 Orvisithvs.com HVS2010 11
AboutHVS The ValuationofHotelsandMotels 12