The autumn decline in hotel room rates

A nice early autumn season is in full swing in the south of Russia. The air temperature has become more comfortable, and hotel room rates are more affordable. Now, about 190 thousand tourists enjoy their vacations in Sochi. The reduction in the cost of accommodation in September began mainly at mini-hotels where a decline in hotel room rates was about 25 percent. In the off-season, the average room occupancy rate in Sochi hotels can be 70 to 80 percent, and up to 20 percent of rooms have already been booked for the winter season in the mountain cluster of the resort city. And this is not surprising, because the tourists can enjoy one season a year at the seaside, and two seasons in the mountains. Experts spoke about this at the round table “An Autumn Off-Season. Revenues and Financing” held by the Sochi’s Association of Small-Scale Hoteliers.

“This summer, we opened two 4-star hotels in Sochi,” said Tamara Podkorytova, executive director of the Mirror hotel chain. “Our hotels have a special feature because each hotel room has its owner - an investor who has invested in the business. A hotel is a living organism. We faced great difficulties, for example, with recruiting the staff. This year, the shortage of personnel is especially acute, nevertheless, we succeeded, the room occupancy rate was 90 percent. An average room rate is over 10 thousand rubles per day.”

As the manager of the Green House Hotel Natalya Arzumanova clarified, 90 percent of the staff have been working since the hotel opening, for ten years, and the average age of employees is 40 to 50 years old.

“We have the same problems, and they are quite acute,” Anton Bodokia, co-founder and managing partner of the Adamand Resort hotel operator, agreed with his colleague. “This summer was a busy one as the room occupancy rate at the seaside was 73 percent, and in the mountain cluster - 84 percent in the first two months of work from opening. I’m not in favor of a 100% room occupancy rate. We receive not only figurers and money, but also reviews. I want to provide quality service to every visitor. The average room rate is 14,456 rubles per night.”

At the Azimut Hotel at the Rosa Khutor resort located in the mountains, the room occupancy rate is 80 to 90 percent.

“It’s almost always a high season in Sochi; an off-season is expected only in November,” noted Victoria Suchugova, general manager of the hotel chain. “Tourists from all over the country enjoy their vacations in the mountains, with 15 to 20 percent of guests coming from the Krasnodar Territory and neighboring regions. We are preparing for selling the ski passes. Now, tourists are actively purchasing winter travel packages.”

In addition to the winter season, tourists have already started booking trips for the next summer. Natalya Gorbatova, manager of the Yves Montand hotel in the mountain, added that last summer, they had a 99 percent room occupancy rate, and in the winter season, 20 percent of hotel rooms are occupied and they have already started the sales for July 2024.

“The booking pattern is good now: in winter the room occupancy rate is expected to be at least 70 percent, but this figure will definitely be higher in a number of hotels,” said Dmitry Bogdanov, chairman of the expert council of the Sochi’s Association of Small-Scale Hoteliers. “At the same time, the average bill is growing. Therefore, economic indicators for hoteliers this year will be higher than last year, of course, unless force majeure occurs. In the off-season, the average room rate at a 3-star hotel can be 3 to 4 thousand rubles per day per room, from 7 to 10 thousand rubles at a 4-star segment, and from 12 to 15 thousand rubles at 5-star hotels, but promotions and bonuses are offered to regular customers. We expect that the resort will be in demand and we see great interest during the New Year holidays, especially in the mountains and not at the seaside. As for differences from previous years, the demand for vouchers to health centers is growing significantly. There is a total deficiency of microelements in the country, which can be compensated for by taking baths and drinking high-quality mineral water. And in Sochi, mineral water is as good as on the northern slopes of the mountains.”

He clarified that over the past few years, more than ten new accommodation facilities have been opened in Sochi and several dozen more are expected in the next 1.5 to 2 years. Bookings for the summer season have already begun, but it is too early to talk about the figures, as well as about the expectations for the next season.

“Now, our task is to coordinate our stances after the end of the high season,” the expert continued. “In fact, the high season continues because we have a high room occupancy rate until the end of November and even early December. Undoubtedly, Sochi will show a record flow of tourists and revenues. But competition will increase within the country and we will have to fight for tourists. Therefore, hoteliers cannot stop their activity for a minute, they need to provide high-quality services and train their staff, and also constantly introduce innovations, as well as carry out renovations and repairs within a short time.”

Meanwhile, Sochi hoteliers have a lot of problems, and the main one is the lack of personnel. Bogdanov added that there were not enough marketers, IT specialists, sales managers, maids, cooks, as well as houses to accommodate visiting employees.

“In addition, there is an increase in costs for all purchased food and goods,” he said. “There is not enough local vegetables, fruits and fish. The situation is more or less okay with goatfishes (mullets), but there is a great shortage of garfish and other fish species. Also, there were many accidents in the housing and public utilities sector this year in Sochi, and there was no water supply rather often. The load on the public utilities is growing, and the city’s infrastructure does not always keep up with it. Water supply was organized by special vehicles, but visitors who have paid a decent amount for their vacations at a 5-star hotel want cold and hot water to be always available in their hotel rooms.”

Currently, the average room occupancy rate at the hotels is about 88 percent.

“This autumn season will be long and warm,” the mayor’s office of the resort city reported. “Collective accommodation facilities for September were about 80 percent booked, and for the autumn season in general, the booking rate was about 70 percent. The treatment and recovery at health centers and resorts is in the greatest demand among the city visitors. The room occupancy rate at health centers and boarding houses providing treatment is 93 percent.”

In the summer, 2,324 accommodation facilities offering 78,404 rooms (about 148,446 beds) received the visitors in Sochi. Seasonal hotels and apartments traditionally start closing in October. Large popular hotels, despite their high room occupancy, arrange promotions and make offers, for example, for long-term stays.

“Room occupancy is especially lower at the end of each week; on weekends it’s 100 percent, and on weekdays it’s half as much,” said Ovanes Roganyan, manager of the Denart mini-hotel in Sochi. “Now, the hotel room rate is 5.9 thousand for two persons per day, including breakfasts, and it is higher in the summer. There are fewer visitors this year, perhaps, because of the air ticket prices that have increased due to the ‘closure’ of some countries popular with tourists.”

Mountain resorts attract their guests by offering special rates; at Rosa Khutor you can choose a “hotel of the week” with an up to 25 percent discount. And at Krasnaya Polyana travelers can enjoy a special offer for the upcoming school holidays, including free hotel accommodation with breakfast for children and a program that includes five activities. Vacations in health centers and resorts in September are usually the most popular, so the reduction in vouchers prices begins in October. In general, experts noted an increase in demand for recreation in the hotel cluster in the mountains.

“It’s especially good there in October and early November. I highly recommend coming here for at least three or four days and enjoying the beauty of autumn in the mountains,” said Dmitry Bogdanov. “Contrary to popular opinion that resort cities do not have enough 4-star and 5-star hotels, there are not enough of them for four months a year only, and there is really a shortage of good health centers all year round. This year, high room occupancy rates in Sochi hotels remain at least until the beginning of November, and at health centers - until the end of November. In September, prices usually slightly decrease by about 10-12 percent compared to August, but there are still few vacant rooms in popular hotels. The first autumn conferences and business events have already begun.”

However, apartment rental prices have not decreased at all and are from three thousand rubles, explained vice-president of the Sochi Guild of Realtors Mikhail Titov. “Perhaps, they will become lower in late September - early October, but maximum by 10-15 percent,” he noted. “Because the demand is high but there are no good options.”

As Sergey Romashkin, vice-president of the Association of Tour Operators of Russia, said, prices are now declining due to a season.

“Hotel room rates fell throughout September,” he shared his opinion. “In the third decade, the decline was up to 25 percent. It’s hard to say about the rates; the range is enormous. Sochi can be divided into four resort areas, including the mountainous area, the Imereti Lowland, Adler, the Central and the Lazarevsky Districts, and hotel room rates are different everywhere. On average, 3 to 3.5 thousand rubles per person per day, taking into account a ten-day stay. In the Central District, tourists can have a hotel room for about 50 thousand rubles for this period, and in Lazarevsky District, a hotel room rate can be 30 thousand, plus travel expenses.”

He noted that a two-way airplane Moscow-Sochi ticket can be bought for 6 to 10 thousand rubles per person. Moreover, the flight can be even cheaper than the train ticket in a four-berth compartment, which is about 11 to 12 thousand, and a reserved seat costs 6 to 7 thousand.

This year, the tourist flow to Sochi amounted to 6 mn people. This figure was three percent higher than last year. At the end of the year, the plans are to increase the record figures of 2022 and welcome about 7.4 mn people. There are 13 ‘all-inclusive’ hotels operating this holiday season. There are also 170 sea beaches open in Sochi, including 35 ones with the national quality mark ‘Blue Flag’.

It should be noted that 9.7 mn vacationers visited the Krasnodar Territory during last summer, and 13.4 mn tourists have visited the Black Sea resorts since the beginning of the year. 10.7 thousand accommodation facilities with 625 thousand beds are available to visitors coming to the Krasnodar Territory.