HOTELS Magazine Investment Outlook December Edition 2013 – Down and Out in the BRICS
HOTELS Magazine has published its December investment outlook, focusing on hotel development in the BRICS. The Associate Editor, Nathan Greenhalgh, argues the hotel pipeline remains robust despite slowing economic growth.
I would agree with Nathan’s overarching analysis: the nature of the pipeline is changing, with opportunity moving from primary cities to the secondary and tertiary markets in regional cities, with midscale hotels meeting the needs of the rising middle classes and businessmen seeking deals. Investors remaining in the high end market are increasingly undertaking conversions rather than building new hotels.
This article almost reads as a resume of VIY Management’s investments. Indeed, I argue in this article that although Moscow remains the market with the highest potential, significant opportunities are unveiling across the country. Nathan asserts the Russian hotel market suffers from tight financing, reticent foreign companies and a visa system which deters tourists. These are valid comments, although I would argue that the reticence of foreign companies is driven by an underestimation of opportunities in the Russian market – especially when compared with their BRICS counterparts.