ST. PETERSBURG MARKET Year-End Review 2016

KEY MARKET INDICATORS 2015 2016

Total supply, number of rooms 19,785 20,562

Total supply of managed by international operators*, number of rooms 8,607 8,948

ADR, RUB/night 4,770 6,070

RevPAR, RUB/night 3,050 4,130

Occupancy rate, % 64 68

Tourist flow, million people 6.5 6.9

* according to STR Global classification Source: Colliers International

Supply Major hotels opened in 2016

NUMBER PRICE NAME ADDRESS As of year-end 2016, the St. Petersburg hotel market accounted OF ROOMS SEGMENT* for 149 hotels, with the room supply of 20.6 thousand rooms Hampton by Hilton (excluding mini-hotels, departmental hotels, and hostels). upper 64 Pulkovskoye Hwy 207 The share of rooms managed by international hotel operators midscale ExpoForum amounted to 43%.

Expecting such major events as FIFA Confederations Cup 2017 Parklane Resort&SPA 9 Ruhina St 152 — and FIFA World Cup 2018 both Russian and international hoteliers Best Western Plus 41 Ligovskiy Pr 107 midscale started to expand their room supply. American chains entered Centre Hotel** the St. Petersburg market – such hotels as Hampton by Hilton Saint Petersburg ExpoForum and Best Western Plus Centre Hotel M19 Station 10 Marata St 81 — were opened. St. Petersburg players – hotel chain Station, Hotel DOM Boutique Hotel 4 Gangutskaya St 60 — Group Eurasia and Nevsky Hotel Group – also made their moves to expand. New hotels of local non-chain operators DOM Boutique * according to STR Global classification ** renovation of block the hotel Oktyabrskaya Hotel (4*) and AvetPark (3*) were opened. Source: Colliers International Hotel supply Major international hotel operators in 2016, 25,000 +777 % of number of rooms rooms 20,000 14% Carlson Rezidor Hotel Group 15,000 3% InterContinental Hotels Group 32% 4% Sokos Hotels 10,000 AZIMUT Hotels

number of rooms number 4% Marriott International 5,000 5% AccorHotels Rocco Forte Hotels 0 7% Corinthia Hotels 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F Belmond 5* 4* 3* 2* 13% Others Source: Colliers International 8% 10%

Source: Colliers International

Research & Forecast Report | 2017 | | Colliers International 1 Demand Pricing policy Tourist flow grows annually. The amount of visitors to The St. Petersburg tourism industry development had a positive St. Petersburg in 2016, according to official municipal administra- impact on the financial performance of hoteliers. The weighted tion data, reached 6.9 million people in comparison with the last average undiscounted room selling price in hotels in 2016 year’s figure of 6.5 million people. The popularity of the North- equaled to RUB6,070/night. In comparison with the year 2015, ern Capital was confirmed in 2016 by the two prestigious World the increase amounted to 27%. A significant growth of room Travel Awards won in different nominations (’s Leading selling price was observed in the segment of 5* hotels, espe- Destination and World’s Leading Cultural City Destination 2016). cially during high season.

Tourist flow Average room 8 selling price increased 7 27% by 27% in 2016 6 5 Average rate and revenue per room, 2016 4 3 12,000 million people 2 10,000 1 8,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 6,000

Foreign tourists Domestic tourists RUB/night 4,000 Source: Colliers International 2,000 Domestic tourism is also on the rise. The number or Russian 0 May citizens who visited St. Petersburg in 2016 increased by 14% July April June March August October in comparison with 2015. This is significantly related to the January February November December MICE industry development. In addition, rouble depreciation led September to the redirecting of outbound tourism to the domestic one. The ADR RevPAR number of Chinese tourists is increasing. In addition, a large pro- Source: Colliers International portion is formed not by individuals, but rather by visiting groups coming from as part of organised tours in Russia. Trends and forecast For three years in a row the hotel occupancy rate had been Active popularization of St. Petersburg as a tourist destination increasing. The average occupancy rate in 2016 amounted continues influencing hotel market. In 2017, further growth to 68%, which is 4 p.p. greater than the previous year’s figure. of occupancy and sales of hotel operators is expected. Some hoteliers will renovate their room fund. For example, Carlson Occupancy rate Rezidor Hotel Group will fully refurbish Radisson Royal Hotel 80% on Nevskiy Prospekt.

70% 68% In the nearest future, hotels of new to the St. Petersburg mar- ket Lotte Group and MEININGER Hotels operators are expected 60% to be opened. The present AccorHotels and Hilton Worldwide 50% hotel chains will increase room fund by opening new hotels. As a result, the total room fund in 2018 will amount to around 40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 22 thousand rooms. Source: Colliers International Major hotels scheduled for opening in 2017 Occupancy rate by seasons NUMBER PRICE NAME ADDRESS OF ROOMS SEGMENT* 100% +5% Hilton Saint Petersburg upper 80% +7% 62 Pulkovskoye Hwy 234 ExpoForum upscale 60% +2% 40% Lotte Hotel 2 Antonenko Ln 154 luxury St. Petersburg 20%

0% * according to STR Global classification Low season Shoulder season High season Source: Colliers International 2015 2016 Source: Colliers International

2 Research & Forecast Report | 2017 | Russia | Colliers International Nikolay Kazanskiy Managing Partner [email protected] Vladimir Sergunin 554 offices in Partner [email protected] Stanislav Bibik Partner 66 countries on [email protected] Anna Nikandrova Partner [email protected] 6 continents Eleonora Bogdanova Regional Director, Warehouse & Industrial Department [email protected] USA: 153 Amel Djerroudi Executive Director, Project Management & Building Consultancy Department Canada: 34 [email protected] Vera Zimenkova Latin America: 24 Regional Director, Corporate Solutions & Office Agency Departments Asia Pacific: [email protected] 231 Andrey Kosarev Managing Director, St. Petersburg EMEA: 112 [email protected] Vladislav Nikolaev Regional Director, Strategic Consulting Department [email protected] Dmitry Romanov Regional Director, Valuation Department [email protected] $2.5 Kermen Mastiev Head of Division, Sales & Acquisitions Office Department billion in [email protected] annual revenue Francois Nonnenmacher Director, Occupier Representation [email protected] Ekaterina Podlesnykh Head of Street Retail Group 185.8 [email protected] Ekaterina Fonareva million sq m Director, Residential Department, Moscow [email protected] under management Elizaveta Conway Director, Residential Department, St. Petersburg [email protected] Olga Bakulina Regional Director, Marketing & PR Department 16,000 [email protected] professionals Veronika Lezhneva Director, Research Department and staff [email protected]

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Research & Forecast Report | 2017 | Russia | Colliers International 3