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Why it pays to be a Russian owner in Russia

Moscow-based owner-operator Azimut Hotels owns 16 properties in Russia and manages another 12. Owned by Alexander Klyachin, who has the historic Metropol Hotel Moscow as part of his portfolio, the group today is focusing on securing more management contracts and franchises. HOTELS spoke with CEO Walter Neumann about the country’s challenges and opportunities. 

HOTELS: Biggest opportunities for growth in Russia? 

Walter Neumann: We are not only growing in the big cities, but we have smaller cities, which are, for example, from the industrial point of view, very important. We have been growing this year in cities like Yakutsk or Mirny, because simply, these are very important industrial destinations. There’s also still a lot of opportunity in conversion. There’s still a lot of opportunities in certain B&C markets, because for example, Moscow is rather occupied. Everybody is focusing on Moscow and St. Petersburg, but I see a lot of opportunities as well in other destinations. For us as a company in the future, we will focus more on former CIS countries. It’s your Georgia, Armenia, Azerbaijan.

Azimut CEO Walter Neumann
Azimut CEO Walter Neumann

H: Biggest challenges right now working in Russia? 

WN: The business is not bad. After the sanctions started though, we have lost a lot of European and American business. But on the hand, it was all replaced by business from China, from Iran and from India, for example. And of our hotels in Moscow, there’s still one with a yearly occupancy over 80%. So, that business has been fully replaced. 

H: You’ve previously worked in Berlin and Dusseldorf – tell us about your life running Azimut. How is it different and what requires the greatest focus of your time? 

WN: I was always rather close to Russia because I was already in the 90s over here for five and a half years and opened the (at that time) Grand Hotel Europe. So, from that time, I still have my family ties here because my wife is Russian, my kids are half Russian, half German. So, I was always in love with this country.

If you know the culture, if you know the language, if you know the people as well for some time, you know that to achieve certain things, you have to use the local ways. I had to do that when I opened hotels in Italy, or when I opened hotel in Austria. You have to get close to the local authorities and with the local decision-makers. 

H: There’s a lot of global brands trying to grow their presence in Russia. What kind of advantage do you think Azimut has, being local and why? 

WN: We are close to our owners. We have standards, we have a clear vision, but we have as well flexibilities in our fees structure as well. An advantage as well, owners don’t have to pay their fees in currencies, because our fees are in rubles, the local currency, which is a big advantage. Because if you see in the last five years, the ruble against the dollar has lost almost 50%. And [our] people, they speak Russian and they know the local culture. That’s the reason why a lot of Russian owners are coming to us.

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