Just How Much is the World Cup Helping Russian Hotels?
Cities love hosting big international events. While it’s obvious that something like the FIFA World Cup or the Olympics is going to result in a considerable uptick in hotel business during the event itself, the fact is that there are long-term benefits for those hotels as well.
Moscow, for example, is expected to experience 20 to 30 percent revenue-per-room growth during the 2018 FIFA World Cup. Room occupancy is also expected to increase 8 to 10 percent during this time. However, Moscow also experienced a 6.7 percent increase in room occupancy in the four months leading into the World Cup—growth likely due to the international attention Moscow was receiving for the upcoming event.
Most people who can afford to attend events like the World Cup, the Olympics, or the Super Bowl are people who are also likely to be booking large number of hotel rooms in the future. If a city impresses these attendees during the event, that city may be foremost in mind when those guests are thinking of where to host their next business event, conference, or show. The money spent building new hotels or improving and expanding older hotels is thus an investment not in the short-term event, but in future events those improvements may attract.
One thing to keep in mind is that if an event results in a larger number of hotel rooms in a city or region, it’s possible to see a significant decrease in the occupancy rate in the region or city after the big event even if there is an overall increase in number of rooms being rented. After all, more rooms with the same number of customers will decrease the occupancy rate. It should be expected, then, that there will be adjustments in the local market in response to the new rental patterns as well as changes in the use of hotel facilities after the big event.
Mega-events like the Olympics or the FIFA World Cup have complex effects on the hotel business. A bigger city such as Moscow, Rio de Janeiro, or Dallas will likely be able to absorb more hotel rooms without much negative effect, and even be able to better take advantage of rare mega-events through the city’s continued attraction of smaller events due to the impression made on the attendees of the mega-event.