“St. Petersburg hoteliers have been spoiled by foreign tourists for a long time”

Evgeny Voytenkov, co-owner of the Domina Pulkovo Hotel and Apartments complex, talks about the resort fee and the conflict with the French Accor.

In the last few years the number of rooms in the hotel market of St. Petersburg has been growing mainly due to apart-complexes. According to NF Group, this year the city will launch 18 objects of this format and only one classical hotel - five-star “Domina Pulkovo”. Evgeny Voytenkov, CEO and co-owner of Pulkovo Sky (the developer of the project), told in his interview to Kommersant-SPb about the differences between hotel and car dealership business, the conflict with French Accor and the consequences of Booking.com leaving Russia.

- A resort fee has been in effect in St. Petersburg since April. Do you encounter dissatisfaction of guests due to the necessity to make additional payments?

- The amount of payment is only 100 rubles per day, which is not much for our guests, so we have not had any negative reactions. This practice exists all over the world, and many people are familiar with it. The main thing is that the money received from tourists should be used in a targeted way and should be used for the prosperity of St. Petersburg.

- What are your expectations from this summer in terms of utilization?

- The summer season started successfully: the hotel occupancy did not fall below 68%, and in peak periods it reached 95%. High occupancy was observed during the Security Council Security Forum, when foreign delegations from 79 countries, including the President of the Republic of Srpska Milorad Dodik, stayed in our hotel. There was good demand during the economic and legal forums. In the apartments, which are also available in our complex, a serious contribution to the load is made by organized groups from China, staying in several buses at once.

- The St. Petersburg market is characterized by seasonal demand. Will the high season be enough to make up for the slump in load, which is typical for the fall and winter?

- October-December are considered to be failed months, but even then you can count on 40% utilization. Moreover, when a hotel's revenue drops due to lower demand, it is compensated by lower costs, as there are no vacant rooms to service.

- The growth rate of hotel occupancy in the Northern Capital in 2024 has started to decrease compared to the previous year. How can you grow in a slowing market?

- The hotel business is much easier than the automobile business. When I worked with Mercedes, there were eight or nine dealers in the city selling the same cars. And for the client to choose you, you had to offer the best terms of insurance, credit, trade-in, and guarantee the best service. Hotels, on the other hand, are different, which makes competition easier. Over 30 years of working with premium car brands, I have learned to do everything I can to ensure that customers are satisfied with the level of service. The guest's impression depends on the ease of check-in, the quality of breakfast, cleanliness, concierge service and spa. To increase loyalty we offer other additional services: we insure guests, help them buy tickets, organize transfers. This brings results: there are clients who stay with us for the seventh or eighth time.

- Are you not embarrassed by the long payback periods of hotel projects?

- We expect a payback period of six to seven years, which is much lower than is common in the hotel industry. These terms became possible thanks to the state program to support hotel construction, under which we attracted a ten-year loan from Promsvyazbank with a preferential rate. We have already managed to make a small profit, although investments are still ongoing. We were lucky that we managed to complete the bulk of the work before the sanctions were imposed. It is even hard to imagine how much it would have cost to build such a hotel at the current moment, when supplies of foreign materials and equipment are complicated.

- Domestic tourists are the main load of hotels now. Can they fully replace foreign tourists who spend much more while traveling?

- For a long time St. Petersburg hoteliers were spoiled by foreign tourists who paid quite different money. Undoubtedly, their outflow is palpable, but we have to live today. We have high hopes for domestic tourism, the development of which is stimulated by the closure of borders with Western countries and the rise in the price of tickets abroad. Domestically, the abolition of VAT by the state helps to keep prices at a competitive level. For €80 per day you can't find a five-star hotel somewhere in Europe, but in our country you can rent a good room for this money.

But there is no doubt that it will not be possible to develop only at the expense of Russian tourists, so we are counting on guests from other countries. The main market for Russia will definitely be China, where there are 120 million dollar millionaires who actively travel around the world. The number of guests from the Middle East, where many Russians now live, will slowly increase. There is a high level of interest in St. Petersburg among residents of Belarus, Kazakhstan and other countries

What was the reason behind Accor's decision to withdraw from cooperation with you?

- My partners and I had invested a lot of money in the project and were not going to participate in the management. There were various proposals, but we preferred Accor, which at the time seemed to us to be the grandee of the hotel business. All the company's standards were taken into account during the construction of the hotel, but in March 2022 this did not prevent the French from sending us a direct text, referring to the geopolitical situation. It is not very clear how this prevented them from fulfilling their obligations, because we had agreed to manage a hotel, not a nuclear reactor or a weapons factory.

When we demanded that Accor compensate us for the funds received from the sale of the apartments, we did not receive a clear answer.

Attempts to conclude an amicable agreement also came to nothing. Instead of constructive proposals, we were warned that we did not understand who we were dealing with and that we would have to deal with the best European lawyers.

As a result, because of their unwillingness to negotiate in a human way, we demanded from Accor not only the debt, but also 1.9 billion rubles. This is the lost profit for the 15 years for which we had a lease agreement with them.

- But you managed to recover only 250 million rubles from Accor. Are you satisfied with the verdict?

- As much as the court thought was right. It was more important for me to make sure that their actions did not go unpunished. According to my assessment, we lost more, but it is difficult to prove such things in court. Although it was certainly not in my plans to go to work every day at the age of 70 and immerse myself in the operational activities of the hotel. There were no other options, as it was already too late to rebuild the building for something else, because we had customized all the processes for Accor.

In addition to 250 million rubles, we also managed to recover 5 million rubles from the French for the use of other people's money. This is how much their delay in repaying the debt cost them. I am surprised that the other victims have not come forward.

- Why, despite the unsuccessful experience of working with foreigners, did you decide to involve Italian Domina Hotels in the management of the hotel?

- After Accor left, we needed to rely on someone with experience in the hotel business. Initially we were close to an agreement with Cosmos Hotel Group, but then they acquired six hotels with 3 thousand rooms in St. Petersburg. In this regard, there was a risk that our project would become secondary for them, so we chose Domina. Ernesto Preatoni, the owner of the chain, made a pleasant impression at the meeting and offered good conditions.

- Is there no risk that Domina Hotels will leave Russia because of sanctions pressure?

- They have no such plans. On the contrary, the company intends to expand its business in Russia after the departure of international operators. It plans to build hotels in Russian regions.

- Has the departure of a number of international hotel chains from Russia affected the quality of service and economic performance of the hotels?

- I don't think we have lost anything. At the stage of hotel market formation foreign operators helped to create certain industry standards, but now Russian specialists understand the market much better, what and how to do. In addition, international companies did not take into account the specifics of this or that region and proceeded from general standards.

At first I had exaggerated expectations of cooperation with hotel chains. I was used to car manufacturers telling dealers in detail how to run their business properly, how to set up all the processes. Before opening a showroom, they needed to make sure that the facility was technically ready, to check the training of the staff. Hotel operators against this background are just children, who are only interested in the size of the hotel revenue, to which their commission is tied. You can involve any management company, but the main thing is to work well yourself, because it is the drowning man who saves the drowning man.

- How critical for the hotel industry was the departure of Booking.com? Were Russian services able to fully replace it?

- For many hotels Booking was everything. The same Accor paid a percentage to the service in exchange for guests' check-in, and it was enough to ensure high utilization. Many hotels in the city even had to change their managers, who were not used to moving and waited for Booking clients to fall to them. Now you need to pay more attention to your website and keep an eye on its content, as sales directly depend on it.

By 2025, two or three leading companies are likely to stand out among booking services and replace Booking. So far this market is fragmented and to attract guests we have to work with a large number of sites.

- Supply on the St. Petersburg market is growing mainly due to apart-hotels, while classic hotels are opened much less frequently. What is the reason for this?

- Erection of apartments is in many respects a forced measure, as it is not possible to build housing everywhere. Some officials still do not see the difference between these types of real estate, although in our hotel, as Vysotsky sang, “the corridor system” and there are no signs of multiple occupancy.

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Russians, as a rule, prefer to rent an apartment for a long term rather than stay in apartments. Do hotels have the opportunity to reorient compatriots towards themselves?

- In this respect, explanatory work is necessary. For example, we have apartments for 38 thousand rubles a month. It is clear that you can rent an apartment for 10 thousand rubles cheaper, but this amount does not include cleaning, laundry and maintenance. We also have a free gym for long-term residents. At the same time, there are enough headaches in the apartment building: a parking space is occupied, or there is no light in the entrance. Nevertheless, a lot depends on how much a person rents an apartment for. If the rent is 15-18 thousand rubles, it will be difficult to attract him.

- The Federal Antimonopoly Service is in favor of restricting hotels from raising prices during major events, such as the St. Petersburg International Economic Forum (SPIEF). How do you feel about the initiative?

- This idea is perplexing. Hotels have seasonality of demand, and everyone regulates prices themselves, so that it is possible not only to fill rooms, but also to get a profit.

In order to live more or less, we need to earn at least 1 billion rubles of revenue per year. But at the same time the hotel expenses are quite high, because no one has canceled the need to pay salaries and taxes.

I think the guest is able to figure out for himself what is best for him. During the last SPIEF, many luxury hotels stood empty because they had raised their prices to 500 thousand rubles per night. It is clear that we also increased the cost of accommodation, but not within such limits, which contributed to high utilization.

- Are you considering participation in other development projects?

- I am so fed up with this facility that I am no longer planning to participate in the management of any business or acquire a controlling stake, although I do receive such offers. My maximum is to buy 18-20% as an investor and visit the board of directors once a quarter. On such terms I am ready to act as an investor, especially since there are a lot of talented and progressive young people on the market now who are looking for capital.

Konstantin Kurkin