Hilton Worldwide Plans for Russian Expansion

Hilton Worldwide (HLT) is set to open 29 new hotels in Russia, more than doubling its presence in the country.

This morning, the hotel company tweeted "today, we have 21 hotels open across the country, and have signed another 29 to open!"

It is unclear exactly when these hotels will begin operating.

"Russia has been one of our main focus markets for several years," Hilton Global Head of Focused Service Brands Phil Cordell said in a statement. The company opened its first two hotels in Russia in 2008.

This year, Hilton opened three hotels in Russia and is expecting its next, Hampton by Hilton Volgograd City Centre, to open its doors sometime in December. In 2017, the company plans to open properties including the Hilton St. Petersburg ExpoForum, the DoubleTree by Hilton Moscow Vnukovo Airport and two Hilton Garden Inns in Novorossiysk and Orenburg.

Hilton's expansion in Russia comes in the wake of a deep recession in 2015, when GDP fell by 4%, hurt by a combination of falling oil prices, international sanctions, and structural limitations, according to the CIA's World Factbook website. The Central Bank of Russia expects 2016 GDP to decline by 0.5% to 1.0%, according to the CIA.

Cordell said Hilton has been focusing on opening its Russian properties in the country's largest cities. Hotels in cities with populations of about 1 million people will have between 120 and 195 rooms.

In Moscow, home to almost 12 million people, hotels have more than 270 rooms, according to Cordell. It is unclear how many hotels are currently located in Russia's capital city.

"There is no single principle or approach for choosing a city for the hotel as we make a complex and thorough market analysis of all market opportunities that could be most suitable for the brands we have in Russia," he said.

Cordell said several things play into choosing a location for a new project, "including business activity in the city and the surrounding region, supply and demand in the hotel sector, the economic prospect for the region and attractiveness of the area to tourists, among others."

In the first half of 2016, Russia's branded hotel market expanded by about 2,000 rooms and is expected to get an additional 2,300 rooms by the end of this year, according to Hilton.

Four of Hilton's 13 brands are represented in Russia, Hilton Resorts & Hotels, DoubleTree by Hilton, Hilton Garden Inn and Hampton by Hilton. 

Hilton's highest-end luxury brands including the Waldorf Astoria Hotels and Resorts, with the average room rate ranging between $366 to $1,057 per night, and the Conrad Hotels & Resorts, charging between $254 and $670 per night, are not represented in Russia.

Shares of Hilton rose 8 cents to $24.57 on Thursday.

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