In December 2001, Katerina-Irist-Congress Hotel acquired a new management company, UMACO, and the first results were quite good: Workload has increased by 13 percent on the average compared to last year's. Viktor Brovka,General manager of Katerina Iris, spoke to The Russia Journal about plans for hotel development.

What were your commercial results for the first quarter of this year?

The breakdown is as follows:

• Corporate clients (about 40 percent of sales total);

• Tourist groups (about 30 percent);

• Conferences, seminars, congresses (about 25 percent);

• Casual visitors, including locals (about 5 percent).

We see this year as our promotional year because the hotel has been poorly positioned on the market for a long time. Of the most interesting events which we have hosted I would like to name the opening of the new restaurant Champs-Elysee, proposals for hosting fashion shows; a summer cafe scheduled to open in June and an award ceremony for Russia's best sports journalist.

Also, we had a Business After Hours Reception for the American Chamber of Commerce, the Evening of Friends - a party for our best corporate partners - and a Business Jazz Party for VIPs held as part of the fourth International Jazz Festival Boheme Jazz 2002.

How would you assess the potential for development of the hotel industry in Russia?

There is a huge potential for filling the niche of international-class hotels in Russia's regions. A shortage of quality-service hotels represents a serious problem of the industry.

As regards Moscow, it is losing to other world capitals in terms of numbers of incoming tourists. London gets some 18 million tourists annually and Paris 25 million, while Moscow only sees half a million. In Moscow, there are 260 organizations providing accommodation, including hotels operated by various departments, companies, embassies and markets – there are a total of 70 hotels with the capacity to accommodate a sum total of 30,000 people at a time. But, in reality only some 40 hotels are effectively operating on the market, while the remaining ones (which are mostly municipally owned) are heavily deteriorated, poorly equipped with furniture, appliances and utensils and staffed with badly trained personnel.

In terms of hotel accommodation, Moscow is far behind the European average figure of 14-18 hotel accommodations per 1,000 people in the population; in the popular tourism centers, the latter figure reaches 30. In Moscow, it is as low as three.

What is the average workload of top-end hotels in Moscow?

Only top-end hotels with Western management have been built in Moscow over the last decade. These include the Savoy, Radisson-Slavyanskaya, Sofitel (Iris, Keterina-Iris), Olympic-Penta-Renaissance, Aerostar, Marco-Polo-Presnya, Baltschug-Kempinski and three hotels in the Marriott chain: Novotel, Holiday Inn and Golden Ring. Also, construction of a Hilton hotel has been launched, and a Hyatt will be built at the place now occupied by Intourist.

At first, these hotels were loaded by 75 percent, but as things stand today (the number of hotels has increased and competition has become tougher, while the number of visitors has not), the workload has dropped down to 53 percent, and Moscow has slid down to the 32nd place in Europe in terms of this indicator.

Do you agree with the opinion that Russia in general and Moscow in particular needs more three-star hotels?

Yes, of course. There is an acute shortage of such hotels in Moscow and St. Petersburg and the cities of the so-called "Golden Ring." After all, it is three-star hotels that are included in the so-called "travel packages" of tours to Russia.

A particularly grave situation is in St. Petersburg, where there are only three hotels of this class, the Pribaltiiskaya, Pulkovskaya and Moskva. The present situation demonstrates that Moscow also badly needs such hotels, especially after Intourist closed down.

As things stand today, I would classify the following hotels in Moscow as belonging to this group: the Kosmos, Rossiya, Ukraina, Mezhdunarodnaya, Belgrade, Izmailovskaya and Moskva. These are rather large hotels in terms of number of accommodations, and their average occupancy runs at around 55-60 percent. But all these hotels have badly deteriorated, and the quality of service is not always in line with the standards accepted for this category of establishments.

What changes in the industry have occurred in this year?

Regrettably, no cardinal changes are taking place, although the Moscow government is giving the issue of developing the city's hotel and tourism complex a lot of attention. There is the City project, there is a program for developing sports complexes and there is a program of preparing for Expo-2010, and these programs include building new hotels. But this is a matter for the future.

To what degree is business tourism developed in Russia, and what percentage of customers in your hotel are business tourists?

Russia has gigantic industrial and raw-materials potential and, therefore, has attracted and will attract businesspeople. At the moment, however, the flow has somewhat stabilized, because many foreign companies have opened affiliates in Russia. At the same time, an increase in Moscow hosting of international exhibitions gives reasons for making optimistic forecasts for the future of business tourism in Moscow.

Service standards for business guests are, of course, different than those for ordinary tourists. First of all, this refers to the need for additional services (visa support, car rental, conference rooms, Internet access, modern means of communication, simultaneous interpretation, etc.). In our hotel, the percentage of this category of guests is high, 50-80 percent of the total, depending on the time of the year.