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News Release

Moscow

Kazakhstan Hotel Market Overview


​Moscow, 3 September 2014 - JLL’ Hotels & Hospitality Group is glad to present Kazakhstan Hotel Intelligence reports on Almaty and Astana markets.

Although Almaty is no longer the capital of Kazakhstan, it remains a key financial and cultural centre in the country. Since losing capital status, business leaders now shuttle to and from Astana and hotel occupancies and rates have suffered from a drop in business activity in the city. Despite this, investors are still keen to develop in Almaty, though there is a concern that saturation is around the corner, JLL experts noted. The country recently introduced a visa free regime as a one-year trial period for key ‘partner countries’, USA, UK, Japan, Germany, France, Italy, Netherlands, Malaysia, South Korea and the United Arab Emirates. This has been very much welcomed by the business community.

“It is a fairly mature hotel market. There are over 6,500 rooms in Almaty, 20% are branded. The historical leader has been the Intercontinental followed by Rixos. The only current branded midscale hotel is the Holiday Inn and last year saw the Ritz-Carlton opening.” – David Jenkins, Head of JLL’ Hotels & Hospitality Group, commented. – “There is little tourism, although the surroundings of Almaty offer chances to ski in the winter months in Chimbulak/Medeu. This appeals though to mostly domestic demand. Almost 70% of all visitors are for business purposes. The main feeder markets are Russia, Turkey, China and USA, with most non-residents choosing branded 4 and 5 star hotels.”

The peak performance came in 2007 to 2009 when the main hotels were optimizing rates. The opening of the Holiday Inn along with the moving of the capital to Astana and the 2009 crisis saw both rates and occupancies drop significantly. According to JLL, this year Almaty hotels market has seen 4% drop in ADR to USD177 (July YTD) with the occupancy at 57%. Pipeline includes Novotel (150 rooms, due 2015), Ramada (162 rooms, due 2016), Hyatt Regency (270 rooms, due 2017).

“There is a significant development pipeline with more than 1,000 new rooms planned till 2018, and the outlook is troubling with the supply of branded rooms to double (at least) by 2018.” – David Jenkins said. – “The continued focus on Astana is hitting the performance of Almaty hotels yet investors continue to develop. As well as the 1,000 new rooms we also expect to see a full renovation of the Rahat Palace and Kazakhstan hotels into branded properties. With at least 3 new mid-scale properties under construction (Park Inn, Novotel and Ramada) the pressure on rates will continue if occupancies are to be maintained.”

Astana has been the capital of Kazakhstan since 1997, and is the country's second largest city after Almaty. Over the last 10 years Astana’s contribution to the country’s GDP increased to 8.5%. It is still behind Almaty in terms of business activity, but the success story of how Astana turned from a provincial town to the capital is obvious and the future development trend is upward. In order to promote further development of Astana and to raise public awareness of the city, Kazakhstan applied for and won the hosting of the World Expo in 2017. The city itself is a prime example of master-planning with many already famous buildings and more to come.

“As a ‘new city’ hotels are being developed at pace. There are totally 7 branded hotels in Astana from a total of 36 (3,083 rooms). The key branded hotels today are the Radisson, Marriott, Rixos, Ramada Plaza, Park Inn and Hilton Garden Inn.” – David Jenkins noted. – “There is little tourism. Astana is the seat of power and is as yet to develop any real tourism infrastructure. It is though hoped that the 2017 World Expo will help boost internal and external visitation to the city. As for now, almost 90% of all visitors are for business purposes.”

Hotels struggle to break 50% annual occupancy but currently achieve high ADR’s. According to JLL, this year Astana hotels market has seen a drop in occupancy to 45%, ADR here is higher than in Almaty – USD185. “With two branded midscale hotels (Park Inn, Hilton Garden Inn) and the Marriott all opening together plus the strong pipeline we expect rates to fall going forward as competition heats up.” – David Jenkins commented. – “There is a significant pipeline up to 2018 of up to 2,000 more branded rooms – more than doubling branded supply. The hotel supply though will be far ahead of demand for several years. There is a trend for local investors to favour upscale and luxury hotel developments which is hardly supported by demand patterns. There will be at least 4 luxury hotels in operation by 2018. We expect the rates to come under pressure as more hotels open and occupancy becomes less predictable. It is though a city of the future and an incredible achievement – with great prospects going forward.”


Please find links to both reports below



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