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Merrill Lynch and the European Bank for Reconstruction and Development are planning a venture with billionaire Viktor Vekselberg to build midrange hotels in Russia as foreign investors seek to fill a dearth of rooms.
The group intends to develop as many as 20 three-star and four-star complexes that will be run by Park Plaza Hotels, the EBRD said. Merrill Lynch confirmed the information Friday.
The new chain will address "unmet demand" in the country's regions, where "relatively few" international operators are active, the EBRD said. Hilton Hotels last week opened its first Hilton Garden Inn with rooms from 2,900 rubles ($114) per night in Perm, following competitors such as InterContinental Hotels Group into the Ural Mountains area.
The project "will increase competitive pressure in the local hospitality sector currently dominated by Soviet-style hotel accommodation," the EBRD said.
Moscow has the most expensive hotel rates in the world, according to British business travel agency Hogg Robinson Group.
Merrill, the EBRD and Vekselberg's Renova Group plan to invest $208 million to form the venture, according to the EBRD, which will hold 25 percent in the project's development and management company.
The EBRD board approved the project and total investment of $52 million Thursday.
Merrill, EBRD Plan Venture With Vekselberg
16 September 2008
Bloomberg
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