By Christopher Kenneth
SPECIAL TO THE MOSCOW TIMES
After a six-year delay and a drastically reduced budget, the project to turn the gigantic, 3,000-room Rossiya complex into three separate hotels is finally under way.
The $20 million renovation of the three-star Rossiya Hotel ?€” which once catered to members of the Politburo and whose concert hall and movie theater were once home to the country's most celebrated artists and film premieres ?€” is the first since the complex was built in 1966.
The plan is to turn the Soviet-style monster famed more for its cockroaches than its view of the Kremlin into a Western-standard entertainment center containing three-, four- and five-star hotels.
The blueprint has the tower of the complex, which is just to the southeast of Red Square on Ulitsa Varvarka, becoming the five-star hotel. The west wing will be turned into a four-star hotel and the south wing will stay a three-star facility.
The renovation of the east wing is still being planned, but it has already been designated as the entertainment and recreational center of the whole complex with swimming pools, saunas, bowling alleys, billiard halls, two disco halls and several bars and restaurants.
A casino is also in the works, but has yet to receive the blessing of City Hall, although the hotel's management say they are optimistic that it will be approved, citing the fact that is already included in the $20 million preliminary budget. Without the casino component, the estimates fell to about $15 million.
The renovation of six of the floors in the skyscraper and 250 rooms of the west wing have already been completed. Completion of the remaining sections is being delayed while hotel management seeks funding ?€” an additional $3.5 million is needed for the west wing and another $5 million for the south wing.
Officially, the hotel is 100 percent owned by the city government. But like most other former state properties, its true ownership structure is unclear.
Moscow Mayor Yury Luzhkov issued a decree back in 1994 approving the renovation of the hotel, with an original estimate of $235 million. But the project was temporarily abandoned, however, when the city failed to find an investor.
Prior to the 1998 financial crisis, Alexander Kuzmin, the city's chief architect, seeing no work being done on the outdated behemoth, proposed demolishing the hotel and erecting a new one on the same spot. An official City Hall study estimated that Kuzmin's plan would cost between $700 million to $800 million.
Because much of the cost of the project was for the demolition and debris removal phase, potential investors balked and once again work on the Rossiya complex was abandoned.
Rossiya's future began to get brighter last year when a management reshuffle resulted in Hussein Dzhabrailov being named first deputy director of the hotel. Dzhabrailov is the brother of Umar Dzhabrailov, one of the owners of the five-star Radisson Slavjanskaya Hotel, as well and the Plaza Group, which has various interests in several business enterprises in Moscow and abroad.
A top hotel official, who asked not to be named, said the presence of Dzhabrailov was pivotal to kick-starting the long-moribund renovation project.
Another change, the official said, was the annulment of contracts with tour operators, which were able to book as much as 90 percent of Rossiya's rooms at cut-rate prices, which they then resold to clients at a substantial mark-up. This practice resulted in the hotel earning just 200,000 rubles (currently just $7,150) a day for nearly all of its occupancy.
Now the hotel rents most of its rooms directly to customers, which has driven daily revenues up to as much as 1.5 million rubles ($53,000). The revenue boom has allowed the hotel to move ahead with the renovation, the official said.
The main investor is Millennium Tour, a subsidiary of the Plaza Group, which is bankrolling the project. The hotel is also in the closing stages of a deal with the Moscow branch of state-owned Sberbank for additional financing.
Nikolai Timonov, another top hotel official, said he was too busy to comment on details of the renovation.
Dzhabrailov could not be reached for comment. However, he was quoted by the Kommersant newspaper as saying the management of the hotel opted for the renovation and upgrading scheme vs. the demolition and reconstruction plan on purely economic grounds.
Demolition and rebuilding would have cost $800 million, while the current plan can will cost a total of $30 million, the paper quoted him as saying.
Many real estate experts have criticized the decision not to tear down the Rossiya on aesthetic grounds.
"The notion that this hotel constitutes an eyesore in the city center, and therefore should be demolished and rebuilt, does not hold any water," Dzhabrailov told Kommersant. "If that were the case, most of Moscow's other real estate properties in their present form would have to be demolished," he added.
"I can't say exactly when the renovation project will be completed, but ?€¦ in a year's time, the Rossiya Hotel will be a totally different facility and will not be easily recognizable," he said.
SPECIAL TO THE MOSCOW TIMES
After a six-year delay and a drastically reduced budget, the project to turn the gigantic, 3,000-room Rossiya complex into three separate hotels is finally under way.
The $20 million renovation of the three-star Rossiya Hotel ?€” which once catered to members of the Politburo and whose concert hall and movie theater were once home to the country's most celebrated artists and film premieres ?€” is the first since the complex was built in 1966.
The plan is to turn the Soviet-style monster famed more for its cockroaches than its view of the Kremlin into a Western-standard entertainment center containing three-, four- and five-star hotels.
The blueprint has the tower of the complex, which is just to the southeast of Red Square on Ulitsa Varvarka, becoming the five-star hotel. The west wing will be turned into a four-star hotel and the south wing will stay a three-star facility.
The renovation of the east wing is still being planned, but it has already been designated as the entertainment and recreational center of the whole complex with swimming pools, saunas, bowling alleys, billiard halls, two disco halls and several bars and restaurants.
A casino is also in the works, but has yet to receive the blessing of City Hall, although the hotel's management say they are optimistic that it will be approved, citing the fact that is already included in the $20 million preliminary budget. Without the casino component, the estimates fell to about $15 million.
The renovation of six of the floors in the skyscraper and 250 rooms of the west wing have already been completed. Completion of the remaining sections is being delayed while hotel management seeks funding ?€” an additional $3.5 million is needed for the west wing and another $5 million for the south wing.
Officially, the hotel is 100 percent owned by the city government. But like most other former state properties, its true ownership structure is unclear.
Moscow Mayor Yury Luzhkov issued a decree back in 1994 approving the renovation of the hotel, with an original estimate of $235 million. But the project was temporarily abandoned, however, when the city failed to find an investor.
Prior to the 1998 financial crisis, Alexander Kuzmin, the city's chief architect, seeing no work being done on the outdated behemoth, proposed demolishing the hotel and erecting a new one on the same spot. An official City Hall study estimated that Kuzmin's plan would cost between $700 million to $800 million.
Because much of the cost of the project was for the demolition and debris removal phase, potential investors balked and once again work on the Rossiya complex was abandoned.
Rossiya's future began to get brighter last year when a management reshuffle resulted in Hussein Dzhabrailov being named first deputy director of the hotel. Dzhabrailov is the brother of Umar Dzhabrailov, one of the owners of the five-star Radisson Slavjanskaya Hotel, as well and the Plaza Group, which has various interests in several business enterprises in Moscow and abroad.
A top hotel official, who asked not to be named, said the presence of Dzhabrailov was pivotal to kick-starting the long-moribund renovation project.
Another change, the official said, was the annulment of contracts with tour operators, which were able to book as much as 90 percent of Rossiya's rooms at cut-rate prices, which they then resold to clients at a substantial mark-up. This practice resulted in the hotel earning just 200,000 rubles (currently just $7,150) a day for nearly all of its occupancy.
Now the hotel rents most of its rooms directly to customers, which has driven daily revenues up to as much as 1.5 million rubles ($53,000). The revenue boom has allowed the hotel to move ahead with the renovation, the official said.
The main investor is Millennium Tour, a subsidiary of the Plaza Group, which is bankrolling the project. The hotel is also in the closing stages of a deal with the Moscow branch of state-owned Sberbank for additional financing.
Nikolai Timonov, another top hotel official, said he was too busy to comment on details of the renovation.
Dzhabrailov could not be reached for comment. However, he was quoted by the Kommersant newspaper as saying the management of the hotel opted for the renovation and upgrading scheme vs. the demolition and reconstruction plan on purely economic grounds.
Demolition and rebuilding would have cost $800 million, while the current plan can will cost a total of $30 million, the paper quoted him as saying.
Many real estate experts have criticized the decision not to tear down the Rossiya on aesthetic grounds.
"The notion that this hotel constitutes an eyesore in the city center, and therefore should be demolished and rebuilt, does not hold any water," Dzhabrailov told Kommersant. "If that were the case, most of Moscow's other real estate properties in their present form would have to be demolished," he added.
"I can't say exactly when the renovation project will be completed, but ?€¦ in a year's time, the Rossiya Hotel will be a totally different facility and will not be easily recognizable," he said.