"System" habits Cosmos

AFC is trying to raise the level of its hotels.
Under control of Vladimir Yevtushenkov, AFK Sistema will rebrand its hotels, uniting more than 4 thousand numbers. The hotels will start working under the guise of Cosmos Hotels & More. The transition to the management of large networks usually significantly improves the operational performance of hotels, but in the case of Sistema, there is unlikely to be a sharp increase, advisers warn.

About the fact that the hotels belonging to Sistema start work under the Cosmos Hotels & More brand, Artyom Sirazutdinov, AFC's managing partner, told Kommersant. He argues that the cost of rebranding is insignificant - several million rubles. "It's about moving to unified standards of service, which will have to be followed by all newly connected hotels," explains Mr. Sirazutdinov. He adds that the network will consist of four lines: budget city hotels MyCosmos, business hotels Cosmos, premium Cosmos Collection, apartment hotels and apartment complexes CosmosStay.

AFK Sistema is a diversified company that has existed since 1993. Its main owner is Vladimir Evtushenkov (61.7% of shares). Now hotels "Systems" is controlled by the Cosmos Group. In the portfolio of the group of 17 hotels with a total number of rooms more than 4 thousand rooms in 14 cities. But there will not be a rebranding for all of them. In 2016 Sistema bought nine hotels managed by international companies, including Holiday Inn Express in Voronezh and seven operating Park Inns in Astrakhan, Volgograd, Izhevsk, Kazan, Novosibirsk, Sochi and Yaroslavl. Three more hotels of the network are located abroad - in Italy, the Czech Republic and Namibia, Sistema does not plan to rebrand these objects.

Vladimir Evtushenkov, the main owner of AFK Sistema, in 2016, "Russia 24" Vladimir Evtushenkov, the main owner of AFK "Sistema", in 2016, "Russia 24"
The hotels are extremely low-margin: in such conditions it is necessary to sell them, but to sell it is a pity

Under the new brands will go five existing hotels Cosmos Group and all new facilities: in the future five years, "System" plans to increase the fund to 4.7 thousand rooms. So far, the fate of the four objects has been determined. Under the sign CosmosStay a new hotel (145 rooms) will start operating, which will open before the end of this year in Moscow on Profsoyuznaya street. Located in Petrozavodsk "Onego Palace" (103 rooms) will be called Cosmos Petrozavodsk, Moscow Region "Emerald Forest" and Altaic "Altai Resort" (78 rooms, 19 cottages) will be transformed into the Cosmos Collection brand. Evgenia Tuchkova, deputy director of the strategic consulting department of Colliers International, points out that the last two objects are quite popular among tourists and belong to the upper upscale (high price segment). The load in this segment in the first half of 2018 was 69.4%, an increase of 3 percentage points relative to the same period in 2017. "But the loading of suburban hotels in the suburbs is on average 15-25% lower than the urban facilities," she notes.

The fate of two Moscow Sistema facilities - the Kosmos Hotel (1,8 thousand numbers) and Intourist Kolomenskoye (259 rooms) remains unresolved. Senior consultant of the hotel business department of JLL Margarita Najshtut assumes that in the future they can be positioned in both the budget and business segments, depending on how the number fund will be modernized. According to her, the load of budget hotels in Moscow in the first half of 2018 reached 77%, the average tariff - 2.8 thousand rubles. Mrs. Tuchkova adds that the high level of occupancy to hotels was ensured by the World Cup held in Russia.

The development of a new brand for Sistema was dealt with by Depot WPF. Strategic director of the company Farah Kuchkarov says that now a sharp change in the target audience forces hoteliers to seek new opportunities for positioning. As he said, the strong brand practically always becomes the reason of growth of qualitative indicators. But Margarita Najshtut does not agree with this conclusion: "This statement is valid only for cases of assigning brands of a well-known international network". In the case of the AFC, it is a question of creating a new network that does not yet have a reputation in the hotel market, so that it is unlikely to increase operational indicators in the short term, the expert doubts.