RHIC Regional Briefing in Stavropol

Ahead of the 10th Annual RHIC, a regional briefing was held in Stavropol last week. The briefing saw around 150 delegates in attendance and was supported by the Government and Chamber of Commerce of Stavropol Region. This invitation only event aimed to increase collaboration between local government and the community, and share ideas as to what the government needs to do in order to attract more brands and investors to the region. This interactive and education forum was a huge success.

Daria Kashurina – Sponsorship Manager at Bench Events shares her account of the event

“Upon landing in Mineralnye Vodye, we realized how green and hospitable the region was.  The Chamber of Commerce of the Stavropol Region met us at the airport, and we began our journey to Kislovodsk; a region that is truly at heart of recreation and spa resources in Russia. The fields and remarkable scenery are worth a visit in themselves, and this was a destination where many of our invited guests tried hot springs for the first time.

The Regional Briefing was introduced by the Administration of the Stavropol Region, who gave detailed insights into the political and economical landscape of the region. The discussion was very vivid and evaluated the region from different perspectives, not only as a region that has to overcome many issues, but also highlighting the potential to “revive” the recreational and medical heart of Russia. Delegates were given unique insights into the biggest investment projects to be realized in the region.

During the coffee break, many participants enjoyed networking and sharing their thoughts into the business potential within the region. More so they enjoyed being hosted in one of the famous sanatoriums – Sanatory Solnechnye, which means “sunny” if translated into Russian. Kislovodsk is proudly known as the city that is blessed by sunshine 365 days a year – a fact highlighted by the Deputy Governor of Stavropol Region, Andrey Murga. The sanatorium was a great experience for all of us, as we could definitely “feel” the unique atmosphere. 

In terms of the potential of the Spa and Sanatorium markets in the regions, the views of many hotel operators were contradicting. Many shared the view of Marina Usenko, Director, Acquisitions & Development, CIS & Baltics - Starwood Hotels & Resorts Worldwide, Inc, that the market is famous for sanatoriums and should be kept as it is; while others debated that those of sound health may not be as enthusiastic to spend their vacations alongside the medical centres, and therefore further emphasis should be places on the potential that Spa’s and Sanatorium’s have to offer.

However understandably this depends on the target segments, as it is proven that domestic customers enjoy sanatoriums. Other factors influencing the success of the region include the high cost of travel, and perceptions surrounding security.

During the presentation of case studies there was great news from a few of the visiting brands. A Holiday Inn is to be opened in Stavropol in 2017, and a Hilton hotel will be constructed in Mineralnye Vody. Arild Hovland suggested that it is a difficult region to develop in with a lot of red tape and bureaucracy to overcome, and the slower progress and longer time-frames = money. Generally a project should take 2-3 years to be realized, while in Russia the average period is 5-8 years.

When the local investors were asked why they usually reject a hotel project, the influencing factors mentioned by Marina Usenko were that usually projects are too small or the location is not proper. Many investors prefer to have “trophy” hotels, however the demand within the Russian market is mostly for mid-scale hotels, rather than luxury.

During the second day, panel discussions included Hotel Financing and further insights into Investment Projects in the region. We are happy to announce that Northern Caucasus Resorts [who attended RHIC 2013 in Sochi], will now be joining us again in Moscow for RHIC 2014. They have unique local knowledge on how to manage mountain resorts, attract the necessary financial investment and do business in Russia. Stepan Smitienko Director Department of Investor Relations & Financial Institutions - OJSC Northern Caucasus Resorts addressed many questions regarding the development of resorts in different republics of Northern Caucasus, and this discussion is to be continued at RHIC 2014 in Moscow.

Furthermore, as an outcome of this briefing an agreement was signed between the Government of Stavropol Region and the company "Rostok" to ensure cooperation in the reconstruction of Kislovodsk resort "picket" worth more than 1 billion rubles. The document was signed by the acting head of the region Vladimir Vladimirov and CEO of the company Vladimir Turivenko. As Maxim Kletin, head of Kislovodsk city noted, the feature of the project is not only to empower spa treatment in a sanatorium, but also to recreate special architectural character when building the resorts.

The success of this event came down to a blend of local knowledge and international experience. There are many more questions to be answered when investigating the potential of a region, however it is important that the conversations have been started and now the dialogue can continue.”