Hilton to Open 2 Hotels At Convention Center
Published: September 21, 2011 (Issue # 1675)
The first two Hilton hotels in St. Petersburg are due to open in a convention center built by Gazprom subsidiaries in the Shushary district.
Hilton’s partnership with the company Expoforum, which is currently building a convention and exhibition center with two hotels in Shushary, was made known to Vedomosti by an employee of a partner company to Expoforum. Two real estate agents confirmed the information.
Anatoly Yerkulov, the general director of Expoforum, confirmed last week that the company has signed a management agreement with Hilton, adding that the two hotels will be opened under the brands of Hilton and Hampton by Hilton, containing 241 rooms and 210 rooms respectively.
The Expoforum complex will be built in the Pushkinsky district of the city. In addition to the two hotels, the first stage of the project will include a congress center with a maximum capacity of 3,000 people, 50,000 square meters of exhibition space and two business centers occupying a total of 25,000 square meters, to be completed by 2013. The second stage, to be completed by 2018, will include an additional 50,000 square meters of exhibition space. The total cost of the project could reach $1 billion, said Yerkulov in August.
According to Yerkulov, about a third of the cost will be covered by investor partners of Expoforum, while the rest will be raised via loans. Spark-Interfax reports that the main investor in the project is Gazenergoprom Development, 67.5 percent of which is owned by the Gazprom subsidiary Mezhregionteploenergo, according to the state register of legal entities.
“Many wanted to bring Hilton into the market, but the company agreed to partner with Expoforum because it was confident that its hotels would be built in accordance with Hilton standards, and shared our assessment of the exciting prospects for the convention and exhibition business in St. Petersburg,” said Yerkulov. He declined to reveal information about investment in the construction of the hotels.
The cost of investing in one Hilton room is $180,000 to $200,000, while a room in the Hampton is $120,000, says the general director of Cromwell Management, Alexei Musakin. The Hilton is a luxury-brand five-star hotel, while the Hampton by Hilton is a three-star hotel, he explained.
This is a case of a place choosing a hotel operator rather than an operator choosing a place, said Oleg Gromkov, head of the real estate market research department of Knight Frank St. Petersburg. On the one hand, the project is conveniently located close to the airport, on the other, this is a major investor and the hotel operator can be confident that there won’t be problems in financing and that the project will be realized, he said. Attracting a large foreign hotel operator will open access to foreign loans for the investor, said Musakin.
Hilton has been searching for a location for a long time, even negotiating with investors whose properties are located in the center of the city, but finding a building that corresponds to their standards is difficult, as when dealing with the city center, it is not new construction, but renovation that is usually discussed, says Gromkov.
The convention and exhibit business is a prospective sphere, and if an investor has governmental support, then their project has the potential to attract a large number of events, he added.