Lately, as being repeatedly reported by most of the national and international governmental and non-governmental media channels, at the last months of the 2009, significant increase noted in the amount of incoming tourists to Russia.

Just to cite few examples;

Although Russian air passenger numbers fell 9.4 percent in 2009 as the global downturn in air travel took its toll, a figure nearly three times as severe as the global average. That should be noted in the agenda of hospitality investors especially by the hotel investors.

According to state air transport agency 45.1 million business and holiday travelers had flown in RF last year, down 9.4 percent on 2008, though December had recorded an 18.7 percent jump.

When we look at the numbers for the capital, almost 10 percent fewer foreign tourists visited Moscow last year but the capital expects more traffic in 2010 as the economy improves.

The city numbered 3.7 million in 2009, a drop of 9.7 percent compared with a year earlier. The data comes from the border service numbers.

In the first months of 2009, the tourist drop was about 12 percent, but the numbers improved by the year's end and even reversed the effect of early negative numbers.

As Grigory Antyufeyev, chairman of Moscow's tourism committee, uttered "I can say with certainty that 2010 will give us, at a minimum, a restoration of 2008's levels, and given a successful outcome, we expect growth of 2 to 3 percent compared with 2008, the pre-crisis year,".

Most of the experts from state organizations and private sectors crucially points out that the number of foreign visitors to Moscow to reach 10 million by 2020.

But also when we look at the current supply, we notice that it will be quite challenging for the city accommodate her guests with the international standards.

It seems that the state is also in agreement with our opinion as hospitality experts.
Therefore, the Moscow region has released a strategy on tourism in the country for both Russians and foreigners which yet to be fully disclosed.

Our suggestion to investors as IFK Hotel Management is that while there are lot of projects with very good prospective returns and sell-side is quite active nowadays, picking up the potential projects and being investors in those would guarantee fruitful yields to their portfolio and diversify and protect them from the risks that were encountered in the crisis.

The hotel investment volume in Europe, Middle East and Africa (EMEA) fell to €2.9 billion in 2009, reflecting the lowest volume of transactions since the late 1990s and a drop of 63% compared to 2008.
While 2010 is expected to remain challenging, by the year-end investment volumes could increase by almost 40% on the 2009 volume and reach €4.1 billion, driven by improving economic conditions, gradually strengthening investor confidence and an increase in stock on the market.

As lending capacity reached record lows in 2009, single asset transactions became the prominent type of deal in the hotel market accounting for 72% of total volumes, and portfolio activity falling by almost 80% compared to 2008. This trend is not forecast to change in the near future. Portfolio activity will remain limited as deals continue to require a high level of equity.

The number of distressed hotel assets on the market is expected to slightly increase in 2010. Although many owners have faced refinancing challenges in 2009, distressed hotel sales have not been widespread. During 2010 investment activity will be driven by the banks and their willingness to lend.

However as it might be the general case in Central Europe, in Eastern Europe the trend to increase will start slowly due to the financing difficulties and investors tend to feel invest their money in more secure markets. However one would quickly notice that in terms of REVPAR and payback period and the figure of exit scenario, Russian Market has been the best performer in last three years and Moscow by taking the lead in the world in terms of REVPAR.

We believe as IFK Hotel Management team, due to the unsatisfying supply of international brand supply in Russian Federation, the market seems quite promising. With a right local partner on board and reliable hotel operator like Golden Tulip Hospitality Group it is highly probable that investors will enjoy high yields from their hotel investments in Russian Market which can still named as lowly penetrated market in terms of hospitality investments.

Special Economic Zones:

Foreign direct investment expected to significantly increase for Russia in 2010
As of 2009, FDI into the Russian economy is expected to be finalized around $20bn appx. Given the general economic downturn, this big number is likely to increase in 2010 as more investment is attracted to Special Economic Zones.

The Russian government has set its sights on economic diversification in order to switch from a resource-to an innovation-based economy. To assist the transition, Special Economic Zones (SEZs) have been created with preferential taxation and pre-existing infrastructure on production sites.

When we look at the who are benefiting from the SEZ, it is quite clear that investors for hospitality sector are the main players. Out of 33 new resident companies registered in Russian SEZs since the beginning of 2009, 19 represent the tourist industry entries as new players.
Therefore as IFK Russia Team, we believe that with the current state strategy, hospitality sector investors are heavily encouraged to enter into Russian Market. As we also notice that non-branded hotels and lack of international standardized hotels are scarce in Russia compared to western markets, and as the effects of crisis in 2009 showed that international money circles are more tend to have stable and profitable return numbers, it is our opinion that Russian Hospitality Market will greatly benefit from it in 2010.

Benefits from investments in special economic zones

Tax concessions

• Exemption from property tax for the first five years (standard rate: 2.2pc)

• Exemption from land tax for the first five years (standard rate: 1.5pc)

• Exemption from all local fiscal charges in some SEZs (Lipetsk, Tomsk, Alabuga)

• Unlimited time for using outstand-ing tax losses

• Social tax reduced from 26pc to 14pc

• Low annual lease rate equal to 2pc of cadastral land value

Customs privileges

• Exemption from import duties on Russian and international goods entering SEZs

• Exemption from import turnover tax on Russian and international goods entering SEZs

• VAT is charged on goods exported from SEZs

• Import duty is collected on imported goods exported from SEZs to the rest of Russia

Types of SEZs

Industrial Production Zones

Required investment of 10m euros at least (including 1m euros in the first year). There are no similar requirements forother SEZs. Area not more than 20 sq km.

Technical Research and Implementation zones

Created on not more than two territory plots, with a total area of not more than 3 sq km. Life not more than 20 years.

Tourism-recreation zones

Created on one or several territory plots, determined by the government. May include the whole territory of any administrative territorial entity. Rendering of tourist and health-improving services.

Source for privileges : PWC

New Delhi (India), 4 January 2010.

Golden Tulip Hospitality Group is proud to announce the latest addition to its Indian hotel portfolio: the Tulip Inn Lucknow. Golden Tulip Hospitality Group and Avadh Projects (Pvt.) Ltd. will strengthen their cooperation by signing the management franchise agreement.

Ideally located in the heart of the commercial centre and business district, the Tulip Inn Lucknow is located only a few minutes from the Vidhan Sabha and the railway station. The hotel offers 3 star accommodation with 50 well appointed, spacious design rooms in superior, deluxe & suite categories. All rooms have a 32" LCD television, a tea & coffee maker, a mini bar, an electronic safe and an iron & ironing board. All bathrooms are equipped with shower and deluxe toilet amenities.

The food & beverage facilities include: "Lucknow 6", an all day dining restaurant serving traditional Avadi & Mughlai cuisine, and "Just Baked", the warm, relaxing lounge serving light bites, oven baked patisseries and savories along with soothing blends of tea & coffee. For conferences & weddings the hotel offers the Imperial Ball room and Imperial garden, seating 200-500 guest or up to a 1000 guest in reception style.

Vimal J Singh, Managing Director, Golden Tulip Hotels India (Pvt.) Ltd.: “I am pleased that our second hotel in India opens in Lucknow, the capital city of Uttar Pradesh, the largest state in India, keeping in mind our strategy to implement international standard hotels in all state capitals in India”.

Rajesh Ladhanee, Director, Avadh Projects (Pvt.) Ltd, adds: “The opening of the Tulip Inn Lucknow is the start of keeping our commitment to open international class malls and hotels in Uttar Pradesh”.