Andrey Umansky on price turbulence in the Black Sea resorts
In the summer of 2021, Russians will mainly spend in summer cottages or domestic resorts – the suspension of flights with Turkey has caused a rush of demand and an increase in the cost of hotels and tours in the Black Sea resorts. What happens and when to expect a decline in prices? Discussed with the chairman of the board of directors Arbat Hotel Management LLC (the management company of the family resorts chain Alean Family Resort Collection) Andrey Umansky…
This season, many hotels multiply the price by 2, refuse those who booked rooms earlier, in favor of new customers who are ready to pay more. In your hotels, have prices also increased significantly?
No, this approach is unacceptable for us, it is not even discussed. We focus on a permanent loyal customer, so this year, as before, we do not go beyond the accepted practice of managing tariffs: our system calculates prices dynamically, it allows a deviation from the tariff by 30%, both downward, if this is the beginning of sales, so and upward – when demand grows.
But have base rates also increased compared to last year?
We have adjusted them only in accordance with inflation, by 5-10%. Although some suppliers, especially for a number of product line items, have raised prices for us much higher. For example, we compared the cost of products in February 2020 and 2021 and the average growth was 12.9%.
What prevents you, as an owner, from giving a command to increase the price due to the rush demand?
In all our hotels, regardless of 4 stars or 5 stars, we implement one concept – a family vacation with children in the “ultra all inclusive” format.
The most important indicator of our efficiency is customer return. When people who already understand our services come to us in a good mood, they broadcast it to those around them. A warm, friendly atmosphere is created. People are resting and want to return next season. If the cost is too high and our guest feels a dissonance between how much he paid and what he gets, he will look for flaws, his vacation will be ruined and then such a client will not come again. This is contrary to our strategy.
Therefore, we take pricing seriously, it is important for us that the cost corresponds to the level of service, then tourists come back and recommend our hotels to their friends and acquaintances. For us, this also translates into savings on attracting new guests and advertising.
Do you have a lot of regular customers?
In our base hotels, the share of repeat customers reaches 70%. Someone loves “Riviera” in Anapa, we brought this resort to the market 17 years ago. Many tourists choose Deauville – it was opened in 2013. On the territory of 6 hectares, probably the most extensive infrastructure for the whole family has been formed. Biarritz has its own regular client in Gelendzhik. This cozy stylish hotel appeared in our chain in 2015, and the rooms there are also most often booked by regular customers.
The hotels that we have joined to the Alean Family Resort Collection brand relatively recently – Sputnik in Sochi and Usadba in Anapa – are now developing loyalty. Especially in “Sputnik” we see a significant share of returning tourists – the hotel is well located, on the first line of the sea and in close proximity to the center of Sochi.
And yet, how do you assess your additional profit at the end of this season in comparison with the summer of 2020?
We believe that it is not entirely correct to compare the indicators of 2020 and 2021, since in 2020 the hotel was idle for almost 3 months, and if compared with the indicators of 2019, we expect a growth in the financial result at the level of 15%. Revenue will grow more, but expenses have also increased significantly.
In addition, our tourists usually redeem rooms in advance, so we sold most of the rooms for an early booking promotion – prices at this stage are always lower than the tariff.
When will a vacation on the Black Sea cost “normal money”?
We are now living in extreme demand with limited supply, which pushes prices up. If there were more quality supply in our market, there would be no such price turbulence. In the future, even if such events occur, fluctuations in cost will not be so significant – the hotel base in the region is developing and there are prerequisites that this process will gain momentum.
Will the general price level go down?
In our resorts, before the closure of borders with other countries, everything was fine with prices in principle. If investments in high-level hotels had a high return, there would have long been a queue of those wishing to invest here. But this does not happen, because this business is low-margin.
In 2020, due to travel restrictions, a client appeared, focused on foreign travel, prices began to accelerate.
And even in these conditions, not only us, but also other professional hoteliers of the Krasnodar Territory do not have to talk about super-profit. Let’s look at the prices – the cost of a room in the hotels of the ALEAN group according to the “ultra all inclusive” system is comparable to the prices of city hotels in Moscow, St. Petersburg in 2019, but they work all year round and, as a rule, for breakfast, they do not offer guests that set services, they do not have to maintain a vast territory and infrastructure. The economy of such hotels is much more interesting for investors than in Russian beach resorts.
Russian resort hotels are often compared to Turkish ones. Is it useful for our hoteliers to study the experience of Turkey? Or should we go our own way?
Of course, it is useful, we ourselves have organized trips of our specialists to Turkey for many years, delved into how the service is built, how different departments work, what makes up Turkish hospitality, and conducted training master classes.
It’s another matter when we transfer this experience to Russian soil, we still have to take into account our specifics.
Are there services in the ALEAN hotel group that are better implemented than in Turkish hotels?
I think yes. For example, food in our hotels for Russian tourists is more attractive and familiar from natural local products. Guests do not experience the stress of adapting to new dishes, we pay a lot of attention to baby food, which is very important for family tourists. We are also developing the direction of proper nutrition, and this season we are opening a buffet, where, among other things, dishes from Yulia Vysotskaya are presented.
Another advantage of ours is medical support. In which Turkish hotels have you seen a 24-hour medical service, where the appointment is led by a pediatrician? Probably nowhere. He works for us 24/7 in all hotels. What can I say, children sometimes get sick when the climate changes. It’s okay, but help is needed. And again, there is no language barrier – parents and grandmothers do not face a problem when they cannot explain to the doctor what happened. This is also a big plus.
What are the prospects for Russian resorts?
I look at the prospects with optimism. We pin great hopes on the national tourism development project, on subsidizing the interest rate for the construction of tourist facilities. We expect that the supporting infrastructure will be financed.
Now one of the limiting factors is the high property tax. If this issue is resolved, more investors will come, more business, new high-quality hotels will appear, and competition will intensify. Then our compatriots will be happy to relax in the Black Sea resorts, regardless of whether there are restrictions on the directions or not.