Hyatt, Hilton announce pause on new development in Russia

Properties tied to Hyatt, other major US hotel franchisors remain open in the country

The Ararat Park Hyatt Moscow (World of Hyatt, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
The Ararat Park Hyatt Moscow (World of Hyatt, iStock/Photo Illustration by Steven Dilakian for The Real Deal)

UPDATED March 9, 2022, 5:58 p.m.: Any new hotels built in Russia won’t be branded as Hiltons or Hyatts — at least in the immediate future.

The U.S. lodging chains announced a hiatus on new development in the country, Bloomberg reported, joining a growing list of Western businesses that have pulled the plug on Russia as its military campaign against Ukraine rages.

While the two hotel labels said Wednesday that they were pausing new Russian projects and investment in response to the war, hotels branded by Chicago-based Hyatt remain open in Russia, according to Crain’s, along with other major U.S. hotel franchises.

Hyatt posted a statement on its website that didn’t lay out plans to sever ties with Russian hotels, Crain’s reported. A spokesperson for Hyatt didn’t address whether it would continue to do business in Russia, according to the outlet.

Hilton also closed its Moscow corporate office, according to the travel industry news site Skift. It is unclear how many, if any, projects currently in development would be impacted by either Hilton or Hyatt’s decision to stop investment in Russia.

In a statement last week, Hyatt said it was “heartbroken over the devastation unfolding in Ukraine” and that its “immediate focus” was the safety of its employees and guests there and in neighboring countries.

Hyatt operates five hotels in Russia, but owns none of them, Crain’s reported, citing the spokesperson. The Ararat Park Hyatt hotel in Moscow is its most well-known.

Scott Antel, an attorney for the hospitality industry who lived in Russia for 22 years and still consults with hotel inventors in the country, told Crain’s removing a name and management service from a hotel leaves hundreds of workers Hyatt has trained out of jobs. That can create hard feelings among potential future employees and guests and make starting up business in the country again harder.

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“People remember these things. It’s just not good,” Antel told Crain’s. “Customer goodwill takes a long time to rebuild.”

The outlet reported it’s not clear who owns Hyatt’s hotels in Russia, and that Antel said most hotels in the country are owned by Russian investors and businesses.

He told the outlet that if Russian hotel owners are hit with sanctions, Hyatt would exit the country to avoid consequences in the U.S.

Marriott International has also not indicated whether it plans to cut ties with any Russian properties the brand is associated with.

Marriott International CEO Tony Capuano said Monday during the JPMorgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas that the company’s fee revenue from its 28 managed and franchised hotels in Russia comes out to less than 1% of its total, according to Crain’s.

“We are very focused on the safety of our associates and the safety of our guests in those markets. But from a materiality perspective in terms of the company’s financial performance, (it’s) not particularly significant,” Capuano said of Russia, Crain’s reported.

[Crain’s] — Sam Lounsberry

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