Moscow is among Europe’s biggest metropolises. The capital of Russia is not only its financial and political center, but also a prominent place for doing business and a fascinating tourist destination. It’s a city full of contrasts, and the Russian way of doing business is much different than in the Western Europe. We asked our partner in Russia, Mark Hamilford of Intermark Group, how did they achieve success there:
Can you give us a short overview of Intermark?
Intermark Group was established in 1993 and quickly became Russia’s largest relocation consultancy, working with large international corporations and embassies. In 2006, we established Intermark Serviced Apartments, again servicing the corporate market. Over the years we have provided serviced accommodation throughout Russia and look forward to opening the 104 unit Intermark Residence in January next year. The Residence is a 4 star product offering a combination of studios and 1-, 2- and 3-bed units in the heart of Moscow.
Can you give us a brief career history and tell us when you first became aware of the serviced apartment sector?
I first became aware of the serviced apartment sector when looking at new concept being developed around the world, particularly in Asia, where this kind of services is highly developed. We were always looking to extend our offer in Russia, and noticed the frustration Western companies had not only with long term expatriate accommodation in Moscow, but also short term, and due to the poor supply often ended up having senior staff and their families living in hotels for extended periods.
What is special about the apartments from Intermark and which one is your preferred location?
We offer our clients a range of locations throughout Moscow, but my particular favorite is the Tverskaya region. Tverskaya is one of the main arteries of Moscow and leads directly to the Kremlin. Our accommodation is a short walk to this magnificent attraction, in addition to offering an abundance of restaurants and bars. Tverskaya is also in the heart of Moscow, with many of the key central office locations. Our new project soon to open in Novy Arbat, is also a very popular location for travelers, and has benefited from significant investment following the 2018 World Cup.
Which other operators are active in your area and how do you differ from them?
We really don’t have a significant amount of competition, simply for the fact that the development of extended stay accommodation is in its infancy stages in Russia. As an illustration, today Moscow has roughly 300 apartments that could be classified as international-standard serviced apartments! So the market is very much in its infancy stage, which is of course very exciting.
What is the ratio of business versus leisure travellers at your properties?
90% business, 10% leisure. Our focus is on the business traveler, as our average length of stay is over 20 nights.
What are the challenges and opportunities for a serviced apartment provider in Russia?
The key challenges are getting local developers to build residential for hold and deliver an extended stay product. Unfortunately, due to the very high cost of funding in Russia most developers work on the model of build to sell. There is no difference in zoning and local planning conditions between residential for sale and serviced apartments. Historically the financial model for serviced apartments has always competed with residential for sale without much success. I’m please to say that this is changing, with large developers of mixed use projects, realizing the opportunity for integrating an element of serviced apartments into their plans. Our new project is a good example of this.
How was Intermark influenced by the increasing number of immigrants to Russia?
Unfortunately, the negative geopolitical turmoil affecting Russia’s relationship with the West has had a major impact on immigration. This has resulted in the serviced apartments demand stagnation, clients having higher expectations and being more budget conscious. We have responded to that by the soon to open Intermark Residence.
You are already the biggest provider of serviced apartments in Russia. What is the next step for Intermark?
Our main focus is to increase our portfolio by working closely with key strategic developers of larger, mixed use schemes to create international-standard extended stay projects. In addition, we are currently working on a new 3.5 star brand called CitiHome, a modern, vibrant concept based on “community living” which will complement our current, upper market Intermark Residence.
What do you know now that you wish you knew when you launched the business?
Everything takes longer to execute in Russia. Russia is a huge market and geopolitical issues have always affected it. The key is to understand that Russia evolves at its own pace and has its own way of operating within the world, and demand respect and an equal footing. So accepting these ups and downs make the business journey in Russia more manageable and, ultimately, more successful.