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Many US-based companies have rushed to pull up stakes in Russia — with at least one notable exception: hotels.
Some hotel chains — including the largest in the world, Marriott International, and also Hilton – closed their corporate offices in Moscow and suspended new hotel development and investments in Russia, they said in a flurry of statements this week.
But they haven’t closed their properties or removed their brands from the hotels, which are mostly run by franchisees.
That could change soon given the public backlash against Western corporations that continue to do business in Russia, say industry experts.
“Given the current level of feeling around the topic, I would not be surprised to see hoteliers take the decision to take their brands off the hotels,” Andrew Sangster, editorial director of UK-based industry journal Hotel Analyst told The Post.
If the brands pull up stakes in Russia, the owners of the individual hotels likely would not be compelled to pay franchise fees to a company that has blocked access to its reservation system and brand, experts said.
Bethesda, Maryland-based Marriott, which operates a Ritz Carlton in Moscow along with 27 other hotels in the country, has a tiny presence in the country. So, too, does Hilton, which operates about 26 properties. And Accor – owner of 50 hotel brands including Novotel and Sofitel – operates 50 hotels in Russia, according to a Skift report.
These companies’ financial exposure in Russia is minimal, experts say. The cost of pulling out is more reputational.
“There is still a potential for a black eye on social media,” as major companies like McDonald’s, Starbucks and Coca Cola have closed their operations in the country, one hotel industry source said who did not want to be identified.
“Our hotels in Russia are owned by third parties and we continue to evaluate the ability for these hotels to remain open,” Marriott said Thursday. Hilton, for its part, said it was also closing its corporate office and suspending new development in Russia. “We will donate any Hilton profits from business operations in Russia to the humanitarian relief efforts for Ukraine,” the company said in a statement.
Hyatt said it would “continue to evaluate hotel operations in Russia, while complying with applicable sanctions and U.S. government directives as we hope for a resolution to this crisis.”
“Understanding that many people in Russia face challenges and uncertainty about their future as well, we are determining how best to support and care for our hotel colleagues and current guests in the country,” the company said.
One exception to the hotel conundrum is Radisson, which is owned by the Chinese government via Jin Jiang International, a state owned hospitality company. The century-old brand from Minnetonka, Minnesota, was bought by Jing Jiang in 2018.
Radisson is the biggest hotelier in Russia by room numbers, according Sangster.
“I would not be surprised to see Radisson pick up a lot of ‘de-flagged hotels,’ he added.