Hotel groups under renewed pressure to cut contracts with Russia

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The world’s biggest hotel groups have come under renewed pressure to cut operating contracts in Russia after Best Western and Hyatt became the first to terminate deals with Russian hotel owners.

The Ukrainian Hotel and Resort Association has slammed international hotel companies for failing to take the ‘ethical stance’ of Best Western, which removed its six Russian hotels from its website this month after sending a letter to partners indicating that she was withdrawing from the country. .

US hotel group Hyatt said it had terminated its “association, contracts and relationship” with a Hyatt Regency hotel in Moscow and “suspended the provision of services” to Hyatt Regency Sochi.

Hotel groups have been slower than other consumer-facing businesses to boycott Russia or scale back operations amid international condemnation of its invasion of Ukraine.

Retailers like H&M and Nike have closed stores, while international brewers, like Heineken and Carlsberg, are divesting their Russian divisions.

The UHRA, which represents 130 hotel companies in Ukraine, said hoteliers were “refusing to change their position in continuing their operations in Russia” in order to “gratify shareholders” despite an escalation in the dispute.

While all major groups have halted new hotel development in Russia and opened hotels for Ukrainian refugees, Ivan Loun, UHRA’s international relations manager, said that was not enough.

“There is a big part of the whole problem, which is morale, business ethics, human rights and international law. That is the whole reasoning why they should be out,” a- he declared.

Accor, which operates 52 hotels in Russia, the most of any international chain, said it had terminated corporate clients and loyalty program partners, but added that exiting franchise agreements was a challenge.

A person familiar with Accor’s Russian operations said the severing of ties with business partners in Russia had already led to “serious legal implications” for the group.

The American hotel group Hyatt has “suspended the provision of services” at the Hyatt Regency Sochi © ITAR-TASS/Alamy

Marriott and InterContinental Hotel Group, which both own more than 25 hotels in Russia, said they were looking into deals with franchise partners and Russian hotel owners, but said it was a process. “complicated”.

UHRA said it also received a “private notification” from the Paris-based Louvre Hotels Group that it intended to “leave Russia soon”. The Louvre did not respond to requests for comment.

Russian hotels belonging to major chains such as Marriott, Hilton and Radisson can still be booked through the companies’ websites and apps, and using their loyalty points.

“You simply shouldn’t be able to book a room with points – which is a room that Marriott International pays for – in Russia today, and yet with just a few taps on the Bonvoy app, you can,” said Gary Snyder, consultant to several Marriott franchisees.

Marriott said it was “committed to meeting our legal obligations” but “at this time” loyalty members could still use their points in Russia.

A waiter sets a table inside a pod at the Ritz-Carlton in Moscow
The Ukrainian Hotel and Resort Association has denounced major hotel groups for continuing to operate in Russia © Maxim Shemetov/Reuters

The hoteliers maintain that the contracts established with the franchisees are more complicated and that the termination could, in any case, not be enforced in Russia even if the action were recognized as legal by European or American courts.

The InterContinental hotel in Kabul, for example, still bears the group’s name even though IHG no longer operates in Afghanistan.

The difficulty of reducing pre-agreed contracts is also underscored by the fact that Hyatt is moving forward with the opening of a new hotel next month in Rostov-on-Don, a resort near the Ukrainian border, despite the end of operations in other Russian hotels.

Hyatt said it is reviewing contracts for unopened hotels. He is making a new announcement about his Russian activities this week.

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