The big mini hotels in St. Petersburg Bubble

The last three years have experienced a remarkable increase in "Saint Petersburg's mini-hotels". As many of you will be aware of, 2003 was the 300th anniversary of St. St. Petersburg's foundation of Peter the Great. This visionary Tsar founded the great city on the banks of Neva as a "window on the West".

Tercentenary was a remarkable event, and it made a worldwide impact by promoting and publishing the city. Government delegations and the great and the good gathering to celebrate right in the heart of the tourist season. This caused major disruption of the tourism industry – a massive increase in demand for rooms in a city that always has a lot of peaks and demand. St. Petersburg always has a lot of popularity in the "white nights", but ultra-low levels of occupancy in the city hotels in the winter months.

In 2003 the major hotels were all heavily booked and many were extremely overbooked. We remember a hotel being overbooked by over 1000 rooms on a particularly awful night. Tour operators and travel agencies struggled to cope with the massive demand, hotels raised their prices and clients had a hard time. Stories about clients that were booked by hotels to Novgorod were common. Novgorod is a 3-hour bus ride from Saint Petersburg.

The result was a large number of entrepreneurs who bought old apartments and converted them into "mini-hotels". Mini hotels appeared overnight as mushrooms in the fall. Mini-hotels were soon on every street and through the city.

It is fine with strong demand, but demand in 2004, 2005 and 2006 decreased due to price increases in 2003. Mini hotels continued to open everywhere and damaged traditional hotels, but were often poorly managed and poorly run. No insurance, high fees for visa registration, 4th floor without lifts (no mention of this on their websites!) And odd places were the order of the day.

Today, the good and those with reasonable prices, good locations and smart management have survived and flourished. Some require that you use indoor slippers and work as a home away from home, some offer wireless internet connections, and some have developed into fully-featured hotels with 100 rooms and more and more marketing and distribution channels online – but many more have closed, or stay up for the winter months or have been sold as luxury apartments.

A classic bubble …. wondering if Peter The Great knew what influence he would have in the hotel market in St. Petersburg!