Ameria Management Advisory has implemented a comprehensive research in tourism and hotel accommodation industry. This was the subject of the interview of the First Armenian News channel with Karen Martirosyan, Deputy Head of Ameria Management Advisory Services.
Mr. Martirosyan, what was the purpose of the research and what areas did it cover?
Yerevan, November 5, Armenpress:
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Interview with Mr. Karen Martirosyan, Deputy Head of Ameria Management Advisory Services
Ameria CJSC has launched a series of researches in various industries of Armenian economy. What triggered such initiative?
Our economic researches are aimed at the study of various economic trends and identification of their cause-and-effect relationships the perception of which varies widely among the experts and the general public. It’s common knowledge that both National Statistical Service of the Republic of Armenia and different Government agencies regularly publish reports covering diverse industries. But the role of research centers, which carry out professional researches and provide their assessment of economy development trends to the public, the Government, business community and potential investors, should not be underrated. Ameria CJSC today performs many functions very similar to those of a research center, including assessment of different industries, analysis of cause and effect relationships, which is not a common thing on the market.
Ameria CJSC actively contributes to the replenishment of hotel business in Armenia with new international hotel brands.
This year the number of tourists is expected to grow by 18%. We expect to have 800,000 guests. Along with increased number of tourists the necessity for increase of the number of hotels arises. Keen demand for hotels does not allow the prices to drop which it its turn leads to rise in tourism prices in Armenia. In our interview with Arman PORSUGHYAN (Advisor, Management Advisory Services, Ameria CJSC) we tried to find out whether or not the development of this sphere may be called dynamic.
- What's the demand for hotels today?
- Back in 2001, the number of tourists in Armenia totaled 115,000, whereas in 2010 the number of tourists accounted for 690,000. Thus an average annual growth of 22,5% was registered. In the first half-year of 2011 the growth was 15,6%. This industry obviously has a great potential. According to the research conducted under the USAID Competitive Armenian Private Sector (CAPS) project, about 65% of tourists stay in Yerevan, 30% of them prefer hotels. Also, according to the same research the average tourists' stay duration in Armenia is 7-8 days. Thus the annual demand for hotels in Yerevan in 2010 accounted for about 990,000 nights. The aggregate number of hotel rooms (from 2 to 5 star hotels) in Armenia is 1,600. About half of the hotels in Yerevan are 3 star hotels, 16% are 2 star hotels, 25% are 5 star hotels and 10% are 4 star hotels. By the way, the hotels in Armenia are classified according to national standards which may differ from international ones. Overall, hotels in Yerevan can provide accommodation for 870,000 nights per year while the demand is 990,000. These are the data for this year only. Given the 20% annual growth of the number of tourists, by 2015 the number of tourists will make about 1.5 million and the deficit of hotel rooms will be about 800-900. Taking into account the fast growth of the demand and the current deficit there will hardly be any drop in prices.
- Does the situation seem to be even worse in the regions?
- The hotels outside Yerevan are also in great demand both for international and local tourists. The overall number of hotel rooms outside the city is 2,000 including the functioning boarding houses and resorts inherited from the Soviet period which are mainly located in the Northern and Central regions of the country. The problem of hotels in the region may be solved by attracting international hotel operators. But at this stage most of them are interested in building hotels in Yerevan, especially in the center of the city.
- Does it appear to be worth attracting hotel operators?
- Yes, since the potential is not used to its full extent. Recently, through the mediation of Ameria CJSC, a license contract has been executed with Wyndham Hotel Group, one of the largest hotel operators which runs 7,190 hotels with 610,000 rooms in 66 countries of the world. The company gave a license for constructing a hotel in Yerevan under Ramada brand name. The project is planned to be completed by the end of 2013. Along with the brand a Swiss company opens its representation is Yerevan and undertakes the management of the new hotel. It will be a 4 star hotel with 125 rooms, conference halls and a fitness club. Besides Ramada hotel, another hotel with 150 rooms is planned to be constructed as part of the hotel development project. I can not disclose any details yet. It will be a 5 star hotel and meet all international standards. The project now is being negotiated with a number of famous international operators. Finalizing the issue I would like to mention that Ameria has established close relations with a number of international operators due to which the projects initiated by us are quickly reviewed by them. The hotel business niche is rather attractive. The hotel construction costs pay off within 7-8 years. In the developed countries this term is a bit longer, whereas in Armenia the construction costs less. Prices in Yerevan are almost the same as in Tbilisi, yet in the capital of Georgia the number of international brands represented is greater than in Yerevan. Only a few famous international brands, such as Marriott, Golden Tulip and Best Western are represented in Yerevan. Best Western is also engaged in management of a hotel outside Yerevan, near Lake Sevan.
- Could you please specify the services Ameria offers to international operators while attracting them?
- While preparing and submitting applications to international hotel operators we perform thorough analysis of the supposed hotel location to identify whether or not it complies with the requirements of the operator. We create a detailed business plan including budgeting and once the negotiations are completed successfully we assist in preparation and execution of necessary contracts and other legal instruments.
- Given the specified tendencies, when shall we manage to have balanced supply and demand?
- Taking into consideration the current pace of tourism growth, the number of hotel rooms in Yerevan is expected to increase by 200 which may ensure balanced supply and demand by 2015 when the 100th anniversary of the Armenian Genocide will be marked. A great flow of tourists is expected then as it was in 2001, when the 1700th anniversary of adopting Christianity as a state religion was being celebrated in Armenia. We mean construction of 4-5 star hotels, since the number of 3 star ones is sufficient as yet. If after 2015 the demand drops, the prices will drop, too. But this will refer only to Yerevan since the hotels are built mainly in Yerevan. It is expected that after 2015 the hotel service quality will be considerably improved.
Yet we lack qualified personnel. Recently a cooperation agreement with the Armenian Institute for Tourism and Vatel International Business School, a French tourism collage, has been executed. So let us hope that this problem will gradually be solved.
Interview of Mr. Tigran Grigoryan, MAS Senior Consultant at Ameria Group, to ArmInfo News Agency
Recognized Armenian experts in governance and management declare that Armenia is facing the crisis of public administration system. Do you share this viewpoint? In your opinion, how efficient is the public administration system in Armenia?