Hotel giants Hyatt (H), Marriott (MAR), IHG (IHG) and Hilton (HLT) said this week that they were pulling out of all their ongoing projects in Russia, as fighting between the country and its neighbor Ukraine intensified.
Accor Hotels ACCYY joined the group as well and said it would stop new development in the country.
In a statement Wednesday afternoon, Hyatt said it would donate Ukrainian hotel rooms to refugees fleeing conflict zones, while Hilton said it would use the profits from all 26 of its currently up-and-running Russian hotels to fund Ukrainian aid efforts.
Why Hotels Leaving Russia Matters to Investors
The pullout of so many major hotel chains signals a shift for American commercial real estate companies and their approach to Russia.
According to an April 2021 EY report, Russia's hotel market share was split among Radisson (RMRDF) , IHG, Marriott, Accor and Hilton, which control 82% of the sector.
Major builder Hines alone has about $1.5 billion invested in Russia, or 2% of its $84 billion in assets under management.
Projects of the size and scale that Hyatt and Hilton built have long timelines and evolving budgets, which are followed closely by both investors in the companies and the businesses backing the ventures.
Perhaps more important, they are also publicly held companies with engaged — and often very vocal — shareholders.
So abandoning projects entirely is a decision that would not be made lightly, and likely shows that the project managers on the ground believe that Russia's invasion and its accompanying fallout are likely to last for quite awhile.
Most of those companies said that they would continue to keep their hospitality operations running at their existing hotels, at least for the time being.
Which Other Commercial Real Estate Companies Have Left Russia?
While a slew of retail companies have pulled up stake from Russia at least temporarily, very few high-profile CRE or hospitality names have followed them out of the country.
Thus far only a handful have ceased operations in Russia, including Colliers (CIGI), Knight Frank, CBRE (CBRE), Hines and Savills (SVLPF) . Competitor JLL (JLL) has said it is keeping an eye on the situation, but did pen a letter condemning Russia's actions.
“Our immediate priority has been the safety of our people, clients and suppliers both inside Ukraine and across Eastern Europe. We are investing significant resources to protect our people in Ukraine and have teams working tirelessly to support our relief efforts," it reads.
"We have been moved by the compassion and unwavering support shown from our JLL employees around the world to all those who are impacted.”
