Russia proposes limits on owners' use of hotel rooms sold to investors

Russia's Economic Development Ministry has drafted legislation to attract individuals' money into hotel construction while preserving the rooms' use for paying guests, Minister Maxim Reshetnikov said on October 15.

Speaking at the Delovaya Rossiya forum, Reshetnikov said the bill was being discussed with the industry. The ministry intends to protect investors through mechanisms already used in shared-construction legislation. Separate amendments to lift restrictions on shared-construction contracts in tourism special economic zones have been submitted to the government, he said.

The minister said high interest rates meant borrowing alone could not finance the required hotel capacity. At the same time, the ministry wants to prevent hotels on hospitality and recreation land from becoming residential properties in practice.

The proposed framework would require a contract with a professional management company and restrictions on an owner's use of the room. As an example, Reshetnikov suggested keeping a room available to hotel guests for eleven months a year. A hotel would also need a shared reception desk and a restaurant.

Vladimir Putin supported professional management and suggested an alternative: limiting the proportion of units offered for sale. He mentioned five, ten or fifteen percent as possible levels for discussion, rather than approved limits.

Reshetnikov said he expected the special-economic-zone restrictions to be addressed within a month to six weeks. Putin called for consultations with businesses and urged officials to avoid delaying a decision.