Project summary document

Project description
and objectives:

The proposed project involves financing of the development, construction and operation of five mid-market hotels in the cities of Samara, Krasnoyarsk, Kaliningrad and Yaroslavl with a total of 897 rooms. The Project is sponsored by Akfen Holding Anonim Sirketi and the principals of Kayi Group and Insa Group of Turkey. The hotels will be managed by Accor, a leading international hotel group, under the Ibis and Novotel brands.

Transition impact:

The Project is expected to have a strong transition impact potential in the following key areas:

• Greater competition in the project sector
  The Project will address unsatisfied demand for international standard economy hotels in Russia’s regional cities.
  
  
• Skills transfers and market expansion
  The Project will contribute to a significant upgrading of technical and managerial skills in the economy beyond the Project entity both at the hotel construction and operating stages. Construction companies involved in the Project will be required to deliver an international standard hotel product in full compliance with operator’s specifications. Once the hotels are fully operational, the employees will benefit from thorough training in customer service, marketing and hospitality, as well as catering management, to ensure that an international standard of service is achieved. The Project will also stimulate competitive behaviours among the Project’s local suppliers and encourage the development of local support businesses catering to the needs of the hotel and tourism sector.
  
  
• Demonstration effect: new products and processes
  At present, there are very few international hotel groups operating in Russia, and where so, they are predominantly in the four-five star segments in Moscow and Saint-Petersburg. The Project will introduce an economy hotel chain managed by a leading international operator. Most regional Russian cities have hitherto no internationally branded hotels and especially no mid-range hotels. This is expected to have a two-fold and particularly strong demonstration effect. Observing a successful hotel project will lead, on the one hand, other international hotel operators to consider expanding their operations into the largely untouched Russian provincial cities and, on the other hand, it will also encourage commercial banks and equity investors to look at similar projects in the future.

The client:

Russian Hotel Investment B.V., a limited liability company incorporated in The Netherlands (the “Investee Company”), owned by Akfen Holding and the principals of Kayi and Insa Groups.

OOO Samstroykom, OOO YaroslavlHotelinvest, OOO KaliningradInvest and OOO KrasnoyarskInvest, special purpose limited liability companies incorporated in Russia and fully owned by the Investee Company (the “Borrowers”).

EBRD finance:

EUR 27.1 million senior loan to the Borrowers and an equity investment of up to EUR 6.6 million in the Investee Company.

Total project cost:

EUR 98.5 million.

Environmental impact:

1. Screening Category and Justification

B/1 (the 2003 Environmental Policy) requiring a site assessment and an environmental analysis of the project. The project could involve some specific environmental issues which can be readily identified and addressed through adequate mitigation measures.

2. Due Diligence Undertaken and Outcomes

The environmental and social due diligence including the assessments of four different sites (Samara, Krasnoyarsk, Kaliningrad and Yaroslavl) and the project to date indicated that there are no significant environmental and social issues to prevent the project to be further developed: none of the site is contaminated; each sub-project has been developed in accordance with national/local requirements and international good practice. The hotel operator, Accor Group, demonstrated adequate environmental and social risk management capacities: Accor is committed to follow the principles of the Global Compact and the Global Reporting Initiatives, both arising from United Nations sustainability initiatives; Accor has an Environment Charter which is used as an environment management tool for every Accor operated hotel including the sub-projects; the Accor charter includes a commitment to work towards ISO 14001 certification of its operations; specific food safety systems will be implemented ahead of each hotel inauguration following the world-wide Accor standards; a Life & Fire Safety (L&FS) Master Plan will be developed for each sub-project hotel to fulfill both the local and an internationally recognized L&FS-code including installation of sprinklers and automated fire detection/alarm systems; and Accor is one of the first companies to introduce European Works Council to reach a worldwide agreement on union rights that complies with International Labor Organization (ILO) guidelines.

One specific issue is that Yaroslavl city where one of the sub-project will be located has a historical downtown which is an UNESCO assigned World Heritage site, and the Sponsors have already consulted with the UNESCO Russian representative about the hotel’s design. Further clarification is currently being made to ensure that the sub-project is fully in line with the outcomes of the consultation with UNESCO.

Implementation Requirements

An Environmental and Social Action Plan (ESAP) is currently being developed and need to be agreed by the client for the project in order to ensure the implementation of adequate mitigation measures including grievance mechanism for the construction workers, the neighbouring community and hotel employees. It will be required that each sub-project complies with national and EU environmental, health and safety standards and requirements, implement an ESAP and submit an Annual Environmental Report to the Bank. The Bank will monitor the project’s environmental performance during the life of the project through a review of the Annual Environmental Report as well as monitoring visit where necessary and adequate.

Technical
cooperation:

None.

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

Mr. Cuneyt Baltaoglu
General Director
Rusakovskaya Street 13/1, Borodino Plaza, 10th floor , 107140, Moscow, Russia

E-mail: cuneyt.baltaoglu@kasa-akfen.com

Tel: +7 495 987 4809
Fax : +7 495 987 4865

EBRD contact:

Sergei Gutnik, Operation Leader: gutniks@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com

Public Information
Policy (PIP):

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations.
Text of the PIP

Independent Recourse
Mechanism (IRM):

The EBRD has established the IRM to give local groups that may be directly and adversely affected by a Bank project a means of raising complaints or grievances with the Bank, independently from banking operations.
Guidelines for Making a complaint and the Rules of procedures