The Federal Law № 59-FL as of 15.04.2019, that made amendments to the Article 17 of the Housing Code of the RF, has come into force since October 1, 2019.

Therefore, according to the amendments, activities of hostels on providing hotel services in residential houses are forbidden. Prohibition does not concern hostels located in non-residential buildings and on the first floors with private entrance.

Further provision of services by hostels will be possible only if the following obligatory conditions are met:

• soundproofing of apartments;
• rooms equipped with fire protection and security alarm systems;
• rooms equipped with safes for holding documents and valuable objects;
• rooms equipped with cleaning and sanitary disposal tools.

Besides, it is not forbidden to place hostels in the apartment complexes that are not residential.

According to the Housing Code of the RF, an owner is assigned with the right to use residential premise for professional and business activities on an individual basis. However, these activities should not violate rights and legitimate interests of other citizens, fire safety requirements, ecological, sanitary and epidemiology standards. Now the Housing Code of the RF directly prohibits using residential premises for industrial production, missionary activities and hotel services.

For information According to the data from the Information and Analytical system Globas currently in Russia there are more than 33 thousand enterprises, providing part-time residence services. Full Information is available for the subscribers of the Globas system.

Information agency Credinform represents the ranking of the largest Russian hostels. Hostels – legal entities with the largest volume of annual revenue (TOP-10) were selected for the ranking, according to the data from the Statistical Register for the latest available periods (for 2016 - 2018). Then they were ranked by the return on equity ratio (Table 1). The analysis was made on the basis of the data of the Information and Analytical system Globas.

Return on equity (%) is calculated as a relation of company’s net profit to its equity. The ratio determines the efficiency of use of capital invested by the owners of the enterprise and shows how many monetary units of net profit were earned by each unit invested by owners.

This indicator is used by investors and company’s owners to measure their own investment. The higher the ratio value, the more profitable the investment. By the return on equity with a negative or zero value it is necessary to analyze the advisability and efficiency of investment in the enterprise in the future. In such cases, the ratio value should be compared with other investment.

Too high value of the indicator, in its turn, can negatively affect the financial stability of a company. High profitability implies also higher risks.

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention to all combination of company’s financial indicators and ratios.

Таблица 1. Net profit, revenue, return on equity ratio, solvency index Globas of the largest hostels (TOP-10)

Name, INN, region	Sales revenue, mln RUB		Net profit (loss), mln RUB		Return on equity, %		Solvency index Globas
	2017	2018	2017	2018	2017	2018
1	2	3	4	5	6	7	8
DRUZYA-OTELI I KHOSTELY LLC INN 7842074140 Saint-Petersburg	22,85	22,57	5,47	3,94	-153,23	998,98	274 Medium
OKEI KHOSTELGRUPP LLC INN 7713389343 Moscow	21,66	26,94	0,89	2,48	82,08	69,49	243 Strong
SET UYUTNYKH KVARTIR,OBSHCHEZHITII I KHOSTELOV UYUT LLC INN 7841491060 Saint-Petersburg	18,82	22,06	-1,60	-3,08	25,60	33,01	346 Adequate
PLANETA KHOSTEL LLC INN 7705557749 Moscow	27,33	37,94	3,22	1,01	124,72	28,16	262 Medium
HOSTEL-S LLC INN 7702375797 Moscow	26,71	28,28	2,11	1,60	28,56	18,14	272 Medium
HOSTEL-A NJSC INN 7720791790, Moscow is in the process of reorganization in the form of transformation, since 09.06.2017	10,15	17,81	-5,83	0,29	33,39	-1,66	306 Adequate
SET KHOSTELOV ZAKHODI LLC INN 7743111955 Moscow	17,63	20,45	-2,85	0,84	8,36	-2,52	307 Adequate
KHOSTELSERVIS LLC INN 7726053654 Moscow	20,63	30,26	-0,64	0,89	3,73	-5,57	298 Medium
SUPERHOSTEL LLC INN 7842504932 Saint-Petersburg	137,53	118,65	7,53	-1,03	118,02	-18,95	253 Medium
SWEET VILLADGE HOSTEL LLC INN 7840033501 Saint-Petersburg	16,03	19,14	1,57	-0,63	83,97	-50,77	300 Adequate
Total by TOP-10 companies	319,34	350,08	9,88	6,31
Average value by TOP-10 companies	31,93	35,01	0,99	0,63	35,52	106,83
Industry average value	33,17	38,79	-12,74	-4,65	3 388,74	1 229,76

improvement of the indicator to the previous period, decline in the indicator to the previous period.

The average value of the return on equity ratio of TOP-10 companies in 2018 is significantly lower than the average value for the hotel services industry. Two companies improved results in 2018.

Picture 1. Return on equity ratio and revenue of the largest hostels (TOP-10)

Over 10 years, the average values of the return on equity ratio in the hotel services industry have a tendency to increase. (Picture 2).

Picture 2. Change in industry average values of the return on equity ratio of hotel facilities in 2009 – 2018