Factors of hotel business development in Ukraine

The development of one or another field depends on a number of factors. The hotel industry isn’t an exception. Enumerating factors that have influence on the development of hotel industry, it is necessary to differentiate the factors, resulting from the place of hotel sector in economy system and specific conditions of this industry functioning in every concrete country. The main group of factors is an economic one (general condition of economics, financial stability, maturity of hotel sector, investment attraction, mean income per head, unemployment level, a rate of exchange of domestic currency, taxation level, interest on bank credit, existence of strong competition on apartment and flat market etc.). The national measures of Ukrainian economy create a picture of stable economic development. According to official statistics the growth of GDP for the period from January to April, 2007 in comparison with the same period of past year is 7,9%. The part of service sector in GDP grows steadily, it is 38%. The positive dynamics of enumerated indexes tells on the sphere of hotel services. In 2006 the volume of services realization, afforded by hotels and other places for short-period residence in Ukraine, was UAN 2 milliard 47 mil (in market prices), that is 35% higher than in 2005.

Together with this the important role in the development of industry regarding the internal consumer play social and social-economic factors: distribution of population according to income level, education level, culture, ethnical needs of people, way of living, age structure, ratio of urban and town population (town population is more mobile), crime rate, tourism development, increasing need of rest because of stress load and other. Special place among these factors occupies the increase of business tourism as the result of business activity both national and foreign entrepreneurs. Increasing number of business negotiations and their organizational level as the result rise of investment attraction of Ukraine, stimulate the development of first class hotel complexes, which include in itself providing negotiation process infrastructure. It must be mentioned, that expenses of businessmen are 3 times more than ones of tourists. And as marketing researches show, in contrast to other ways of traveling, business tourism provides the capacity of hotel organizations during all the year, what is especially important in the off-season period. At the times of any economical recession and crisis business tourism sphere suffers less then others, and sometimes even increases its volume. On average a service of corporative business tourists gives to hotels 40-50% of income and greatly favours increasing of their competitive capacity. Such indexes are typical to business-hotels with developed infrastructure of corresponding services.

A special influence also has a demographic factor. In this aspect tendencies of changing the number of population, birth & mortality rates, migration phenomenon are especially important. The number of population, its consistence and structure influence on formation of hotels consumer segment, as well as its preferences. Nowadays in Ukraine exists negative tendency of changing the number of population and high migration activity.

The important feature of hotel services, that distinguishes it from industrial ones, where machines are used, is the high participation of people in the production process. The involvement of factor influences on heterogeneity, quality changeability and concerning this lack of standardization, what creates one of the most important problems in development of hotel services. To solve this problem service standards (a complex of obligatory rules, which are called to guarantee established quality level of all operations) are brought in hotel sphere. The main problem in Ukraine nowadays is the absence of qualified staff. Although more than hundred universities give the education in the “Hotel business” sphere, level of knowledge doesn’t correspond to reality. A perfect solution is practical training, it is desirable to realize it in one place but on different services, so that a student will be able to choose a department in which he will work, and the hotel provides itself with qualified staff, familiar with hotel structure and able to work from first days of their career.

Determining influence on hotel sector development has legal sphere. Through adoption of legislative enactments, regulating actions of individuals, dealing with hotel business, regulatory legal base is created: tax legislation, labor laws, rules of fire safety, licensing, hygiene-and-sanitary conditions etc. Problems, which are connected with questions of issue of land can be pointed out into separate group. Heterogeneous situation from this point of view has been shaped in Ukraine. In Kiev the deficiency of building sites and difficulties in their documentary legalization process can be observed. In the other regions land can be bought cheaper, many questions are solved easier. The most interesting big cities from development perspective are – Odessa, Harkov, Donetsk, Dnepropetrovsk, Crimea, as one of the Ukrainian resort centers.

Some influence on structure of tourist stream, and consequently on hotel services market, has political situation in the country. Ukrainian political sphere in 2007 is characterized by unpredictable events, that tells on external contacts with the other countries. For example, in holiday season of 2007 in the Crimea the decrease of tourists from Russia and increasing number of European ones is expected. It is connected with the fear of Russian tourists that the frontier between the Ukraine and Russian can be closed and foreign passports will be needed.

Besides the general factors a number of specific ones also has great influence on economy of hotel sphere. In Ukraine future organization of football European championship in 2012 stimulates greatly the development of hotel sector. To satisfy the requirements of UEFA 16 five-star hotels have to be built in Ukraine. Following the conditions of football federation only in the capital are to be 5-10 five-star hotels (now exist 2) and to 30 four-star hotels (now - 8). Cities hosting the championship will be – Kiev, Dnepropetrovsk, Donetsk and Lvov. Also Odessa and Harkov are considered. According to Uriy Galushki nowadays hotels in Kiev can accommodate 15.5 thousand people and speaking about the regions their existing hotel services level and potential number of rooms can’t satisfy requirements. For example, Donetsk can offer only 19 hotels, Lvov – 38, Dnepropetrovsk – 40. The most deficit category in all cities is three and four star hotels of 150-200 rooms with developed conference service and cost under $ 100 per day.

Thus, during the next years activity of investment in Ukrainian hotel sector is expected. During 2 last months the appearance in Ukrainian market of international operators (Accor Group, InterContinental Hotels Group) was announced. Also foreign operators, which have occupied certain positions in the sphere of hotel services in Ukraine, become more intense in the real estate sphere in searching the places with the purpose of reconstruction rearrangement them in new hotel complexes.