Forecast of Hotel Business

The Economic Recession did not Avoid Ukrainian Hotel Market

To European Football Championship 2012 in Ukraine about 200 new hotels should be built. However for today the pace of hotels reconstruction and building does not coincide with requirements of UEFA.

Considering the situation on European and world credit markets the plans of local and foreign investors have been corrected and as a result realization of many projects decreased. Some of the projects which are on different stages of readiness were frozen and the terms of another were moved to a later period. State program to Euro-2012 could never be implemented due to absence of influence and control of the Government for implementation of approved projects. In this regard according to the Deputy Prime Minister of Ukraine Ivan Vasunyk the Government intends to elaborate the program of hotel investors’ support for Euro 2012 which foresees the possibility of repayment of the part of credit rate for funds from the State budget.

In the first half of this year there was record decrease of hotels occupancy and profitability on Ukrainian market. Over the same period in 2008 the occupancy of central hotels declined from 80-95% to 45-50% and the profit per room - almost for 13%.

As expected in the first half of this year investment activity will be weak. Investors will continue to concentrate on the major cities especially hosting Euro-2012.

During economic recession the owners will refrain from selling their assets (projects or existing hotels) until the sale will be enforced due to necessity of refinancing, financing attraction in the other uncompleted projects or any other reasons.

However this situation can cardinally be changed with coming of international investors, management companies which will choose right strategy of development, bring their standards with consideration of conditions and specifics of Ukrainian market.