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Reality of Hotel Business in Ukraine. Figures & Facts

(Based on the speech of Dr. Nickolay Mayger on hotelforum, 2008, in Munich www.hotelforum.org )

Geographical and geopolitical location

  • At 603,700 km (233,074 sq. mi) and with a coastline of 2,782 km (1,729 mi), Ukraine is the world's 44th - largest country. It is the second largest country in Europe (after the European part of Russia, before metropolitan France). It is a transit country due to advantageous location and extensive aviation, railway, sea and vehicle network.
  • Ukraine owns 5% of the world’s deposits of minerals, the total value is US 11 trillion $.
  • There are 73 ths. rivers, more than 20 ths. pools, and more than 3 ths. lakes.
  • Ukraine is maritime state. It is washed by the Black sea and the Sea of Azov. The Black sea coastline is 1540 km. 

Economic factors

  • In January-September 2008, the real GDP was 106,9% as compared with the relevant period of the last year.
  • During 2007, export of foreign trade in goods to EU countries made up US 13.8 trillion $ and increased in comparison with 2006 for 15,1%; correspondingly import – US 22.9 trillion $ and 37,2%.
  • The volume of direct investments from EU countries by 01.01.2008 made up US 22.9 billion$ which make up 77,8% of the total investment to Ukraine (01.01.2007 – US 16.3 billion $, 75,2%).
  • On the 16th of May, 2008 Ukraine became the 152nd member of World Trade Organization.
  • In 2007 the Ukrainian Stock Market recorded the second highest growth in the world of 130 percent. According to the CIA, in 2006 the market capitalisation of the Ukrainian stock market was US 42.87 billion$.

Catalysts of dynamical development of hotel market in Ukraine

  • Broad “geography” of tourists flow is favorable for Ukrainian Hotel Business Development (for 2007 the foreigners from 205 countries visited Ukraine), one third (33.8%) – the tourists from CIS countries. The most frequently visits: from Germany - 81.7 ths. people, Poland - 69.4 ths., USA- 64.4 ths., Italy - 32.6 ths., Turkey -  31.9 ths., the United Kingdom of Great Britain and Northern Ireland - 28.2 ths., France - 27.8 ths., Austria - 17.8 ths., the Netherlands - 14.6 ths., Czech Republic - 13.5 ths., Israel - 12.5 ths., Canada - 12.0 ths.
  • In 2007 the volume of provided hotel services for the foreigners was $105.9 US, or 75.4% from the total volume.
  • During six months 11.3 Mil tourists visited Ukraine that is 1.8 Mil people more as compared with the relevant period of 2007.

The rating of 10 main countries of entrance tourism:

    People Rate 6 months of 2008/ 6 months of 2007
  Total 1E+07 100% 18,30%
1 Russian 3E+06 25,90% 12,70%
2 Poland 3E+06 24,80% 21,80%
3 Moldova 2E+06 17,50% 16,10%
4 Byelorussia 1E+06 11,80% 33,50%
5 Rumania 6E+05 5,70% 33,90%
6 Hungary 6E+05 5,10% -4,00%
8 Slovenia 3E+05 3,00% 59,30%
7 Germany 96069 0,90% 15,60%
9 USA 59345 0,50% 9,40%
10 Azerbaijan 36463 0,30% 3,60%
  Total for 10 countries 1E+07 96%  

Source: the State Service of Tourism and Resorts of Ukraine

  • According to the index of tourism competitiveness, prepared by the World Economic Forum in 2008, Ukraine occupies the 77th place among 130 countries of the world.
  Position The place (among 130) Point (from 1 to 7)
1 Political rules and standards 100 4
1 Foreign property in the country 123  
1 Property rights 118  
1 Economic influence for foreign direct investments 123  
1 VISA requirements 81  
2 Environmental sustainability 83 4
3 Safety and Security 93 5
4 Public health and hygiene 17 64
5 The priority of Tourism and Travel 96 4
6 The infrastructure of air transports 98 2
7 Infrastructure of  surface transport  82 3
7 Quality of the roads 116  
7 Quality of the railway infrastructure 31  
8 Number of Hotel rooms 104  
8 The availability of big rent-a-car companies  56  
8 The availability of cash dispensers 33  
10 The competitiveness in Tourism and Travel industry according to the price level 115 4
11 Human resources 100 4
14 Cultural resources 84 2
14 The number of International fairs and exhibitions 70

Source: the World Economic Forum

The Number of Hotels and other part-time residence

  2000 2003 2004 2005 2006 2007
In total 1308 1218 1192 1232 1269 1420
Hotels 886 776 777 788 807 812
Motels 19 23 15 17 15 19
Hotel-Office Centres 10 7 7 8 8 6
Campings 10 9 7 6 4 9
Youth and ski resorts 20 26 26 35 35 42
   383 377 360 378 400 532

Source: the SSC of Ukraine

Pricing Policy

  • Ukrainian market of hotel services just goes on the stage of its development and it’s characterized by low level of market saturation and high demand. For example, the average fulfillment of Kiev hotels is 58% and in the downtown – 75-80%. Low competition allowed hoteliers to overstate prices.
  • Free niche of hotel business, due to the lack of rooms, was occupied by apartments, houses for rent, real estate agencies, private brokers and by owners who rent 24-hour apartments. The part of apartments, real estate agencies, private brokers specializing on the renting which are working lawfully does not exceed 15%.The volume of this real estate market is estimated in more than 30%. The rental rate for single-room is $ 60-145, two- room - up to $ 190.
Rates for:  Radisson SAS Hotel, Kiev (4 star hotel) Radisson SAS Centrum Hotel, Warsaw (5 star hotel) Radisson SAS Hotel Charles de Gaulle Airport, Paris
Sun Aug 10, 2008 Wed. Nov 5, 2008 Sun Aug 10, 2008 Wed. Nov 5, 2008 Sun Aug 10, 2008 Wed. Nov 5, 2008
Standard Guest Room 241,67 EUR 440 EUR 100 EUR 202 EUR 100 EUR 300 EUR
Bed & Breakfast 266,67 EUR 470 EUR 120 EUR 202 EUR 124 EUR 326 EUR
Business Class Room - breakfast included 325 EUR 490 EUR 150 EUR 175 EUR    
Junior Suite - breakfast included 366,67 EUR 540 EUR 165 EUR 185 EUR 250 EUR 350 EUR
One Bedroom Suite - breakfast included 500 EUR 700 EUR 185 EUR      

Source: the Rezidor Hotel Group

Till 2008, there are only three hotels of International Hotel Chains: Hyatt Regency Kiev, Radisson SAS Hotel, Kiev, Rixos-Prykarpattya.

Considering economic potential, geographical location and climatic conditions, Ukraine has great advantages to become the major tourist centre of Europe!