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Roadside Hotels of Ukraine - Reality

Mass automobilization, highway development and absence of quality services on Ukrainian roads results in investment attractiveness of roadside hotels and motels in Ukraine. Ukraine is situated on the crossroad of Eurasian traffic streams, its territory makes up 5,7 % of Europe’s territory and 0,44 % (43-d place in the world) of the world’s one. Ukraine has a very important role in Silk Road revival.

Currently it’s hard to call the number of roadside hotels. Mostly they are not licenced and officially registered. At the moment the market is halflegal and absolutely chaotic. Most hotels don’t have parking, without mentioning other necessary conveniences: bathroom, phone, TV-set. There is nothing to say about drivers’ and their fellow travellers’ or cars safety.

With every year Ukrainian automobilization level, huge cargo &passenger traffic, operation of international and Ukrainian transport companies increases. New roads are being built, highways construction has started. According to statistics, volume of Ukrainian car market made up 9 billion EURO in 2008, average cost of sold cars exceeds 20 thousands EURO.

Passenger’ traffic for January-May 2009

  Passangers transported Passengers turnover
Mill. In % by January-May 2008  Mill.Pass.Km In % by January-May 2008
By all kinds of transport 3076,2 87,9 51248,2 90,3
By automobile 1678,2 93,9 22929 94,7

Mostly, so-called “roadside hotels” are roadside restaurant complexes with 5-10 rooms often without main necessary conveniences or comfortless, barracks with outdoor conveniences occupied by haulers.

International highway standards foresees roadside complexes construction every 100—150 km. However many other factors such as: intensity and type of traffic, communications availability and closeness, tourist attractiveness of regions should be taken into consideration in Ukraine. Main concept of this business is right geographical location of the object, though Ukrainian businessmen and owners are not used to work according to standards. In most cases, plot selection is based upon intuition and own mind. Absence of marketing research, construction standards leads to low-quality projects in this segment. These projects can’t be classified as failed due to absence of competitive supply. Without having better choice travelers had to stay there.

Ukraine has paradoxical situation. The road Moscow-the Black Sea (approximately 1.500 km) takes 2 daylight hours. There are only not more than 10 hotels on this distance. People sleep in cars at every State Road Traffic Safety Inspection post. There are hundreds of such cars on the road. But not only tourists need comfort and safety sleep, Ukrainian-Russian traffic corridor’s potential makes up to 90% transit of all CIS countries.

Building, reconstruction and complete repair of Ukrainian roads is one of the ways to fight the economic recession contributing intercontinental trade.

By the end of 2011 it is planned to build and reconstruct 700. 47 km of new highways with total length 1900 km. Roadside hotel complexes construction is the part of the State Target Program on Euro 2012

Location of hotel investment object Concise description of investment project Total cost of the project Mill.USD
1 Volyn region. Ratne district v.Domanove Building up of autoterminal” Domanove” with the complex of buildings(hotel, café, filling station, car wash, administration, custom warehouse, car repair, parking, refinery facilities) 1.039
2 Chernihiv region. Ripkivskyy district, v. Novi Yarylovychi Building up of autoterminal ”Novi Yarylovychi” with the complex of buildings (hotel, café, filling station, car wash, administration, custom warehouse, car repair, parking, refinery facilities) 1.039
4 Volyn region. Ratne district v.Domanove Building up of autoterminal ” Domanove” with the complex of buildings (hotel, café, filling station, car wash, administration, custom warehouse, car repair, parking, refinery facilities) 0.6
5 Chernihiv region. Ripkivskyy district, v. Novi Yarylovychi Building up of autoterminal ”Novi Yarylovychi” with the complex of buildings (hotel, café, filling station, car wash, administration, custom warehouse, car repair, parking, refinery facilities) 0.45
6 City Rava-Ruska street. Konovaltsa 27 Building up of autoterminal ” Rava-Ruska” with the complex of buildings (hotel, café, filling station, car wash, administration, custom warehouse, car repair, parking, refinery facilities) 0.39
7 City Haysyn Vinnitsa region Building up of car service ceter “ Haysyn ”with the complex of buildings (hotel, café, service center, car wash, administration, warehouse, parking, refinery facilities) 0.97
8 City Krasnoperekopsk, ARC, St. Taurian 2 Reconstruction of car service center ”Krasnoperekopsk” (hotel and café construction, service center re-equipment) 0.65
9 Rivne region. v.Kvasyliv Reconstruction of car service center ”Rivne ” (hotel and café reconstruction&re-equipment, parking enlargement up to 40 parking places, filling station re-equipment, car repair re-equipment, car wash and refinery facilities construction) 0.8
10 225 km Kyiv-Lviv Building up of car service ceter “ Novograd Volynskiy» with the complex of buildings (hotel, café, service center, car wash, filling station, administration, warehouse, parking, refinery facilities) 0.65
11 400 km Kyiv-Yagotin Building up of car service ceter “Porovsk» with the complex of buildings (hotel, café, service center, car wash, administration, warehouse, parking, refinery facilities) 0.12
12 Chernivtsi region. Glyboksky district, v. Porubne Building up of car service ceter “Porubne» with the complex of buildings (hotel, café, service center, car wash, filling station, administration, warehouse, parking, refinery facilities) 01.мар
13 City Khmelnitsky Building up of car service ceter “Khmelnitsky» with the complex of buildings (hotel, café, service center, car wash, filling station, administration, warehouse, parking, refinery facilities) 0.39
  Transcarpathian reion,v. Chynadievo, st. Garden 92 Rreconstruction of car service center ”Chynadievo” (hotel, café, administration, parking)  
  City Kyiv, Pr Nauki 97 Reconstruction of car service complex “Kyiv ”(hotel, café, cervice center, automobile sales centre, printing office, administration, warehouses)  
  Uzhgorod district., v.Solomonovo St.  European, 1 Hotel complex construction(hotel, café, parking(only cars), refinery facilities, car wash (car& lorry)  

Source: Ukravtodor

This market niche is free that is very rare in the current situation. And hotel chain have a great opportunity to become a national leader among roadside hotels and motels in Ukraine.

UAN devaluation resulted in increase of foreign travelers inflow as the tour cost for European citizens is  up to 57% lower in Ukrainian currency. Also an important fact for Ukrainian tourism is visa free entry to Ukraine for representatives from EU countries, USA, Canada and Japan.

Roadside hotel complexes and road service development would help to increase the security level of Ukrainian roads, employment level, to give opportunity to medium-sized business and enterprises development, involved in functioning of these complexes. Moreover, it would help to develop bus and car tourism bringing million dollar income in European countries.

Investment attractiveness of this business-tourism should interest investors as such projects have government support in Ukraine.