2010 is a year of stagnation of Ukraine hotel business. Though, in the second half of the year the situation was improved. The Ukrainian President elections influenced the situation greatly. At the beginning of the year investors and owners were looking forward to the new laws and regulations. Their expectations were justified.
August, 11th 2010 Law “About amendments made to some laws of Ukraine for the purpose of development and preparation of hotels for the Final Part of the European Football Championship 2012 in Ukraine” came into the force. The main point is exemption from income tax of 3-5* hotels which will be reconstructed, repaired or put in operation before September, 1st 2012.
The aforesaid law may be applied to a small number of hotels. Therefore the situation will not be changed radically. Favorable tax rate will support unfair competition on the hotel market of Ukraine. According to state authorities, only seven of the announced hotels in Kiev will be ready for the European Football Championship.
Many owners refuse to apply for classification since the procedure is too complicated. The authorities decided to amend the procedure of certification, having registered in Verkhovna Rada the draft law №7293 on “Making Amendments to the Law of Ukraine “About Tourism”. Hotel stars Union classification system launched by HOTREC members in Prague in 2009 should be taken as a basis. New classification standards should assess objectively both facility requirements and the quality of services. According to the draft law certification will be obligatory. The new draft law aims to reveal those hotels which are in the shadow.
So far, the tendency to delay hotel project deadlines is observed. This tendency is likely to remain in 2011 due to the fact that financing of the frozen projects is partially resumed. In 2010 no large high quality internationally branded hotels were opened in Ukraine. All hotels opened in 2010 are mini-hotels or small hotels. Opening of the four Reikartz hotels was planned for winter of 2010: Reikartz Medievale Lvov 2010 December, 30th (first announced for 25th), Reikartz Pochayev 2010, Reikartz Dnepropetrovsk 2010. Moreover, Fairmont Grand Hotel Kyiv was scheduled to open in 2010. Recently the opening has been postponed until Fall 2011. None of the announced hotels function so far.
For 2011 opening of the following hotels is planned: Reikartz Kharkov, the first stage of Reikartz Odessa, Sofitel Kiev, Park Inn Dnepropetrovsk, Ramada Donetsk, Four Points by Sheraton Zaporozhye. Opening of the IBIS Kiev Centre was planned for 2010 – 2011, is postponed for April 2012. The majority of the announced hotels will be put into operation later.
Average occupancy rate of the hotels in Ukraine made up 45-55%. Considering the fact that the occupancy rate on weekends was 30% down from that on weekdays, some hotels offered special packages and reduced prices.
According to the data of the State Service of Tourism and Resorts of Ukraine in the Q1 2010 comparing to the same period of 2009 tourists inflow from the EU countries increased for 20%, and from the CIS countries declined for 7%.
Since tourist inflow to Ukraine increased the hotel occupancy rates should stably increase and this will stop damping.
According to the data of State Statistics Committee of Ukraine capital investment inflow into hotel business of Ukraine increased by more than US $ 100 million in 2010 compared to that in 2009. In the first half of the year investors and international operators were studying the market conditions. As it was expected, investors continued to concentrate on the major cities.
Global economy conditions have great influence on Ukrainian market development. Economy starts to come out of a recession, though there is a considerable way to go for complete recovery of the economy. Moreover, it should be mentioned that the government facilitates investment attraction for hotel industry of Ukraine. No radical improvement is expected. Still positive dynamics and stable growth are observed.