Ukraine’s Hotels Not Meeting Demand

KIEV, Ukraine -- While the number of visitors to Ukraine has doubled over the last four years, the supply of affordable, quality hotels remains low and the cost for a bed is well above the European average.

Radisson SAS Hotel Kiev

With exceptions, the Ukrainian hospitality industry has yet to develop the level of service most business travelers come to expect.

Recently, a number of famous international hotel chains opened their doors in Kyiv, but the attractiveness of investment opportunities in Ukraine’s hotel market continues to be constrained by bureaucracy and prolonged delays in the adoption of sensible land­ use law, industry experts said.

“With the growth of the economy, visitors to Ukraine increased in number by more than 50 percent between 2003 and 2007, nearing 20 million annually," said Galina Martynyuk, sales and marketing manager for Senator Apartments. "At the same time the number of hotel beds is less than a quarter of Prague’s.”

Senator Apartments is Ukraine’s first chain of high­quality, full­service furnished accomodations. The company currently runs two complexes, Senator Apartments City Center and Senator Apartments Executive Court, both in the capital.

More than 1,250 hotels operate in Ukraine, Martynyuk said, though these figures should not be misunderstood — only half of these meet European three­ to five­star standards.

Hotel room rates of the same category are much higher in Kyiv than in other European capitals, according to Iryna Yablochkova, general manager of the boutique hotel Riviera on Podol. Thus, Radisson SAS hotel charges 367 euro per night in Kyiv and only 175 euro in Warsaw.

Riviera on Podol opened in Kyiv in May 2007 as the first classic boutique hotel, attracting elite travelers with nightly rates ranging from $375 to $1000.

Industry insiders emphasize the huge gap between high prices and low quality service in Ukraine’s hospitality sector.

Ukrainian hotels usually charge double the price for deluxe rooms, Yablochkova said, because the demand is especially high for the best suites and as a rule the price rarely corresponds to an appropriate service level.

“The demand for high­quality hotel service greatly exceeds the supply, and the shortfall is filled by Soviet­era hotels and private sector apartment rentals,” said Martynyuk, adding that the occupancy level of Kyiv’s four­ to five­star hotels came to 60 percent last year, at the average room price of about 300 euro per night.

“This is among the highest average price in Europe and will not fall until at least a dozen new quality hotels are opened,” she added.

Industry insiders said the Kyiv five­star hotel market is nearing saturation and will reach it when the 10 planned luxury hotels are completed before the EURO 2012 football championship.

“One should not forget that the three­ and four­star hotel segments are also not filled in Ukraine," said Oleksandr Lytvyn, the general director of the elite Premier Palace hotel in Kyiv.

"And if we are talking about attracting a massive amount of tourists to the country, it is this segment that will be satisfying the demand,”

A number of mid­level international hotel chains have announced plans to fill the void in the three­star segment, industry players said.

With a 100­year history and renovated in 2001, the Premier Palace was the first five­star hotel to appear in Ukraine. The hotel was originally designed and built by city architect Lev Ginsburg and was known as a luxurious hotel before World War I.

The two­ to four­star hotel sectors in Ukraine remain thin and are low in quality with a poor range of services, hence international players might successfully fill up these undeveloped niches, industry insiders expect.

“This share will fall into the hands of hotels under the management of international operators, who also charge higher rates but offer a corresponding quality of service familiar to many travelers," Yablochkova said, naming Intercontinental, Ritz Carlton, Hyatt, Radisson as candidates.

Meanwhile industry insiders express concern that further development of the hotel sector in Ukraine will be hampered by problems, particularly the land use codes, red tape and endemic corruption.

“Issues like the hotel registration process; land allotment for construction; numerous compulsory procedures at the fire prevention, sanitary and epidemiologic institutions; and the process of obtaining all the necessary approvals and certificates is tricky, to say the least,” Martynyuk said.

On top of this, the rate of return on investment in the hotel business is a few years longer than in other real estate sectors. This slows down hotel investment, according to experts.

“It constitutes an obstacle for international investors that they do not see many examples of international hotel chain projects that have been successfully completed in Ukraine," Martnyuk said.

"At the same time, they see unclear and complicated conditions for getting all the necessary approvals and difficulties with the purchase of land plots or real estate properties."

Although a low level of competition and growing demand for hotel services is attracting foreign interest, industry players said the chronic problems must receive prompt government attention.

“If we had a favorable investment climate, we wouldn’t have found ourselves in a situation where we lack funds, stadiums and hospitality infrastructure on the brink of EURO 2012,” said Yablochkova.

Source: Kyiv Post


Anna said…
It's much worse in Russia though. Hotels in Moscow/St. Pete are insanely expensive, and the price/quality is pathetic. I have been to Cambodian and North Korean hotels that had cleaner sheets and nicer staff. Ukraine should really do something about its hotels; now that the EU/US residents can go there visa-free, there will be a rising demand for nice and mediately cheap hotel rooms.
petr said…
I was in kiev on business with two my colleagues, and we chose President hotel. I must say that this hotel was one of the best experience I’ve had if comparing money and quality of service. Perfect location, room with all you can ask for, open business center, free wi fi, gym. Service is outstanding, whatever you ask staff’ll do, from taking a taxi to booking restaurants. Very good for business travelers I must admit. It was great experience.