Market analysis
Ukraine has great potential in hotel-restaurant sphere because this business has being developed for last 2 years and foreign developers take interest in it. Indeed, hotel restaurant business dynamics can be assessed as very positive.
Unfortunately, supply is lower than demand. Hotel quantity index per 1000 per. in Ukraine (in compare with European countries) tends to be the lowest one.
DIAGRAM. UKRAINIAN ROOMS QUANTITY PER 1000 PERSONS IN COMPARE WITH EUROPEAN COUNTRIES.
Data in the diagram assert the hotel sphere in Ukraine has great potential. Private investment promotion into hotel business and international networks appearance seem to be the question of civilize market growing and developing due to the world dogmas.
Crucial moments in hotel estate development in Ukraine became the following:
Annual session of European Bank for Reconstruction and Development in Kiev in 2015;
Arranging final part of UEFA football championship with the Republic of Poland in 2012. Host cities: Kiev, Donetsk, Dnepropetrovsk, Lvov, Odessa, Kharkov.
Hotel market in Ukraine is attractive for international agents because of good proposition absence and increasing demand. Taking into account implementation of planning projects, demand for high-quality hotel service will be higher than supply during the nearest 10 years, and capacity level of existing hotels is expected to be rather high. If we talk about tendency, successful hotels will be sold to foreign investors.
Economic insecurity in the country influences hotel market. Companies (which used to use five-star hotels) are saving money now and send their co-workers to cheaper hotels. Business trips quantity as well as corporate events, conference (which are organized in our country) in Ukraine have been reduced.
In general, hotels try to reconstruct themselves and find new ways to lure customers. The good news is business activity return in 2015.
According to the destination management statistics, as of 20th May 2016 Kiev had 12 019 hotel rooms, 1449 of them are five-star rooms, 2428 – four-stars rooms, 4139 - three-stars rooms, 891 – two-stars rooms, 175 – one-star rooms. Other 2937 rooms are hotels without category.
The question regarding hotel market saturation should be discussed using two views. If we talk about current economical and political situation in country, rooms’ number is not big but too big. If we estimate this segment through the prism of room security in compare with European capitals, certainly, Ukraine is able to grow.
The most demanded categories in the hotel market are four and three-star hotels. Foreigners traditionally demand high-price rooms; there are a lot of such rooms. Inner tourist is oriented on middle price, good location and good service, but there are not a lot of good affordable hotels.
Thus, there is increase of Ukrainians as hotel clients. There are almost 50% of Ukrainian visitors in some of the hotels.
Major problems of hotel market in Ukraine.
1. Small percentage of famous multinational hotel corporations. Hotel market in Ukraine is really attractive for international agents due to good supply and growing demand. Nowadays Ukrainian market has such hotel operators as «Radisson SAS», «Rixos», «Hyatt International», «Hilton», «Inter Continental». Significant obstacle ifor foreign investors is difficult to get permission in local power structures as well as government policy which is not assigned to make investment climate better. 2. There is no good proposition in the country – old-fashioned material and technical resources, need to reconstruct hotel fund, low service level, lack of competent personal. 3. There is no attractive investment climate in the country. During creating of investment climate which would assist material and technical resources attraction into hotel sphere the crucial requirement is taxation reduce and guarantees to ensure property. The question regarding taxation reduce must be discussed through the prism of interest rate reduce for three major tax types – value added tax, income tax, charge on payroll tax that let it reduce part of expropriate income and will stimulate interest in business development in hotel sphere. 4. Political instability in the country. 5. Some difficulties in bank sphere – Ukrainian commercial bank can loan entities and persons at high percent that is not good motive to develop place of accommodation material and technical resources. 6. Difficulties with land uptake, deficit of free ground areas, especially in the capital and big cities. 7. Hotels in three-stars segment and lower are unoccupied in Ukraine and are introduced by enterprises with too low service level and low range of services. Advantageous directions and market development tendency in Ukraine can be considered the following: 1. Active development of small hotels and private complexes. This is connected with wishes which are formed by modern tourists: they want hotel to be not only room for temporary living but they want to fill homelike atmosphere, uniqueness that is one of the identities of independent hotels. Competitive advantage of private hotel is private approach to each client, i. e. they use personal approach, create home atmosphere far from home. Segment advantage of mini-hotels seems to be rather short payback period and rather small investments. 2. The most required will be the cheapest rooms – hostels. There is no competition, but demand is huge because most of the visitors are detailed staff, students, low-cost segment of tourists who need minimal comfort and overnight stop, and they can’t spend money in “stars” hotels. There are more the ten hostels in Kiev. To compare: more then 100 hostels work in Kharkov. Their owners are mini-hotel owners, pension and apartment house. домов. 3. Perspective advantage may become apart-hotels market which has not get good development in Ukraine. World widely apartments tend to be furnished hotel rooms which combine home coziness and hotel service accept. Apart-hotels tend to be located in expensive districts. Apartments can be offered in short-term and long-term rent as well as sold. All over the world it is normal to purchase hotels in property, but in Ukraine the same projects are on realization step. Nowadays Kiev has 5-7 objects, which belong to apart-hotels.
4. Due to domination of businessmen coming to negotiate in Kiev and other big cities there is demand in VIP hotels, for example, congress-hotel ( with big conference halls, meeting rooms and event halls) located not far from offices and business centers. 5. As far as market being full of 4-5-stars hotels there is a shift of priority development direction into the middle level projects – 2-3-stars hotels and less categorical hotels.
As a conclusion there is need to mark that tourism industry in many countries was being from during the decades, and now it is developing, create new working places for millions of people that influence government economy in positive way. In our conditions tourism has to become driving power to from market engine of companies running and flow of funds into budget. That’s why we should take into account creation of advantageous conditions to lure foreign investors in order to develop and improve hotel market in Ukraine. Upgrade of legislation, stabilization of political situation, improving of economical conditions will assist success.
Let us view rest places in summer season in Karpaty (competitive environment) taking into consideration the fact that hotel complex will be located in Bukovel.
Slavskoe – hotel “Perlyma Karpat”
Hotel “Perlyna Karpat” in famous mountain small town Slavskoe
You are offered to be located in one of two bedroom buildings in the room which coincides with your wishes. All the rooms have shower, toilet, TV, communication, blow-dryer, fridge, comfortable furniture.
Yaremche SPA-hotel Яремче "Romantik SPA Hotel"
4-stars SPA-hotel "Romantik SPA Hotel" let you have a great rest in summer season in the mountains according to high level service. The hotel is located in beautiful part of Karpaty – sunny Yaremche.
Welcomings Kosov – hotel “Maetok Sokilske”
European level hotel “Maetok Sokilske” is a great choice for comfortable summer rest, active entertainment and great conversation with mountain nature. It is located iint National parl “Guzulshina. ”
Guests may enjoy the following services: beautiful summerhouses, SPA (massage, pilling, sauna), billiard, rafting, paintball, playgrounds, kalian, colorful “kolyba”
Bukovel hotel “Fomich”
Rooms are equipped with modern furniture, TV and telephone communications. Guests may enjoy free parking and Internet, sauna, sunny terrace near pool.
Great Polyanitsa – hotel “Medvezhy dvor”
As you can see, there is a little competition. If you choose correct development strategy, flexible price policy and high service level, there is a possibility to develop own hotel business.