Ukraine’s hotel industry begins to growth

The performance of Ukraine’s hotel industry improved for the second consecutive year in 2017, which resulted in the return of international investors to the country with the first new projects since the beginning of the economic crisis in 2014.

Key to that recovery is the hotel market of Kiev, Ukraine’s capital, according to Tatiana Veller, head of hotels and hospitality for Russia and CIS at JLL’s Hotels & Hospitality Group.

Kiev hotels have “been quite persistent on continuing along the path to recovery,” she said. “The occupancy has almost climbed back up to the normal for Kiev levels of 48% year-to-date for the period from January to November, 8% higher than the previous year so far.”

Both Kiev City Hall officials and analysts said the city’s hotels strongly benefited in 2017 from the Eurovision Song Contest, which the city hosted in May.

“The international, (meetings, incentives, conventions and exhibitions business) and cultural events are starting to fill up the city again, bringing in big groups and guests to the hotels, and tourists seem to return, thus driving the positive changes in operational results,” Veller said. “We (expect) the year will close with a gain in occupancy of about 7% to 8% versus 2016.”

For full year 2017, Kiev hotel occupancy rose 13.7% year over year to 50.9%, according to STR, parent company of Hotel News Now. The 2017 increase followed a 19.9% occupancy increase in 2016 over 2015.

In the first half of 2017, 6.3 million tourists visited Ukraine, according to the country’s Ministry of Economic Development and Trade. The total number of visitors is an 8.7% increase over the first half of 2016. Over the course of 2016, 13.6 million tourists visited Ukraine, which was a 5.6% increase.

Dmitro Velichko, the spokesperson for the ministry, said Kiev is one of the most “underestimated European capitals” in terms of tourism. The number of visitors in the city most likely will keep growing in the next several years, he said, primarily thanks to the visa-free regime with the European Union and the growing number of the tourists coming from Asia/Pacific countries, led by China and Vietnam.

This will no doubt lead to improving operational performance of the hotel industry and the rising demand for new hotels, Velichko said.