Revival in Kyiv hotels strengthens

“In 2016, there were several positive developments in the macro-economic, political and social environment of Ukraine, that allowed the tourism in the country to experience positive dynamics,” said Tatiana Veller, the head of JLL’s hotels and hospitality group for Russia and the CIS. “The capital city is experiencing a gradual recovery in terms of the flow of tourism, assisted by the continuing fall of the hryvnia against most hard currencies, which is of course not a good thing for economy in general. Kyiv has become a budget-friendly European travel option for most foreign tourists,” she added.

“Based on the year-end results for2016, we can finally declare that the quality Kyiv hotel market has gone through its worst and begun a recovery. The occupancy level rose for the second year in a row, to nearly 40 pct over the year, after being 34 pct in 2015 and 29 pct in 2014,” added Tatiana Veller.

ADR has also grown in UAH (up 14 pct to UAH 3,800) on a year-on-year basis. This means a 128 pct cumulative increase in the price for a night’s stay at a hotel in local currency on the last stable year for the Ukrainian capital, 2013 (when it was just slightly below UAH 1,700). This hike in ADR has also allowed revenues per room to grow by 34 pct compared to 2015 to UAH 1,500.

The USD fall in ADR almost came to a stop (only 3 pct down this year, to USD 150), while the USD RevPAR showed a healthy recovery, rising 14.6 pct to USD 60 per room.

There have been no additions, according to JLL, to the quality room stock in the city; however, 2017 should see the opening of the 192-room Park Inn on Troitskaya street. This will be the first new international brand to open in the city since Hilton in early 2014. This shows that investors are starting to regain confidence in this market, although this is mainly being done with local money at the moment.

As the market makes gradual progress towards its previous position in terms of the relevant indexes, hopefully developers and financial institutions should soon feel confident enough to unfreeze projects previously put on hold, and obtain loans to further stimulate the development of the sector.

“We can see many reasons why Kyiv hoteliers and investors are likely to be optimistic about 2017. First of all, there is a Eurovision song contest, which will take place in the city in May. Additionally, the group A games of Men's World Ice Hockey Championship will be held in the Ukrainian capital at the end of April. This means a busy spring for Kyiv hoteliers in the quality room segment, which is the traditional choice for international travellers,” explained Tatiana Veller. “Looking slightly further ahead, the 2018 UEFA Champions League final will be played in Kyiv in May next year. So it seems as though a page has been turned, and the only way is up from here for the hospitality market of the main Ukrainian city,” she added.

The stabilisation of the economic situation in the country and the revival of business activity should also boost the demand from corporate individual travellers and MICE events. An additional boost for the hotel sector in both Kyiv and the wider country could come from a simplification of the visa regime with China: Chinese tourists travel cheaply, but in large groups, allowing hoteliers to increase revenues through higher occupancy.