Mr. Nikolay Mayger People will always be travelling either on business-trips or just for rest and therefore they would stay in hotels. One of the formulas of success is simple – to provide good service for reasonable price. Currently the number of such hotels in Ukraine is crucially low. In perspective only networks of mini-hotels can satisfy demand of costumers who are not the rich ones. As usual there are many small private hotels along with hotel-networks in any European city, but situation in Ukraine is different. For example, overall capacity of mini-hotels in Kiev makes extremely low share in the hotel sphere of the city while in London it makes 15%. There are 600 mini-hotels in Paris, 450 – in Prague.
Looking at the situation in major cities of Ukraine guests of mini-hotels can be divided into two classes: business-costumers and tourist-costumers. According to the data of State Frontier Service of Ukraine 9.5 million foreign tourists have visited Ukraine in the first quarter of 2007. That is 27% (or 2 million people) more than in the same period of 2006.
There are certain changes in the structure of tourists flow comparing to 2006.Part of private tourists has increased from 83 % in the first six months of 2006 to 92% in the corresponding period of 2007. At the same time part of the organized tourist groups decreased from 6% to 4%.
As it has been mentioned before there are just few mini-hotels in Kiev, such as "Vozdvigenskaya", "Domus", "Jintama", "Kamelot", etc. and Kiev needs at least dozen of new hotels with overall capacity not less than 2 500 - 3 000 rooms.
Ukrainian cities with more than 1 million of population are in the same situation as Kiev – they all need good hotels. Demand for new hotels can be counted by dozens or even hundreds. The hotel market is at the early stage of its development but has very promising future. Roads, bus or train terminals, hotels represent not only the city itself but the country in whole.
There is also a need for more mini-hotels in resort areas. More than 100 of new middle-class hotels have appeared in 2006 most of all in Lvov region: Slavskoe, Vorokhta, Rozvuch, Oryavchik. Hotels "Al’tana" and "Boykivs’kiy dvir" in Rozvuch have personal ski-elevators and indeed comfortable rooms. Hotels "Mal’va", "Vivat" and "Zveniv" have been opened in Oryavchik. Many hotels worked for several years, have good reputation and proved they are the most wanted ones. They are: "Zakhar Berkut", "Natali", "4 sezona", "Monte Pogar" in Slavskoe, "Khatki Ruslani" in Yablunitsa, "Zahid" in Polyanitsa near Bukovel. Skiing became popular among Ukrainians with average income. As the result it creates high demand of hotels with good service for reasonable price in Carpathians. Carpathian ski-resorts have been much developed recently and demand for place to stay increased by 30-40 % comparing to the last year. Most popular are Slavskoe, Yaremcha and Dragobrat ski-resort areas.
Looking at the south of Ukraine we see that number of tourists in Crimea decreased. The reasons for that are high prices. There are not many descent hotels in Crimea and therefore no competition in price among them. Hotel "Semeiz", pension "Lidia" can be good examples of mini-hotels in Crimea.
Considering that it is relatively new, but rapidly growing sphere in hotel business, mini-hotels today are quite different. They include rooms of different capacity: starting from single rooms and up to quad ones. Usually they have bathroom, TV, Internet, Conditioner, mini-bar. Interior is usually aimed to create feeling of warmness and comfort. Many of them provide better services than famous hotel networks do.
One of the popular models of creation of mini-hotels is buying several flats in apartment-building including at least one on the ground floor. The ground-floor flat is used for reception and main entrance. It requires about 3-4 millions USD to make a 15-25 rooms mini-hotel in center of a city. The payback period is 3-5 years which is shorter comparing to the big hotels. Besides, mini-hotels usually cooperate with tourist agencies. It allows them to stay fully booked while big hotels have problems with it. If there is building boom for such hotels in following couple years competition in this sector will be high. Obviously in this case prices will go down and at the same time services will be improved.
Ministry of Culture and Tourism of Ukraine initiates preferences and discounts to builders of mini-hotels in reserve areas of Ukraine. Territories of such reserve areas of Ukraine as Khortitsa, Kachanovka, Khersones and others permits to build mini-hotels. Ukrainian cultural heritage government service will define permitted borders for mini-hotel infrastructure development. These hotels will be owned privately. There are 14 national reserve areas in Ukraine.
Ukraine and Poland will be hosting European Football Championship in 2012. This event positively contributes to long-term outlook of hotel sphere. Finals of EURO-2012 will be in Kiev, Dnepropetrovsk, Donetsk and Lvov. Kharkov and Odessa are in reserve.
The parliament of Ukraine on the 19th of April passed a law "Regarding organization and conducting of final part of European Football Championship in 2012 in Ukraine". This law defines following simplified procedures: visa procedures, issuance of work-permits, custom supervision procedures, exchange and transitions of foreign currency during European Championship. Also there are additional breaks for business defined in the law. Many foreigners who come to Ukraine to take part in preparations, building, investing and business organizing for EURO-2012 long time before will contribute to augmentation of tourist rates and therefore hotel demand.
According to international regulations there should be not less than 10 hotel places for every 1000 citizens. There are 47 million people who live in Ukraine. Therefore there should be about 470 000 hotel places in the country. But today there are only about 55 000. The amount of offered places is 8.5 times lower than regulations require.
Main tendency of development in hotel sphere of Ukraine is increase of interest by international hotel networks that search for Ukrainian partners and aim to realize investment projects in hotel sphere of Ukraine.
Mini-hotels with 20-30 rooms that offer high-quality services represent the sector of hotel business that has highest pen-up demand. This type of hotels should be interested to investor because payback period is relatively low – 3-5 years. Minimal amount of investment is also relatively low and starts up from 100 000 USD. Figures show that there is high potential for development of mini-hotels in Ukraine including investment projects of Ukrainian businessmen.
Nikolay Mayger is the founder and the president of Mayger Consulting Company, a Ukraine-based firm established in 2000 by highly skilled team of business and finance experts. The company is a member of the International investment forum "Ukraine-Germany", as well as the founder of the audit company "Ukrugaudit" Ltd. He serves as a member of the Ukrainian Union of industrialists and businessmen, and represents the Ukrainian Business Assistance Network and the Federation of employers of Ukraine. Mayger Consulting Company is an affiliate of the Fin Group. Mr Mayer serves as the Chief of the supervisory board of Commercial Bank, and is President of the Regional Agency of the Ukrainian National Committee of International Chamber of Commerce. He can be contacted at +380-482-343-333 or commerce@maygerconsulting.com
