Business news from Ukraine


Four-star hotels in Kyiv in 218 systematically reduced Average Daily Room Rate (ADR) to boost occupancy and competition with five-star hotels, which committed to increasing prices. “In February 2018, compared to other months, was the highest ADR, and by the end of the year, with the exception of May (hosting the final of the Champions League), it gradually decreased,” Partner at DEOL Partners Maryna Rymarenko said at a press breakfast.
According to DEOL Partners, the average occupancy of four-star and five-star hotels in Kyiv in 2018 decreased slightly: to 47.7% from 47.6%. At the same time, the five-star hotel occupancy rate decreased to 45% from 46%, in four-star hotels it increased to 60% from 47% in 2016.
“In the four-star hotel segment, there was a significant increase in occupancy, but it occurred along with a substantial decrease in ADR, which dropped to $113-115. That is, it was necessary to significantly lower prices in order to become more competitive. This also indicates that now the market dictates the conditions,” Rymarenko said.
According to her, ADR in five-star hotels in Kyiv in 2018 increased to $195 from $178 in 2016. “However, considering the 45% occupancy, it is not economically viable to build a five-star hotel today,” the expert said.
At the same time, according to her, due to the increase in occupancy in the four-star segment and the increase in prices at five-star hotels in 2018, Revenue Per Available Room (RevPAR) increased by an average of 8% in the market compared to 2017.
“On average, it was $78: for the five-star hotels it was $89, for the four-star hotels it was $70. Compared with other countries, it is catastrophically low to talk about the prospects of opening new facilities next year. The return on investment is very long. Stable occupancy of 64% in 2012 helped to keep a balanced ADR and on average for the market it was $164.
The main clients in DEOL Partners hotels are business tourists: they make up 90-95% of the total number of guests, she said.
“We see an increase in the number of guests from Israel, Turkey, and always a significant share is occupied by Americans and Europeans, among which No. 1 is the United Kingdom, while Belgium and France are second… But if earlier we felt the movement of business for the years, at some period of time the bankers, at another period agrarians, then lawyers – that is, it was possible to distinguish a trend in the market, now it is very difficult to outline and understand what business is coming in. That is, we cannot say what particular segment of the economy is growing and how business travel will transform tomorrow,” Rymarenko said.
According to the expert, Kyiv needs a strong mix of hostels and cheap hotels.
“There is not enough a strong mix of hostels, two-star and three-star hotels in the market that could attract more tourists to Kyiv… One can single out only Dream Hostel, which is categorized on the international market and has already entered the Eastern European market. This segment can have a fast payback period – from three to five years. However, it should be located in the center of the city, and the cost per square meter is growing now,” Rymarenko said.
According to NAI Ukraine, the number of rooms in Kyiv in 2018 increased by 7% and amounted to 12,983 in 110 facilities. According to the current number of rooms, Kyiv exceeds the figures of such European capitals as Bucharest (10,000) and Sofia (8,500), but still lags behind Warsaw (15,800) and Budapest (21,800) which is the number one capital in Eastern Europe in terms of visits of guests.
Investment and development company DEOL Partners has been operating in Ukraine since 2005.
The company is a developer and operator of the first Ukrainian network of apartment hotels – Senator Hotels and Apartments – and the first Ukrainian design-hotel 11 Mirrors.

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