The occupancy of hotels in Kyiv in January-June 2019 decreased by one percentage point (p.p.) compared to the same period a year earlier and amounted to 48%, the press service of Jones Lang LaSalle consulting company in Ukraine (JLL) has reported. “The first half of this year was marked for the hotel market of the Ukrainian capital by a fall in average operating indicators both in U.S. dollars and hryvnias. Against the backdrop of the very successful first half of 2018, when the Champions League final was held in Kyiv and both occupancy and average tariffs rose, the results this year leave much to be desired. In particular, for the first time since 2014, there was a drop in occupancy between January and June,” Tetiana Veller, the head of the hotel business department at JLL, said.
According to JLL, the average rate for staying in hotels of the upper segment in January-June 2019 decreased by 15% compared to the first half of last year, to $153, the figure in the middle segment decreased by 11%, to $69 per room. At the same time, the occupancy of expensive hotels fell to 43%, while mid-range hotels raised occupancy by 1.5 percentage points, to 53%.
JLL experts explain the decline in the figures with the martial law introduced at the end of 2018, the holding of presidential elections in the country, as well as a significant increase in last year’s performance in connection with the Champions League final in Kyiv.
“Compared to a more “standard” year 2017, market indicators still rose,” the report said.
According to JLL forecasts, in the second half of the year it’s worth expecting an equalization of indicators in connection with completion of the transfer of power, as well as determining the course of the new government.
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.
The occupancy of Kyiv hotels in July-September 2018 was 52.4%, which is 4% more than in the same period of 2017, such statistics are presented in the study by CBRE Ukraine international consulting company (Kyiv).
“The key performance indicators of the hotel market in Kyiv continued to recover in 2018, especially thanks to the results in April, the month of the UEFA Champions League 2018 final. Thanks to a record high figure in April, when the average occupancy in the market reached 59.4%, the average occupancy rate by the end of the third quarter of 2018 amounted to 52.4% (2.1 p.p. more year-on-year),” CBRE Ukraine said in a report.
According to the report, by the end of the third quarter of 2018, the average price of a room was $106, which is 0.3% higher than in 2017. At the same time, the average yield of a room was 55.5%, which is 4.6 percentage points more compared to the same period of 2017.
According to CBRE Ukraine experts, the increase in profitability of rooms in luxury, upper upscale, upscale and upper midscale hotels was due to a rise in the average price, while the growth of profitability in economy and midscale hotels was due to a high occupancy.
CBRE is the largest consulting company in the real estate field with over 450 offices in the world and about 80,000 employees. The company’s shares are traded on the New York Stock Exchange.
The Ukrainian office of CBRE was opened in January 2008 and is part of the company’s affiliate network.
The gross occupancy of logistics real estate in the Ukrainian market in January-June 2018 increased by 43% compared to the same period in 2017 and amounted to approximately 100,000 square meters, according to statistics given in the study of CBRE Ukraine international consulting company (Kyiv). According to the CBRE Ukraine survey, the share of occupancy of warehouses by large retailers was 58%, by light industry, pharmaceutical and medical companies some 26%. About 62% of rental transactions were associated with relocation or extension.
The share of large transactions (more than 10,000 square meters) was 23% and was represented by leasing 20,000 square meters by Comfy in the Raben warehouse complex near Kyiv, as well as 20,000 square meters by Eldorado with the move to RLC Fozzy Distribution Center.
According to CBRE Ukraine, the vacancy rate in the first half of 2018 decreased by 2 p.p. and amounted to 4%.
The declared rent rates in A class warehouses at the end of the first half of the year were in the range of $4.6-6 per square meter a month. Effective rental rates in A class warehouse complexes ranged from $3.4 to $5.2 per square meter a month, while in B class warehouse complexes they stood at the level of $2.5-3.4, where the upper limit has grown by 13% since the beginning of the year. As a result of fluctuations in the exchange rate, rates in U.S. dollars were unstable, while most of the deals were signed in hryvnia.
Occupancy of Kyiv’s hotels in the highest peak of the tourist season (May-August) grew by 1.6 percentage points (p.p.) in the upscale segment, to 47% and by 5 p.p. in the midscale segment, to 56%, the press service of Jones Lang LaSalle (JLL) in Ukraine has reported. According to JLL, Average Daily Room Rate (ADR) in the upscale hotel segment in Kyiv in May-August 2018 grew to $175, which is 10% more than in May-August 2017, while Revenue Per Available Room (RevPAR) grew by $13, to $85.
“May was the month when hotels were occupied the most, when the UEFA Champions League final took place. This event… allowed hotels of the upscale segment to reach occupancy of 59% with the increase of ADR by almost 40%, to $230,” Head of the Hotels & Hospitality Department at JLL Tetiana Veller said.
According to the JLL report, in the midscale segment of the Kyiv’s hotels there was a decrease in ADR by an average of 10%, to $80. At the same time, due to the increase in the occupancy to 56%, RevPAR in this segment increased to $45.
According to the consulting company, Kyiv hotels in the eight months ending August 2018 showed an increase in occupancy by 1 p.p. in the upscale segment and by 2 p.p. in the midscale segment, the growth of ADR – by $15 in the upscale and $2 in the midscale.
