Business news from Ukraine

PRICES IN ODESA HOTELS FALL TO HISTORIC LOW

The cost of staying in three- and four-star hotels in Odesa has decreased by half compared to the same period in 2019 and averages UAH 650 per day ($24), founder of Ribas Hotels Group Artur Lupashko has told Interfax-Ukraine.
“Today, the average price in three- and four-star hotels is UAH 650 per day ($24) in Odesa. This is an unprecedented low rate over the past 20 years. In the same period last year, such a room cost at least twice as much and was three times more expensive in 2013,” Lupashko said.
According to his estimates, the expected decline in gross income and net profit of hotels will be 20-40% in 2020 compared to the indicators in 2019.
“The positive dynamics can continue in cottage-type hotels and recreation centers, which have been in high demand since April and have increased in price in some cases up to 50%. Some of them have already been booked for the whole summer by guests who, as a rule, spent the summer in Cyprus, Spain, Italy,” he said.
However, hotels do not count on guests from other countries in 2020.
“The vast majority of Belarusian tourists were in the resort budget hotels. According to information available today, guests from Belarus will not be allowed to Ukraine this year. Most likely, these may be guests from Moldova and Turkey in the second half of the year. However, the share of such tourists will be minimal and will not have significant influence on the market,” the expert said.
Ribas Hotels Group collaborates (management and booking) with 25 hotel and restaurant complex facilities (beach and ski hotels, hostels and recreation centers), two of which are its own. The company’s portfolio includes Wall Street Hotel business hotel, Bortoli city mini-hotel (all are located in Odesa), Richard hotel complex (Hrybivka), Kyparys park hotel (Yuzhne), Seazone mini-hotel (Karolino-Buhaz), a chain of youth hostels Friday and others.
The total number of rooms of the chain was 1,234 rooms in various forms of cooperation at the beginning of 2020.
Ribas Hotels Group provides integrated management, exclusive booking, franchising and design services.
Ribas Hotels Group LLC was established in 2017. According to the unified register of legal entities, individual entrepreneurs, director and owner of a 100% stake in charter capital of the company is Lupashko.

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RESORT HOTELS IN UKRAINE EARLY CLOSE SUMMER SEASON

Resort hotels in the south of Ukraine early finished the summer tourist season in 2019 at once after holidays on the Independence Day, which is several weeks earlier than in 2018, Director General of Ribas Hotels Group Managing Company Artur Lupashko has told Interfax-Ukraine.
“This year, resort hotels closed the season early. It ended after the weekend, when was the Independence Day, since the hotels in the south were almost completely empty as early as August 26. Nobody believes in September. Many teams are simply tired and decided not to take risks, although last year we “held on” until September 14-16. We counted on the weekends and gained. Odesa residents finally decided to relax by the sea for the weekends. Therefore, we had full occupancy in the first two weeks of September at the weekends,” he said.
According to preliminary data, this year, the occupancy rate in the hotels of the Ribas Hotels Group increased by an average of 5%. The highest occupancy was observed in August (91%), followed by July (81%), and the lowest rate was seen in June (46%).
“The results of the summer tourist season of 2019 were influenced by many factors. This is cool weather in the beginning of summer, then fluctuations in high temperatures, algae blooms in the sea, elections and much more. We would say that before the election, guests carefully planned their holidays,” Lupashko said.
According to him, about 60% of guests booked rooms a week before arrival, about 15% – two weeks, and only 5% – a month before the planned date of rest.
“People began to save on everything during their holidays. According to the tourist portal Booking.com, 60% of users use the room price slider as the first filter. The most popular price range for guests on the Ukrainian coast is from UAH 500 to UAH 1,500 per night for a room,” Lupashko said, adding that while doing this, guests take into account what is included in this price: breakfast, lunch, spa treatments, and other things.
In this regard, the Ribas Hotels Group is considering a proposal to remove services such as breakfast, extra cleaning, SPA treatments for guests of resort hotels. Thus, the average guest check will be significantly reduced and will correspond to the budget of the guest for the trip.
Ribas Hotels Group provides integrated management services, exclusive booking, franchising and design.
The total number of rooms in the network as of July 2019 was 1,424 rooms.
Ribas Hotels Group LLC (Odesa) was established in 2017.
According to the unified public register, Lupashko is the head and owner of a 100% stake in the charter capital of the company.

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OCCUPANCY OF HOTELS IN KYIV DECREASES TO 48%

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.

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UKRAINIAN HOTELS NOT OBLIGED TO COLLECT TOURISM FEE UNTIL LOCAL AUTHORITIES APPROVE RATES

Ukrainian hotels are not obliged to collect tourism fee from their clients until local authorities make a decision to approve the fee rates, Deputy Director of the Tax and Duties Department of the State Fiscal Service of Ukraine Stanislav Beskydevych has said. “The tourist fee is a local tax and is charged in accordance with the requirements of the Tax Code, but taking into account the decisions of local governments that implement the mandatory elements of the tax,” Beskydevych said at a roundtable in the parliamentary committee on family issues, youth policy, sports and tourism.
He recalled that the travel tax is charged in accordance with Article 268 of the Tax Code, which was amended at the end of 2018. In particular, the tax base has been changed, tax rates have been differentiated depending on the consumer category, and the possibility of an advance payment of the tax has been introduced.
At the same time, the taxman said that in order to implement the law, local authorities should set rates, determine the possibility of an advance payment or the absence of this possibility.
“While local councils have not established specific elements of the tax rate, in fact this tax is not paid, it is zero. We cannot collect tax without a decision of local councils,” Beskydevych said.
According to him, for its part, the State Fiscal Service must publish a modified form of tax declaration, which will be submitted in the first quarter of 2019.
“Today we have already developed draft changes. They are undergoing internal coordination. In the near future, they will be presented for public discussion, after which they will be sent to local self-government agencies,” Beskydevych said.

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TERM OF HOLIDAYS IN HOTELS NEAR BLACK SEA THIS SUMMER DECREASES TO 4 DAYS

The average term for booking rooms in hotels of the southern region of Ukraine after the summer 2018 season fell to four days from seven a year ago, Ribas Hotels Group Executive Director Andriy Marenchuk has told Interfax-Ukraine. “If we evaluate the overall [summer] season, we can say that it was not easy… The booking period in the southern region was significantly reduced, the early booking period also. The average booking duration for this season is four days, and last year it was seven day. This is one of the main factors for assessing the tourist market,” he said. According to Marenchuk, a decrease in this indicator indicates a low level of the marketing product of most resort hotels in the country.
He said that Karolino-Buhaz, Hrybivka, Ochakiv, Zatoka and Koblevo became resorts of the “last minute,” that is, they are chosen as the last resort if tourists could not go to a foreign resort. “This is the worst marketing product of the existing ones. It is bought last, because other factors did not play: for example, there was not enough time to go to Egypt or Turkey for 10 days, so we went to Zatoka for three days. Why there were queues at the Moldovan border on Thursdays and Fridays? People from Moldova went for a weekend. These are not tourists from Belarus or Ukrainian guests who came for five to seven days,” the expert said.
He also said that in the struggle for a guest who prefers to come to Ukraine for a long time, domestic resorts lose to foreign ones, primarily because of the lack of a developed hotel infrastructure. “If in Turkey a hotel is built on average with 300 rooms, then in our region such a facility is considered very large. And if a hotel has a small number of rooms, then it is unprofitable to build a pool, install water slides and other entertainment infrastructure,” the expert said.
At the same time, Marenchuk reported on increased competition with Carpathian hotels. “We have a rival with rapidly developing tourism like the Carpathians. The mountains are considered not only from the perspective of the winter resort Bukovel. Many Carpathian hotels have begun to use the summer season. Today only the sea saves us [the Ribas Hotels Group],” Marenchuk said.
In turn, the founder of the company Ribas Hotels Group, Artur Lupashko, said that the operator’s hotels showed a consistently high load this year. “Loading of our summer hotels this year has fluctuated at the level of 68%. Traditionally, the most active months [July and August] showed 76%. June sank a little at 58%. For owners or investors of the southern region, this means profitability of resort hotels of six to eight years and the return of 12-16%,” he said.
Ribas Hotels Group (Odesa) LLC was established in 2017. According to the unified public register, Lupashko is the head of the group and holder of a 100% stake in the company’s charter capital.

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OCCUPANCY OF HOTELS IN KYIV IS 52.4% IN Q3, 2018

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.

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