Chumak I. A., Reutskova O. M.

Oles Honchar Dnipropetrovsk National University


Hotel business is one of the most promising and successful business areas in Ukraine. Orientation toward European service standards and vigorous transition to such standards make up the distinctive feature of this sector. Similarly to any other economic activities, the hotel business aims to increasing its income and seeks tools and efficient ways to achieve the desired financial results.

In accordance with the data of the State Statistics Committee, there are 1218 hotel businesses in Ukraine including sanatoriums, rest homes, vacation houses, etc. this number exceeds 3,200. As of March 2006, 930 hotels had been certified. Today accom­modation services in the country are provided by 30 one-star, 43 two-star, 66 three-star, 22 four-star and only 2 five-star hotels. The highest ratings were awarded to the Premier-Palace in Kiev and the Donbass-Palace in Donetsk which are members of the Association of Great Hotels of the World. The latter appeared thanks to investments of the System Capital Management which would like to spread the hotel chain in the future.

The tourist industry as an independent sector of economy is only springing up in Ukraine. In general the investment flow-in forecasts are optimistic but a lot of decisions will depend on the policy of the State on the market. In order to realize the hotel potential of Ukraine the State must take into account the case of such developed countries as Spain, Switzerland, Austria, France, Belgium that earned a significant part of their welfare from tourism, and should:

·  provide tourists with comfortable and safe conditions for visiting Ukraine;

·  undertake an effective mass tourism development policy;reduce the hotel fee;

·  create means to improve and restore sightseeing attractions;

·  amend the land-use legislation;

·  amend the rules of issuing licenses to companies from related branches in order to attract investments into developing new tourist objects.

In the process of establishment the hotel market of Ukraine has encountered a number of problems. One of them is a weak interior competition caused by the lack of free means and high tax rates which makes it difficult to ensure economic stability, maximize profits and increase competitive capability of hosting companies on the hotel services market. Another one is the absence of powerful international hotel chains. The low competitive ability index of hotel services is formed by a price level and service quality.Due to high tax rates (hotel fees) hotels have to maintain high prices. The hotel fee levels are different for different hotel categories in Ukraine. The prices are specified by conditions of competition, state and interaction of the demand and supply.

Currently, Ukrainian hotel market is dynamically developing. Real estate business­men prefer to invest into small and medium hotels for 200-400 rooms able to provide elite class accommodations. For example, the Soyuz Contract Investment (Kiev) acting as a project owner ordered a hotel to be built in 21,Naberezno-Khreshchatitskaya Street. The project is expected tobe rated four- or five-stars and join the international Hilton chain.

The presence of major international hotel chains on the Ukrainian market has considerably increased. Previously such major world chains as Hilton, Mariott, Sheraton, Radisson, Kempinski or Accor used to pay revollitile attention to Ukraine preferring to invest into building hotels in Turkey and Egypt. Now the situation is different. Hilton and Radisson SAS Hotels & Resorts pioneered the way to the Ukrainian market. According to experts, this might make other hotel chains become more active in Ukraine. The French hotel network Accor might also enter this country next year after 5 years of researching the market.

According to researches, investors around the world have become more active in the hotel segment of commercial real estate, and first of all this is true for the hotel market of Ukraine. A number of reasons contribute to positive changes and the following of them are believed to be the most important:

·  the existing hotels are not able to meet the current demand;

·  the demand for world level departments is permanently growing;

·  the segments of the real estate market with the minimum repayment rates are already met;

·  the capital of investment companies has increased;

·  Ukrainian economy is relatively stable;

·  foreign policy of the country has changed;

·  the EU borders are coming closer and Ukraine is being gradually integrated into the European and world community;

·  the investment and business climate inside Ukraine has improved;

·  business is getting more active inside the country;

·  the frequency of business visits from abroad is growing;

·  the tourist attractiveness of Ukraine has increased.

The rules of compulsory certification of hotel services will be updated soon and the amendments are being prepared now. The new certification rules will definitely contri­bute to the development of the hotel business as well as to improvement of accommo­dation services. And this in turn is destined to ensure stability and prosperity of the hotel business in Ukraine.

Ukrainian hotel market has attractive prospects and is one of the most promising in Eastern Europe. The number of existing hotels in Ukraine is far from being enough to satisfy the demands of the country with high investment attractiveness, rich history and diversified tourist opportunities. The hotel business in Ukraine is a promising challenge for at least four reasons:

·  First of all, business activity in the country is increasing which inevitably causes growth of ‘business traveling’ both inside the country and from abroad.

·  Secondly, according to world practices, higher incomes (population’s incomes are now increasing in Ukraine) make people travel more and subsequently stay more in hotels.

·  Thirdly, having declared its intention to integrate into European structures Ukraine is becoming more attractive for Europeans (in this particular case for European tourists).

·  Finally, hotel fees are expected to be reduced and unified. Thus, the compulsory payments by hotels to the budget are going to decrease.