Oleksii Abasov: Hotel market in Kyiv shows growth dynamics
Positive dynamics of the hotel business is facilitated by a more stable geopolitical situation and partial restoration of Ukrainian economy
Growth dynamics of the hotel business in Ukraine is recovering. Tourists, who were earlier scared off by military activity and economic instability in the country, are returning to Ukraine. According to data of the Ministry of Economic Development and Trade, in the first half of 2017, 6.3 million tourists entered Ukraine, which is 8.7% more than in the same period of 2016. At the same time, Ukrainian companies increase their business activity, which also has its impact on MICE segment development of the hotel business, in particular, in Kyiv. In the first half of 2017, the average market load of Kyiv hotel facilities was 45.8%, which was the highest rate since 2013. We asked Aleksey Abasov, manager of rebranding process conducted by the multidisciplinary group Wisher Enterprise, which initiated opening of a hotel of Mercure network in cooperation with AccorHotels, what factors had a positive impact on dynamics of the hotel business development and how to keep the industry attractive for tourists.
Aleksey Abasov, manager of rebranding process conducted by the multidisciplinary group Wisher Enterprise
The hotel business in Ukraine is experiencing a new stage of growth and development. What is the reason for that?
- More stable geopolitical situation and partial restoration of Ukrainian economy contribute to the positive dynamics of the hotel business. Another factor of no small importance is that Kyiv hosted Eurovision and conducted it very decently. Tourists realized that Kyiv is far from the negative image that various media tried to show. I would like to see a lot more such major events, and then the hotel business market will grow dramatically. But these should be comprehensive efforts of the government and local authorities, so that the number of business and cultural events increased.
What can you say about the occupancy rate and the average tariff?
- Occupancy rate also starts growing, which will inevitably result in the average price growth. The average tariff in Kyiv hotels grew by about 2.4%.in the first half of 2017.
Several hotel projects are planned to be opened in Kyiv in the near future. Isn’t this too much taking into account the situation that is far from the best possible?
- Definitely not. On the contrary, sound and proper competition will serve as a good impact for the hotel business development in Kyiv. Competition is the best incentive for the hotel services development, operations upgrade, service improvement and employment of professionals. Of course, international brands will greatly affect operation of local hotels, they will absorb their clients, but in general the market will benefit from this. As I already mentioned, entrance of international brands will give a signal to foreign investors that Ukraine can and should be invested into. This will be beneficial for both the country and the economy, and for business in particular.
Positive trends that can be observed throughout 2017, at the same time do not mean that new players can easily enter the Ukrainian hotel market. The competition level is high, but “beginners” are not afraid of this. So, in September 2017, AccorHotels Group, the world leader in hospitality industry, introduced the first hotel under Mercure brand in Ukraine including the largest congress center in the capital with area of more than 5,000 m2. How do you plan to win the market?
- The new congress hall opened up as a result of rebranding and reconstruction of the Cosmopolite Hotel and was presented under the name of Mercure Congress Centre. The “congress-hotel” format is the newest and the fastest-growing segment of the hotel market all over the world, and emergence of Mercure brand in this format is a milestone both for the capital and for the whole country. The project is complicated and capital intensive, but such intensive investments of AccorHotels group are related to the confidence that Ukraine has great prospects in the development of business tourism, thus a format combining hotel business and conference services will be much in demand on the hotel market of Ukraine. Total capacity of Mercure Congress Centre is up to 2,000 people, and the modern technological solutions make it possible to hold events of any format from business events to weddings and banquets, designed not only for 10 but also for 1,500 guests. Our main goal is to provide a quality product by combining a set of services: accommodation, conference services, catering as well as a wide range of additional options. This is a long-term strategy for establishing a creative and intellectual place for progressive business people that can meet all their demands in the business sphere, starting from the working space to conduct of various events, including corporate ones.
Business is always the initiator of progressive changes, introduction of global trends. But one man, no man. What kind of support could the government provide for its part?
- I would really like to see the establishment of a ministry for development and attraction of investments in tourism in Ukraine. There is a huge potential and natural opportunities for the development of the hotel industry throughout the country, from alpine to nautical tourism. Of course, this requires the desire of all interested people, because simply establishment of a ministry or an agency will lead nowhere. Full range of activities is required for a dynamic development: reduction of the tax burden on business, introduction of specific privileges to attract investment, and so on. I think that this will still inevitably happen in the near future, but many progressive changes should be introduced now. For example, nowadays it is already possible to work on attracting various kinds of events that are very important for Ukraine at this difficult time. After all, they will create positive image for the country on the international scene, as by conducting major business and cultural events the country demonstrates that it is safe, that Kyiv is one of the most beautiful cities in the world, that we have here high business activity and broad opportunities for business development, that tourist potential of Ukraine is not yet fully implemented and is still developing.