Kyiv's hotel market rebounds
For Kyiv’s hoteliers, there's good times and bad times in the market.
The May 26 UEFA Champions League final football match, which drew thousands of foreign guests, confronted price gouging. It was a rare moment of beauty for a market that suffered a massive drop in tourists and businesspeople following the 2014 Euromaidan Revolution that drove President Viktor Yanukovych into Russian exile.
Neither feast nor famine today, demand is rising and supply is staying flat, giving the city’s hoteliers an opportunity.
“It’s not about taking advantage, I don’t see it that way,” said Levent Cengiz, general manager of the newly opened Aloft Hotel in central Kyiv. “It’s pretty normal. You can sell a room for maybe 20,000 euros.”
Aloft opened in February, and belongs to Starwood Hotels, a subsidiary of conglomerate Marriott International. The hotel added 310
rooms to Kyiv’s market targeted at, as Cengiz said, a younger, millennial demographic.
“There is an opportunity here, but we’re not forcing anybody to pay this money. It’s there. Take it or leave it,” Cengiz said. “It’s the free market.” Rebound But Champions League finals are few and far between. Other big events that drove tourism included Eurovision 2017 and the Euro 2012 football championships.
Still, hotel occupancy rates are recovering, said Alexandra White, an executive at STR, a company that conducts market research in the hospitality sector. “Kyiv is gaining back the image of a safer city, and is quite attractive, not only for tourists but also businesspeople,” White said.
Average daily room occupancy rates hit 50.9 percent in 2017, up from 44.8 percent in 2016 and 49.9 percent in 2013.
Hospitality association Hoteliero’s CEO Andriy Skipyan offered a less sanguine view, saying that “we still remain behind the majority of European capitals, where occupancy is between 60–70 percent on average.”
And thanks to the hryvnia’s massive devaluation, prices have dropped since 2013.
According to data provided by STR, the average price of a hotel room in Kyiv in 2013 was Hr 1312 ($164) per night, according to the exchange rate of eight hryvnia to the dollar.
But in 2017, the average price has changed to Hr 2,706 ($103) per night, a drop of around $60 from the 2013 average.
According to Michal Rao, an STR analyst who covers the Kyiv market, “It's not unusual for the hotels to be charging much higher rates during these events.”
“In countries like Russia and Ukraine it’s much more visible because the (regular) rates are generally lower in these markets.”
In spite of the improvements in the country’s image and the steady growth in demand and occupancy rates, almost no new hotels are planned to be built.
Aloft Kiev was restarted at the end of 2016 after being put on hold by Starwood in 2014, Cengiz said.
“The idea was to open the hotel in 2013,” he said. “The events of 2014 in Ukraine, in Kyiv postponed the opening once again, so we were (only) able to achieve it in February of this year. There was uncertainty with the political situation in the country, so it was on hold.”
The Park Inn by Radisson Kyiv recently opened, as did the Ibis Kiev Railway Station hotel.
“Today Kyiv has a deficit of middle-market hotels,” said Skipyan, adding that some brands — like Best Western — are interested in the market as a space for “further development.” Best Western only had one project in Ukraine’s Sevastopol, a city in Ukraine’s Crimea currently occupied by Russia.
But most of the city’s recently opened hotels were initially planned before the events of 2014, suggesting a drop in interest lately.
“There is not much supply coming into the market, so that’s partially driving occupancy,” said White. “We don’t see huge additions in the pipeline, it’s rather flat.”
Rao said that corruption perceptions are still preventing new investment.
“There’s been a huge thing about corruption, bribes and things like that,” Rao said. “With all of that in mind from the past, it’s still hard to change minds of people to convince investors to come into the country and build new hotels and invest into the local industry.”
The 310-room Aloft Kiev hotel opened in February, in time to enjoy an industry on the rebound. (Oleg Petrasiuk)
A hotel room in the Aloft Kiev. The 310-room hotel is managed by Marriott International. The is centrally located near the corner of Basseina and Esplanada streets, near Olimpisky Stadium and the Guliver shopping mall and business center. (Oleg Petrasiuk)