Hotel real estate market
Supply at the hotel real estate market
By this moment one of the main features of the hotel business market in Ukraine is that the number of hotel accommodations per thousand of residents is absolutely different in different cities and varies from 0 to 15.
According to the State Tourist Administration the number of hotel accommodations in the capital of Ukraine per 1 thousand of residents is 6. For comparison, throughout Ukraine this index is 2, in Dnepropetrovsk - 2, in Moscow – 9, in Paris – 38, in Europe on the average – 14–18 hotel accommodations. In Kharkov this index is 2 hotel accommodations, that is, at the average level in Ukraine.
According to the State Tourist Administration the country needs 32 hotels of four-five star level in large cities and historical centers. As compared to Russia and to the countries of Eastern Europe, the segment of five star hotels in Ukraine is insignificant.
As of January, 2008, due to monitoring of hotel segment in Kharkov, information about 23 hotels was collected. The total accommodation resources of the explored hotels made 1 487 accommodations.
 |
Fig. 13. The structure of accommodation resources in the hotel industry in
Kharkov
Junior suite
De Luxe
Apartments
Single-bedded rooms
Double-bedded rooms |
The State Enterprise (SE) “Kharkovstandartmetrologiya” has recently certified 21 hotels in Kharkov.
According to it two hotels are certified as two-star hotels, these are “Gloria” and “Ahtamar”.
Seven hotels are certified as three-star hotels: motel “Druzhba” , “Kievskaya”, “National”, new building of hotel “Kharkov”, “Mir”, “Mercury” and “ZS-club”.
“Cosmopolite”, an art-hotel in combination with the business-center “Telesens”, is certified as four-star hotel in Kharkov, (it was opened at the end of 2005 at Academician Proscura Street).
In June 2006 the hotel “Chichikov” was built in the center of the city, which is positioned by operators as a hotel of «****» category; however this information was not officially confirmed by the statistics bodies.
In summer 2007 a new business-hotel “Aurora” was built in the center of the city. In October the business-hotel “Aurora” received the certificate confirming its high level of service and comfort. The hotel obtained the «****» category.
A complete list of all hotels described further in this survey is given in the table below.
Table 1. Hotels of Kharkov (as of January 2008)
¹ |
Name |
Number of
accommo-dations |
Number
of
beds* |
Number
of
beds** |
Address |
1 |
"ZS Club" |
11 |
11 |
16 |
10, 2d Lesoparkovyi lane, |
2 |
"Aurora" |
37 |
37 |
75 |
10/12, Artyoma st. |
3 |
"Gloria" |
80 |
93 |
116 |
57, Plekhanovskaya st. |
4 |
"Jungles" |
26 |
26 |
54 |
19-á, Kirghizskaya st. |
5 |
"Metallist" |
210 |
366 |
369 |
92à, Plekhanovskaya st |
6 |
"Nart" |
12 |
12 |
24 |
47, Pestelya st. |
7 |
"Rosinka" |
8 |
8 |
16 |
52, Balakireva st. |
8 |
"Slaviya" |
22 |
36 |
36 |
52, Poltavskyi shlyakh st. |
9 |
"Solnechnyi motel" |
21 |
42 |
42 |
Belgorodskoe shosse |
10 |
"Chichikov" |
52 |
68 |
85 |
6/8, Gogolya st. |
11 |
"Express" |
68 |
106 |
106 |
1, Privoksalnaya sq. |
12 |
"Ahtamar" |
6 |
6 |
12 |
38, Krupskaya st. |
13 |
"Aeroport" |
23 |
29 |
29 |
16, Aeroflotskaya st. |
14 |
"Dynamo" |
22 |
27 |
29 |
3, Dinamovskaya st. |
15 |
"Druzhba" |
105 |
155 |
180 |
185, Gagarina av. |
16 |
"Kievskaya" |
64 |
73 |
101 |
4, Kultury st. |
17 |
"Cosmopolitan" |
29 |
36 |
38 |
1, Academician Proskura st. |
18 |
"Mercury" |
35 |
52 |
70 |
29, Kharkov divisions st. |
19 |
"Mir" |
209 |
315 |
392 |
27à, Lenin av. |
20 |
"National" |
73 |
98 |
116 |
21, Lenin av. |
21 |
"Start" |
33 |
49 |
61 |
18, Plekhanovskaya st |
22 |
"Tourist" |
148 |
210 |
255 |
144, Moscow av. |
23 |
"Kharkov" |
193 |
234 |
295 |
7, Ploschad Svobody sq. |
|
Total: |
1487 |
2089 |
2517 |
|
* - considering single-bedded rooms in De Luxe and Junior suite rooms
** - considering double-bedded rooms in De Luxe and Junior suite rooms
|
Fig.14 The structure of hotels distribution as to their categories – according to certification
Not certified |
|
Fig.15. The structure of hotels distribution as to their categories
Lower Higher Middle |
Hotels were divided into three categories: higher, middle and lower.
Demand at the hotel estate market
Tourism is considered to be the basic motive force of development of hotel industry. The number of foreigners interested in visiting Ukraine and Kharkov has been increasing every year, however the requirements to the quality of tourist services are not yet met.
Among economic and socio-political problems which hinder development of tourism in Ukraine on the whole and in Kharkov in particular, it is possible to name the following:
- insufficient development of infrastructure of tourism: shortage of tourist offices, guide-boards, tourist maps and guide-books in foreign languages;
- absence of advertising of Ukraine abroad as a country attractive for tourism and advertising of separate events.
However, in spite of all these difficulties and problems, hotel industry remains stable enough. Such objective and constantly operating factors as annual growth of the number of domestic and foreign travelers, rise of population welfare of countries, development of external economic relations of Ukraine and the region, general growth of use of services and others are contributing to its successful development.
The main factors of growth of demand on hotel services are closeness to European Union and preparation for “Euro-2012”, development of international business relations and improvement of business climate in the country.
Presently there are 5 construction projects of hotels complexes in Kharkov which are on different stages of development. But it should be noted that in spite of the perspective for increase of quantity of accommodation reserves, the gap between demand and supply will still retain a positive value.
The analysis and the forecast of capacity index of hotel infrastructure of the city showed in 2012 that the deficit of accommodation reserves would remain in all segments of this market (see the Table).
Table Market indexes of hotel business as of 2012 (number of accommodations)
| Category of hotel |
Potential supply (projects included) |
Predicted demand (tendency of increasing the number of guests is taken into account) |
Requirements of UEFA to accommodation of guests and participants of
EURO-2012 |
Consolidated figures of demand |
Deficit of accommodation reserves |
4****-5**** |
633 |
680 |
807 |
1487 |
854 |
2**-3*** |
724 |
1430 |
1000 |
2430 |
1706 |
1* |
645 |
848 |
12500 |
13348 |
12703 |
The number of accommodations is determined with the accepted assumption of one accommodation for two guests.
In order to satisfy the present index of deficit in the city it is necessary to build at least five hotels of higher category, nine hotels of middle category and about sixty hotels of economy category by 2010.
The level of profitability of hotel business in Kharkov during the last five years varied in the range of 35-40% per year.
Profitability of hotels construction projects is 12-16% with the period of investment return 6-8 years.
In conclusion it should be noted that the market of hotel business in Ukraine and in Kharkov is in the phase of active growth and is one of perspective sectors of investment activity for both national and international investors. Cancellation of hotel fees in Ukraine from January 1, 2004 and cancellation of visa regime for citizens of EU countries are one of the main reasons that influenced growth of attractiveness of this sector.
Because of geographical location and whether conditions Ukraine has great chances to become one of the major tourist centers of Europe.
