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2017 Kiev quality hotel market results

06 February 2018 | Tuesday
JLL Ukraine

According to JLL experts, quality hotel market in Kiev continues to rebound. Boryspil airport reported increase in passenger flow by approx. 17% (over 10m arrivals in 2017, out of which 3.2m were transients). Currently, the strategy of Boryspil airport, biggest Ukrainian hub, is to attract more economy and low-cost airlines (at the moment in negotiations with Ryanair and WizzAir), which should additionally boost weekend tourism. Ukrainian low-cost carrier SkyUp should start its flights in April 2018, primarily to most popular recreational destinations in Europe, however some flights would be launched domestically.

In 2017, Kiev saw the first few hotels under international brands enter the market: Park Inn by Radisson Kyiv Troyitska (196 rooms), Mercure Kyiv Congress (160 rooms). Another signal of the market improvement is that IKEA and H&M are scheduled to open their first shops in Kiev in 2018, and this success story is what is needed for international business community to start perceiving Kiev and Ukraine as an interesting and safe destination for investment again.

“In the Ukrainian capital in 2017 quality hotels’ occupancy rate increased by 7.4 ppt, to 47.3%. This is the highest positive dynamics in the past 5 years. Since 2014 the occupancy of quality hotels in the Ukrainian capital has been growing at the rate of 5 to 7 ppt annually, therefore, should in 2018 the average speed of recovery remains the same, the occupancy index in 2018 will reach the threshold of 2012 (52.1%),” - Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS, comments. – “We are expecting a couple more openings to hit the market under international brands here in the upcoming year: ibis Kiev Railway Station (280 rooms) and Aloft Kiev (312 rooms) are scheduled to open in 2018.”

Despite the fact that Kiev hotel market is recovering quickly and stably, it is still highly affected by economic and political situation. ADR growth was very slight in hryvnia – 2.6%, to UAH3,939. Yet, when comparing USD-denominated rates year-over-year, there is a slight ADR drop (by 1.3%), which still allowed RevPAR index in USD to increase by 16.8% and reach USD70 basing on strong gains in occupancy. RevPAR index in hryvnia reported growth of 21%, to UAH1,851. “For ADR to reach the level of 2013 in USD would take another several years. This process is, first and foremost, subject to recovery of the macroeconomic indices.” – Tatiana Veller says.

“The calendar of business and leisure events in Kiev looks extraordinarily full for 2018. There will be international sporting events (Final of UEFA Champions League, for example) and various concerts by world-class musicians (e.g., Imagine Dragons, Thirty Seconds to Mars, Franz Ferdinand, Nothing But Thieves, David Guetta, Bones, etc.) in addition to numerous conferences and exhibitions. This stimulates domestic tourism and attracts foreign travelers, as due to cheap hryvnia, Kiev is still professed as a budget tourism destination.” – Tatiana Veller concludes.

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