August 10, 2017

Tourism returns to Kiev: H1 2017 quality hotel market results

Tourism returns to Kiev: H1 2017 quality hotel market results

“The Ukrainian capital keeps delivering positive news with the gradual recovery of the quality hotel market,” said Tatiana Veller, Head of JLL Hotels & Hospitality Group, Russia & CIS. “In May 2017, during the Eurovision Song Contest, quality hotel occupancy approached 55 percent, compared to 41 percent in May 2016. Notwithstanding the fact that the June result was a little bit more modest, it still exceeded the last year’s number: 46 percent against 37 percent.”

Especially notable is the substantial ADR and RevPAR improvement in USD: ADR in May displayed a 3 percent growth, amounting to USD 158, while RevPAR, due to the occupancy improvement, skyrocketed by 39 percent, to USD 86. In June USD ADR took a slight cut (by 1 percent vs. last year, down to USD 150) but RevPAR still increased by 22 percent.

In general, quality hotel market average occupancy in H1 2017 went up to 46 percent. According to Tatiana Veller, “This is highest occupancy in the period since 2013. The supply four years ago was considerably lower, and over 48 percent of room stock in Kiev was occupied between January and June. Since then, the Hilton with 262 rooms was put into operation, and gave the modest-size hotel market in the Ukrainian capital a significant boost.”

While ADR in H1 exhibited slight growth in UAH (by 2.4 percent, up to almost UAH 4,000) and decline in USD (by 2.6 percent, down to USD 147), RevPAR increased in both currencies (by 26.2 percent in local currency, reaching UAH 2,700 and by 20 percent in hard currency, to USD 67). This is the highest H1 hard currency RevPAR in Kiev since 2013, when it equaled USD 103.

“If the political situation in the country remains stable, gradual recovery of Kiev hotels’ operational performance will continue,” Tatiana Veller added. “On the back of this trend, we observe the growing confidence among investors, as well as hotel management companies and international brands. First of all, it is reflected in a number of new hotels entering the market. About 664 internationally branded rooms in different segments are planned to come into operation by the end of the year – Mercure Congress Kiev (Accor) with 160 rooms, Park Inn Troitskaya (Rezidor) with 192 rooms and Aloft Kiev (Marriott/Starwood) with 312 rooms. New branded supply will intensify competition and might lead to adjustment of the main hotel market performance indices in 2017-2018.”

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