War is not an obstacle: more hotels are being built in Ukraine than on the eve of Euro-2012

Recently IA “FACT” reported, that in the Prozorro.Sales system, the first auction within the framework of large-scale privatization was completed, where the hotel “Ukraine”, located in the center of Kyiv, was sold for 2.5 billion hryvnias. 

Many entrepreneurs show interest in the development of the hotel business in Ukraine even during the war. More than 80 new hotels and hotel complexes are under construction. Major players in the market, such as Apartel Resorts, Arha Group and Sensar Development, are actively developing their projects despite the war. 

Our compatriots invest mainly, both experienced hoteliers and newcomers. Apartments attract mini-investors as a source of passive income or for resale, which accelerates construction.

Dynamics of the hotel market during a full-scale invasion

With the start of a full-scale Russian invasion in 2022, many hotels have closed for security reasons, especially in the eastern and southern regions of the country. In Kyiv and the western regions – Lviv and Bukovel – hotels continued to operate, but with low occupancy. In 2022, the number of hotels decreased by 16.7% compared to 2021, and in 2023 – by another 4.5%.

But from 2023, the market started to recover again. In the western regions and Kyiv, there is an increase in the demand for hospitality services, which contributes to the active construction of new facilities. At the same time, the situation remains difficult in the eastern and southern regions due to ongoing hostilities. 

In Ukraine, hotels are most often bought by local investors, for example, Maksym Krippa, who bought the “Dnipro” and “Ukraine” hotels in Kyiv, investment companies – such as Ribas Hotels Group, which specializes in managing and investing in hotel real estate. International investors are also showing interest in the Ukrainian market, especially in the tourist-attractive regions of Kyiv, Lviv, and the Carpathians.

Why do some hoteliers abandon the hotel business, while others, on the contrary, invest in construction

Some players decide to leave this market because of security and others reasons, on the other hand, others – Apartel Resorts, Arha Group and Sensar Development – are simultaneously building several complexes. The reasons why some investors actively invest are the profitability of locations and sources of investment.

Profitability, of course, is an important factor for the development of the hotel business. Investors can invest in objects with quick returns. The opening of small complexes, as in the case of ULIS, is an effective way of scaling. Domestic tourism also stimulates the development of the industry. 

New hotels will be opened gradually, mainly in popular locations with good infrastructure. Forecasts for occupancy vary, with some experts confident of success thanks to domestic tourism, while others believe competition will remain high until international tourism recovers.

The hotel business is becoming attractive to investors primarily because, despite the war, domestic tourism in Ukraine is growing. People are looking for safe vacation spots inland, which creates demand for hotels.

The war has reduced property values ​​in some areas, making investment more affordable. Investors see an opportunity to purchase objects at lower prices and modernize them. The Government of Ukraine supports the development of tourism infrastructure, which includes tax benefits and other incentives for investors.

The construction of new roads, airports and other infrastructure facilities makes some regions more attractive to tourists and, accordingly, to investors. Investors understand that the war will not last forever, and the hotel business has the potential for significant growth once the situation stabilizes.

The example of Apartel Resorts – one of the most active chains that develops its infrastructure in resort areas – is illustrative. They already have three hotels with more than 400 rooms in Shayan, Uzhhorod and Skhidnytsia, two of which were opened during the war.  New projects are planned in Kosino, Skhidnytsia and Polyana – a total of 830 rooms.  The opening of new hotels during the war demonstrates the company’s ability to quickly adapt to changing conditions and find opportunities even in difficult times. 

Apartel Resorts are known for their high level of service and comfort for guests, which makes them attractive to tourists. The company uses modern technologies and innovative solutions to improve the guest experience, which includes convenient online services and modern in-room amenities. Hotels of the chain are located in popular tourist destinations, which ensures a stable flow of guests.

Sensar Development offers its clients apartment hotels and residential complexes with a high level of comfort. Many have heard of THE FIVE Hotel in Uzhgorod, Smart Well in Yaremche and other projects in the Carpathians.

The secret of the popularity of apartment hotels in Ukraine

So, despite military operations, more than 80 hotel business objects are being built in Ukraine. For the most part, these are apart-hotels and resort complexes, especially in the western regions of the country, in the Carpathians. 

The most popular nowadays are apartment hotels, as they combine the features of ordinary hotels and apartments. They usually offer more space than standard hotel rooms and have a full kitchen and living room. This makes them convenient for long-term stays as part of tourist and business trips, for family, friendly or business vacations.

Aparthotels have several advantages over traditional hotels. Additional services are provided there: reception, cleaning, breakfast, transfers, these apartments can also have a guarded area and various amenities such as restaurants, swimming pools and fitness centers. This makes them attractive to investors as they can generate a steady rental income.

Guests can enjoy more flexibility in planning their time, as they are not limited by the schedule of hotel restaurants or other services. For longer stays, aparthotels can be more economical, as they often offer discounts for long-term bookings.

Why some entrepreneurs give up the hotel business

This year, more than 120 ads for the sale of hotels in the Kyiv region were published on the OLX online platform. The reasons for selling hotels can be different. Hoteliers may experience cash flow or debt problems, or may choose to focus on other projects or industries. 

Hotels may require significant investment to upgrade, and owners may decide to sell rather than invest. Changes in tourist flow or the economic situation can affect the profitability of hotels. And of course, owners may have personal reasons for selling, such as moving or changing life circumstances.

Tatyana Morarash