Hotel Market Shows Small Recovery

According to Jones Lang LaSalle Hotels, Kyiv hotel market was raised quite substantially during the crisis. Comparing with the previous period of low demand, accommodation increased for 22%.

Average room price at high class hotels in Kiev ("Hyatt Regency", "Premier Palace", "Opera", "Radisson") in 2009 declined approximately for 25% to $ 275. At the same same operational yield in terms of the number in 2009 has decreased by half compared with 2007-2008. And the operating margin - a result of serious efforts to cost cutting - reduced at least for 10%.

Middle class hotels ("President-hotel", "Rus", "Ukraine", "Dnipro", "LYBID") also felt the drop in demand. However, since they had paid attention to consumers of hotel services with reduceed budgets, for now they are pretty OK. As a result, the average price for a room at these hotels decreased with estimation of Jones Lang LaSalle Hotels, from USD90-140 in 2008 to USD50-80 in 2009 with 65-70% occupany.

In 2010, the demand for Kiev hotels quite stabilized, but not fully recovered. Despite the fact that the level of occupancy for upper price range hotels at 1H 2010 grew by 5,6% compared to the same period in 2009, this was only due to lower average prices, which for the same period decreased (in USD) up to 13% to USD220 in June 2010.

According to JLL Hotels, there are two key indicators - the occupancy level and average room rates - showes unstable recovery of demand in the upper price segment within next 5 years. Therefore, according to forecasts, proper investment decisions will focus on middle-price or even budget accommodation properties at CBD or close to.