Your place or mine?

Euro 2012 became the highlight on Ukraine’s agenda for this fall. The UEFA commission is in for a serous disappointment after visits in September and October concerning the lack of progress in preparations for the championships, which poses the threat of the final matches being held in Poland instead. The main problem is not in the stadiums, but in accommodation for the players of the visiting teams and hundreds of thousands of fans. At this point they simply have no place to stay due to the shortage of hotels. The economic recession has made their construction a very difficult thing

 I give you my word, Mr. Commissioner

Ukraine was given a deadline of August 31 to report to UEFA on its readiness to host VIP guests and sponsors of the championship that was to include hotel booking agreements with the international company TUI Travel, which has exclusive rights for accommodating the UEFA target audience.

On paper, everything seems peachy keen for the Ukrainian side. Indeed, there is a world practice whereby hotels that have not been fully constructed selling accommodation to future guests well in advance of their opening. With this aim the owners of hotels signed a promise to commission them by November 2011. UEFA commissioners accepted on a handshake promises that guests would be accommodated in hotels that have yet to be built.

According to official data, another 50 hotels must be built in Kyiv by the end of 2011 to be ready to accommodate guests for Euro 2012. This means 10 five-star hotels, 15 four-star hotels, 16 three-star hotels and 7 two-star hotels in addition to the 125 hotels that are currently operating in the nation’s capital. In addition to that, youth hostels must be built to accommodate some 30,000 fans that cannot even afford a room in a 2-star hotel. Today there are only six of them in Kyiv, while Warsaw boasts 80 such hostels. All in all, Kyiv will have to provide accommodation to 200,000 – 300,000 fans over the three weeks of the championship.

The requirements of UEFA mainly pertain to VIP guests – i.e. the organizing committee, referees, players, high ranking guests, etc. They must be provided accommodation in 4-5 star hotels, which means a minimum of 5,000 rooms. At the moment, Kyiv can only offer 1,000 such rooms.

Everybody is welcome

When a little over a year ago Ukrainian officials woke up and smelled the coffee realizing that they have to get ready for Euro 2012, the owners of multi-functional office centers took active interest in the hospitality industry.

Some of them proposed to Kyiv City Hall one or two floors with 20-30 rooms in exchange for privileges in the allotment of land and issuing of permits. Such objects were included in preparations for Euro 2012, when the authorities were ecstatic about every potential hotel room.

But where was the guarantee that only five of the 30 rooms promised would be provided at the last minute. The fact is this nuance is not factored into such permits. They only indicate that a mini-hotel will be built and nothing more.

The Kyiv Oblast has also entered the fray in the construction of hotels promising to build 26 of them, including four 5-star hotels with 1,000 rooms. However, the situation worse is than in the nation’s capital. Assistant Director of the Department of Euro 2012Preparations in the Kyiv Oblast Administration Valeriy Zolotukhin said: “Construction of a five-star hotel and entertainment complex in the village of Shchaslyve (between Boryspil and Kyiv) is at a standstill. The foundation is complete, but due to the shortage of cash, the project has been frozen. There are a number of other five-star projects in the suburbs that face the same problem. Specifically, there are situated on vast remote territories that need greater expenses and time than hotels in the city.”

Operational and on hold

“The matter of postponing the terms of completion of certain hotel projects is on the agenda,” says Yevhen Samartsev, an advisor to the Minister of Culture and Tourism.

“Building a hotel requires getting a seal and signature in two hundred and fifty different bodies of the civil service,” says President of Association of Small Hotels and Apartments in Ukraine Dmytro Zaruba. “It takes around two hundred days for the land allotment and another three hundred to get through the red tape of project approval. Finally, construction takes at least one year,” he argued.

The situation has been even more aggravated by the economic recession and complications with investments. But there is a positive side to the recession. Namely, it trimmed the appetites of Ukrainian land construction profiteers. “Now real investors interested in project being sold at considerably lower prices can enter the market. The fact is that last year’s price offers were sky high and unrealistic even for foreign investors,” says Samartsev. This means that despite all factors there is still a good chance that the required number of hotels will be built in Ukraine. The list that was submitted to UEFA commissioners includes projects currently underway, suspended projects and projects still in the works.

Open invitation

to all VIP guests

According to information that Weekly.ua possesses, the construction of 21 hotels in Kyiv is currently under way and another 47 hotels are in the drafting or pre-drafting stage.

The most large-scale projects include the Radisson SAS Airport Hotel Kyiv and the InterContinental on Velyka Zhytomyrska St., which recently held its grand opening, the Grand Hotel managed by Fairmont on Poshtova Ploshcha, the River Side on Naberezhno-Khreshchatytska and the Hilton on Shevchenko Blvd.

The projects in the drafting and approval stage include Nest City on Zlatoustivska St., Stolychniy Hotel on European Square, Crown Plaza on Fizkulturna St. and Kyiv Airport City near Boryspil International Airport.

At the same time, the construction of many hotels has been frozen, including Peresvit Plaza Hotel, Toronto Kyiv, a hotel on Obolonska Naberezhna, the Radisson SAS Airport Hotel Kyiv, etc.

Their fate has yet to be decided. However, if two thirds of the announced hotel projects will be completed, Kyiv will be able to greet and accommodate its VIP guests for Euro 2012.

Hostels and haylofts

Most football fans, however, cannot afford to stay in a four- or five-star hotel. This is why UEFA is demanding a plan for the accommodation of 30,000 spectators during the championships that cannot afford to live in expensive hotels. They can only afford staying in youth hostels, student dormitories, tent cities and haylofts…

Different state administrations actively jump on such an opportunity to get budget allocations for repairing their infrastructures.

For example, three student dormitories of the National Tax Academy have enough space to accommodate 1,300 people.

In two buildings of the Healthcare Ministry, there is enough space to accommodate another 800 people, while student dormitories have a total of 10,000 beds.

Today the objective is to renovate buildings for which UAH 506 mn has been allocated in the national budget. There are also approximately 1,000 small hotels, ships, suburban complexes and apartments in Kyiv.

Based on the experience of Eurovision, the city authorities have announced the creation of a camping ground for 20,000 on Trukhaniv Island. Such a project will require investments of EUR 7 mn.

At the same time, it may create a scandal. Environmentalists are already protesting the destruction of the green zone in the middle of the Dnipro River.

Be that as it may, we must choose the lesser of two evils: building hotels or temporary shelters for fans. After all, we voluntarily applied to host Euro 2012, while the aftermath of championship games demands sacrifices.

COMMENTARY

Mariya Kozak

Chief Marketing Analyst

of Sotsmart

The construction of hotels in Kyiv is under way only on half of the sites planned prior to the recession. The situation with hotels approved for construction is even worse. The fact is that developers are in no rush to begin construction. Around 80% of the projects have been frozen. Over the past six months, the construction of only one new hotel got underway. In short, the crisis has slowed down the development of the hotel industry and it is unlikely that the plans of construction of over 50 hotels in Kyiv for Euro 2012 will be realized. Our forecast is that a maximum of 20-25 hotels will be completed on time for the championships.