Allan Saunderson is managing editor of Property Finance Europe and a contributor to

KIEV, UKRAINE-Ukraine has seen only three top-end international hotels opened in the last four years, and while several are under construction, bureaucratic red tape and lack of financing for projects continue to hamper the market, a conference heard recently.

The event in Kyiv organised by international consulting group PKF hotelexperts and hosted by law firm Wolf Theiss and project developer Michaeler & Partner, heard that at least eight large international branded hotels are planned, with one InterContinental scheduled to open in 2009 and three scheduled for 2010 – Fairmont, Holiday Inn, Sofitel. These will supplement the Radisson and Hyatt Regency in Kyiv plus Radisson in Alushta on the Crimean Peninsula. Rezidor Development Manager Darren Blanchard told the conference Radisson Kiev is one of the best performing hotels of the group in Europe.

The conference heard that one international-brand hotel per 15m population is dramatically low; Ukraine has nearly 46m inhabitants. However a large number of domestically managed hotels are present, including the five-star Premier Palace in Kyiv. According to Premier Hotels President Oleg Bolotov, the group manages seven hotels in Ukraine and holds a 20% market share in four to five-star segments. Premier plans to expand to 10 hotels in 2010 and will soon introduce Accord Hotels, a new mid-segment hotel brand.

Despite the challenges, most large international groups would like to enter the market, said Magdalena Sekutowska from Hilton and Ivica Čačić from Marriott Their groups have projects in planning. Starwood Hotels’ Anatoly Kondratenko said he would like to see his group’s brands – Sheraton, Four Points by Sheraton – in Kyiv and other Ukrainian cities.

“Together with Russia and Turkey, Ukraine has the biggest development potential in Europe,” noted Michael Widmann, Managing Partner of PKF hotelexperts. “However, probably in no country in Europe it is more difficult and time-consuming to develop a hotel project, and the lack of financing is the biggest stumbling block.”

Political and bureaucratic obstacles are also keeping investors away. He advised the conference to focus on budget and mid-segment hotels which are desperately needed, avoid mixed-use projects which are not financeable, focus on smaller projects of €10 million to €20 million, ensure a financial commitment by the operator, consider conversions and refurbishments rather than new-build, retain a residential component in new projects, and structure projects carefully to obtain financing.

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