Roadside Hotels of Ukraine: An Eastern European Chaotic Reality

By Nickolay Mayger, Founder & President, Mayger Consulting Company

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. September 01, 2009

SEPTEMBER 1, 2009 - Mass automobilization, highway development and absence of quality services on Ukrainian roads results in attractive investment of roadside hotels and motels in Ukraine. Ukraine is situated on the crossroad of Eurasian traffic streams, its territory makes up 5.7% of Europe's territory and .44% (43-d place in the world) of the world's one. Ukraine has a very important role in Silk Road revival.

Currently it's hard to know the exact number of roadside hotels. Mostly they are not licensed and officially registered. At the moment the market is half legal and absolutely chaotic. Most hotels don't have parking, without mentioning other necessary conveniences: bathroom, phone, TV-set. There is nothing to say about drivers' and their fellow travelers' or cars safety.

With every year Ukrainian automobilization level, huge cargo & passenger traffic, operation of international and Ukrainian transport companies increases. New roads are being built, highway construction has started. According to statistics, the volume of the Ukrainian car market made up 9 billion EURO in 2008, the average cost of cars exceeds 20 thousand EURO.

Mostly, so-called "roadside hotels" are roadside restaurant complexes with 5-10 rooms often without main necessary conveniences or comfortless, barracks with outdoor conveniences occupied by haulers.

International highway standards foresees roadside complexes construction every 100-150 km. However many other factors such as: intensity and type of traffic, communications availability and closeness, tourist attractiveness of regions should be taken into consideration in Ukraine. The main concept of this business is right geographical location of the object, though Ukrainian businessmen and owners are not used to work according to standards. In most cases, plot selection is based upon intuition and own mind. Absence of marketing research, construction standards leads to low-quality projects in this segment. These projects can't be classified as failed due to absence of competitive supply. Without having better choice travelers have to stay there.

Ukraine has paradoxical situation. The Moscow/Black Sea route (approximately 1.500 km) takes 2 daylight hours. There are no more than 10 hotels on this distance. People sleep in cars at every State Road Traffic Safety Inspection post. There are hundreds of such cars on the road. But not only tourists need comfort and safety sleep, Ukrainian-Russian traffic corridor's potential makes up to 90% transit of all CIS countries.

Building, reconstruction and complete repair of Ukrainian roads is one of the ways to fight the economic recession contributing intercontinental trade.

By the end of 2011 it is planned to build and reconstruct 70047 km of new highways with total length 1900 km. Roadside hotel complexes construction is the part of the State Target Program on Euro 2012.

This market niche is free and that is very rare in the current situation. Hotel chains have a great opportunity to become a national leader among roadside hotels and motels in Ukraine.

UAN devaluation resulted in increase of foreign travelers inflow as the tour cost for European citizens is up to 57% lower in Ukrainian currency. Also an important fact for Ukrainian tourism is visa free entry to Ukraine for representatives from EU countries, USA, Canada and Japan.

Roadside hotel complexes and road service development would help to increase the security level of Ukrainian roads, employment level, to give opportunity to medium-sized business and enterprises development, involved in functioning of these complexes. Moreover, it would help to develop bus and car tourism bringing million dollar income in European countries.

Investment attractiveness of this tourism segment should interest investors as such projects have government support in Ukraine.

Dr. Nikolay Mayger is the Founder & President of Mayger Consulting Company. The company is a constant member of International Business Forum "Ukraine-Germany", the founder of audit company UkrugAudit, Ltd. and informational-analytical company "Ukrainian Agency of Financial Development". In 2008 Mayger Consulting Company was awarded by the title THE LEADER of UKRAINIAN BUSINESS http://who-is-who.com.ua/bookmaket/uspihibisnesa2008/5/146.html. In 2008 Dr. Mayger entered the list of LEADERS of UKRAINIAN ECONOMY http://who-is-who.com.ua/bookmaket/economisty2006/8/134.html Mr. Mayger can be contacted at +380-482-343-333 or [email protected].