Ukraine should make it easier for business and tourism

Ukraine should make it easier for business and tourism

Jesper Henriksen, CEO at Radisson Blu Hotel Kyiv says: “To do business in Ukraine you have to be patient with a lot of things… You have to go through this bureaucracy that they have here, and if ...

Jesper Henriksen has been in Ukraine only since August 2017, but already sees many areas where Ukraine has to improve.

Whether it’s establishing an anti-corruption high court, creating an agricultural land market, fixing the capital’s empty buildings or removing layers of bureaucracy — Ukraine has a lot to do to attract more foreign investment.

If done, it would boost the hotel business in Ukraine. And that, of course, would be good for Henriksen, the general manager of the Radisson Blu Hotel Kyiv.

“It needs to be easy to do business in Ukraine,” Henriksen told the Kyiv Post on Feb. 19 at the Radisson Blu’s luxury hotel on historic Yaroslaviv Val Street. “The whole administrative process of running a business is just making it very unattractive to start businesses here.”

Though Radisson has no plans to quit Ukraine, “you have so many negative things about the very heavy administration of running a business in Ukraine.”

So the changes need to take place “because the people who stay in our hotels come here if they are investing in the country,” Henriksen said. “The biggest markets for us here are linked to agriculture, IT and banking.”

But despite the hardships, Radisson said 2017 was profitable, but refused to disclose details.

“It was significantly better than the previous year,” he said. “It grew by about 20 percent.”

In general, the Ukrainian hotel industry is not doing great, but is recovering along with tourism.

Internationally branded hotels in Ukraine perform better than independent ones and Ukrainian hotels are hosting 3 percent more guests in 2017 than five years earlier, before the recession brought on by revolution and war, according to Dennis Spitra, head of business development at STR Global Europe, a U.S. researcher who covers the global hotel industry.

Radisson opened its Kyiv Park Inn hotel near the Olympic Stadium in September 2017.

“It’s already picking up very well,” Henriksen said of the mid-market hotel with large conference facilities. The hotel is almost fully booked for the Union of European Football Associations, or UEFA, Champions League final, which is being held in Kyiv on May 26.

In addition, Radisson has two other capital locations and a Spa Resort hotel in the skiing resort of Bukovel, in the Carpathian mountains. The hotel’s branches in Alushta, Crimea and Donetsk closed down three years ago because of Russia’s annexation of Crimea and the war in eastern Donbas. Altogether, Radisson Group’s Ukraine network has more than 600 rooms and over 700 employees.

Radisson is planning more expansion — to Odesa and possibly Lviv, Dnipro and elsewhere. “Even in Kyiv itself we believe we can have more hotels,” Henriksen said.

Though Radisson Blu is an international brand, it originated in Denmark. It started in 1960 as a part of Carlson Rezidor Group. Rezidor is based in Brussels, but its first hotel was purchased in Denmark.

Carlson is from Minnetonka, Minnesota, and named after its founder, Curtis Carlson. The group is comprised of more than 1,440 hotels in 115 countries. The hotel chain will soon be consolidated under HNA Group Co., a Chinese company that bought Carlson Hotels in April 2016, according to Bloomberg news agency.

Radisson does not own the hotels, but runs them for local owners. The Radisson Blu Podil hotel is owned by Ukrainian oligarch and politician Sergiy Tigipko, a former member of unpopular and disgraced Prime Minister Viktor Yanukovych’s Party of Regions.

Henriksen predicts that the overall luxury sector in Kyiv will reach a 60 percent occupancy rate in the next couple of years. Now it’s in the mid-40s, but that’s a step up from recent years.

“The market was at around 25 percent occupancy, which is not a viable business model, but now it has really started recovering,” Henriksen said. “We’re confident that Kyiv will start picking up.”

His clientele is about 70 percent foreigners, mainly businesspeople on work-related trips.

Leisure clients

Henriksen’s challenge is to attract people to Kyiv for leisure time.

“Kyiv is not generally a well-known leisure destination, unfortunately, as I think that Kyiv has a lot to offer,” he said. “If you go to cities like Prague and Budapest you can’t get a room there during the weekend. Everyone goes there for a weekend break.”

With no European Union visa restrictions, Ukraine should be performing better, he said.

Those who consider Ukraine change their minds when they see the expensive air fares and poorly developed infrastructure — problems caused by monopolies such as billionaire oligarch Ihor Kolomoisky’s Ukraine International Airlines.

But others simply don’t know much about Kyiv at all, and the authorities have been doing very little in promoting it as a tourist destination. “There is no strong promotional organization,” Henriksen said.

Visual pollution

Other tourist repellants include outdated policies that don’t allow municipal authorities to sell or destroy empty old buildings. This problem is well-known to the hotel manager. He faces an empty building everyday across from his office on Yaroslaviv Val Street.

“It is… visual pollution,” Henriksen said. “Those who come here will go back and talk to others about their experience in Kyiv. So we cannot have these empty buildings… It brings down the image of Kyiv, and it really doesn’t deserve this.”

Numerous projects have stalled in Kyiv simply because investors had difficulties with authorities when purchasing a building and obtaining licenses, Henriksen said. “Down the road here we have the (unopened) Renaissance Hotel, which is just standing there,” he said. “I would love that to be a Radisson.”

The 50-year-old Henriksen has been in the hospitality business for most of his life. He worked as a bellboy at the age of 13 in Denmark. He has been working for Radisson for the past 20 years in 11 different locations.

Henriksen’s last location was Beijing, a city with more than 8,000 hotels. “I loved being in China, but I think Kyiv is more human in size — it’s more European, and it’s closer to home.”

But “whether you run a hotel in China or in Kyiv the work is the same.”

Ukraine can learn from China. Twenty-five years ago, when Radisson opened its first hotel in Beijing, its clientele was 90 percent foreign. Today, 80 percent are locals.

“As soon as they have a small vacation, they will travel,” Henriksen said. “And it surprises me that we don’t have more Chinese people in Ukraine, because there are hundreds of millions who can afford to come. We are starting to see Chinese, but that’s still a timid market,” Henriksen said.

Source: KyivPost

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