The Ukraine Tourism Report examines the significant long-term potential being offered by the tourism industry, but also highlights the potential downward pressure that economic uncertainty in Europe could have on currently strong arrival numbers. We also analyse the growth strategies being employed by the country to continue to attract arrivals, including sporting events such as UEFA European Football Championship (Euro 2012) in June and July. A weakening global growth picture bodes badly for Ukraine’s export-dependent economy and a faltering domestic demand picture underpin our lower growth estimates for the rest of 2012. Ukraine’s economy expanded at the slowest pace since the 2009 recession in Q112, posting real GDP growth of just 2.5% year-on-year (y-o-y). We forecast many of the economic imbalances to correct going into 2013, when we forecast GDP to hit 3.4%, up from 2.5% GDP growth in 2012.
The recession subdued arrival numbers in 2009, dropping by 12%, and as the majority of arrivals come from Central and Eastern Europe (CEE), 2010’s arrival numbers did not entirely rebound. For 2010 and 2011, BMI calculates there was continued growth in tourist arrival numbers, with a jump from 21.9mn in 2009 to 23.3mn in 2010 and nearly 26mn in 2011. From 2012 to the end of our forecast period in 2016, we forecast the industry to return to and largely maintain double-digit growth until 2016, when it is then forecast to grow by 9% y-o-y to 41.8mn tourist arrivals. Ukraine was a co-host of the Euro 2012 with Poland in June-July and the tournament was expected to be a key driver for the country’s tourism industry during our forecast period. Not only did it bring thousands of tourists to the country, the requirements to be chosen as a host for the competition included an array of infrastructure investment that can only be regarded as positive for the industry. Significant attention was afforded to the event and the potential for it to provide a boost to the economy. That said, it was plagued by poor publicity in months leading up to tournament and has been slightly overshadowed to some extent by the Olympics, which start at the end of July.
As such, while some boost to growth is likely to have been generated, we remain sceptical about the ambitious expectations of a surge in economic activity. Hungarian budget airline Wizz Air started offering services from Ukraine in 2008 and BMI expects the trend of low-cost carriers in the country will increase in the coming years. This would be a positive development as it would drive down fare prices, making travel within, to and from Ukraine more affordable, increasing tourism numbers. Wizz Air’s entrance to the market has already prompted the largest Ukrainian carrier, Aerosvit, to reduce fares. Since March 2011, Wizz Air, Italy’s Wind Jet and Turkey’s Pegasus Airlines all fly to Ukrainian cities. The authorities at Boryspil International Airport, which serves Kiev, are constructing another terminal for international and budget flights. Terminal D was completed in winter 2011 but it required another six months for commissioning. The new terminal only served football fans during Euro 2012. The January 2010 presidential election, the country’s first since 2004’s Orange Revolution, had the potential to destabilise the country politically but turned out better than expected, with political risk continuing to subside.
President Viktor Yanukovych successfully formed a coalition government in March 2010 and it obtained a new US$15.2bn Stand-By Arrangement (SBA) from the IMF (after the original loan was suspended in November 2009), which are all positive steps for stability. That said, we believe Ukraine will ultimately carry out the reforms spelled out under the SBA with the IMF, although we believe these are unlikely to occur until after the October parliamentary election. Continued cooperation with the IMF is crucial to anchoring confidence in Ukraine’s economy and underpinning macroeconomic stability.
Published: July 2012 No. of Pages: 53 Price: US $ 1175
Table of Contents
Executive Summary 5
SWOT Analysis 7
Ukraine Tourism SWOT . 7
Ukraine Political SWOT 7
Ukraine Economic SWOT . 8
Ukraine Business Environment SWOT 8
Industry Forecast Scenario 9
Arrivals 9
Table: Arrivals, 2008-2016 9
Accommodation . 11
Table: Hotels Data, 2008-2016 11
Expenditure 12
Table: Tourist Expenditure And Economic Impact, 2008-2016 . 12
Inbound Tourism 13
Table: Inbound Tourism, 2008-2016 13
Outbound Tourism 14
Table: Outbound Tourism, 2008-2016 15
Market Overview – Travel 16
Road And Rail Transport 16
Air Transport 16
Global Oil Products Price Outlook 18
Table: Oil Price Forecasts (US$/bbl) 19
Market Overview – Hospitality 25
Hotels 25
Business Environment Outlook 27
Table: Central And Eastern Europe Tourism Risk/Reward Ratings . 27
BMI’s Security Ratings 27
Table: Europe Security Risk Ratings 28
Table: Europe State Terrorism Vulnerability To Terrorism Index 29
Europe Security Overview 29
Europe In A Global Context 30
Europe’s Key Security Issues Over The Coming Decade 30
Global Assumptions . 37
Table: Global Assumptions, 2011-2016 . 37
Table: Global And Regional Real GDP Growth, % change y-o-y 38
Table: Developed Market Exchange Rates, 2010-2013 38
Table: Emerging Market Exchange Rates, 2010-2013 39
Developed States 39
Table: Developed States, Real GDP Growth Forecast, 2010-2013 (% change y-o-y) 40
Emerging Markets 40
Table: Emerging Markets, Real GDP Growth Forecast, 2010-2013 (% change y-o-y) 41
Table: BMI And Bloomberg Consensus, Real GDP Growth Forecasts, 2012-2013 (%) 42
Company Profiles . 43
Aerosvit . 43
Premier Hotels 43
Ukraine Tourism Report Q3 2012
© Business Monitor International Ltd Page 4
Ukraine International Airlines 44
Wizz Air 44
Demographic Outlook 45
Table: Population By Age Group, 1990-2020 (‘000) . 46
Table: Ukraine’s Population By Age Group, 1990-2020 (% of total) 47
Table: Key Population Ratios, 1990-2020 48
Table: Rural And Urban Population, 1990-2020 48
BMI Methodology . 49
How We Generate Our Industry Forecasts . 49
Tourism Industry 49
Tourism Ratings – Methodology 50
Table: Tourism Risk/Reward Ratings Indicators 51
Table: Weighting Of Components 52
Sources . 52Table: Arrivals
Table: Hotels Data
Table: Tourist Expenditure And Economic Impact
Table: Inbound Tourism
Table: Outbound Tourism
Table: Oil Price Forecasts (US$/bbl)
Table: Central And Eastern Europe Tourism Risk/Reward Ratings
Table: Europe Security Risk Ratings
Table: Europe State Terrorism Vulnerability To Terrorism Index
Table: Global Assumptions
Table: Global And Regional Real GDP Growth % change yoy
Table: Developed Market Exchange Rates
Table: Emerging Market Exchange Rates
Table: Developed States Real GDP Growth Forecast (% change yoy)
Table: Emerging Markets Real GDP Growth Forecast (% change yoy)
Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts (%)
Table: Population By Age Group (‘)
Table: Ukraine’s Population By Age Group (% of total)
Table: Key Population Ratios
Table: Rural And Urban Population
Table: Tourism Risk/Reward Ratings Indicators
Table: Weighting Of Components
