Disorganized and Underfunded, Ukraine’s Tourism Programs Struggle

By Yulia Pushko

Of the nearly EUR 13 million that Ukraine has budgeted this year to attract businesses and tourists to its shores, almost nothing has actually been appropriated, leaving the country with a promotion program that looks good on paper, but is worth little in reality. 

Even before the nation fell on financial hard times, it was miserly in terms of spending on tourism: Last year, Ukraine spent an amount equivalent to 32 kopecks for every man, woman and child in the country to promote its image and tourism opportunities - about the price of a single small hard roll or small box of matches.  The nation shelled out just EUR 2 million for its tourism campaign, and an additional EUR 566,000 to promote itself as a place to do business - sums more reflective of spending by a midsized U.S. city than of a European country of 47 million people.

Neighboring Turkey, on the other hand, made what appears to be a successful investment in tourism.  Last year, the country spent EUR 322,000 just to promote Turkish tourism in the United States - an investment that resulted in a 10 percent increase in the number of American tourists.  At the same time, Turkey poured more than EUR 572,000 into promotions in Ukraine in 2008.  The result?  Even in a recession, Ukrainians continue to flock to Turkish resorts.

The government began an effort to enhance Ukraine's image as a tourist destination in 2007, but has been hampered by lack of a unified program, spotty funding, the occasional scandal and, predictably, politicization.  

One campaign ("For Those In Love With The Snow") was launched in December 2007 and focused on winter tourism to the Carpathians.  The ad, aired on EuroNews and the National Geographic Channel, was part of a 10-year program called "Ukraine Invites" developed by the state tourist administration.  The 2008 budget was estimated at EUR 1.2 million.

Ukraine's travel agents, just one of the groups that stand to benefit from increased tourism, weren't entirely enthusiastic about the program.  Alla Shapovalova, deputy head of Kyivskiy Sputnik travel agency, said that promoting tourism before the country's infrastructure was ready was premature.  "The public campaign should be done in concert with actual development. We are in the situation where we have some good hotels, but poor roads, or we have good roads, but no roadside restaurants to serve tourists."
Shapovalova's comment begs the old chicken-or-egg question: Is it better to fund improvements that attract tourists, or to attract (and possibly disappoint) tourists and use tax revenues to develop infrastructure?

The answer to that query may in the end be academic, since the government's approach to funding tourism development appears fragmented and poorly coordinated.  With no clear guidance from parliament, ministries have squabbled over slabs of the allocated funding.  Early on, the Foreign Affairs Ministry controlled the funds, but following a 2006 fiasco in which an obscure Kharkiv agency won a EUR 2.1 million tourism promotion tender, the program was transferred to the Education and Culture Ministry.  Prime Minister Yulia Tymoshenko has since moved the program back under the Foreign Affairs Ministry's control.

This year, a special three-year target program to enhance Ukraine's image abroad was allocated EUR 32.8 million (of which EUR 9.1 million was to be spent this year) by the Cabinet of Ministers.  Of the principal sum, EUR 27.8 million will be allocated from state coffers, with the remainder to be gleaned from local budgets.

The lion's share of the planned expenditure - EUR 16.4 million - is to be spent to present Ukraine "as a European country facing democratic transformations."  It's not the sexiest possible tagline, nor one that will induce anyone other than EC election monitors to start packing their bags.   The government says it will spend the money by increasing the number of positive mentions of Ukraine in foreign publications, creating websites, appearing at trade shows and seminars, and by organizing press tours for foreign journalists.   While it would be easy to take a busload of journalists to Crimea, or to the Carpathians, or for a cruise down the Dnipro, it will be a real challenge to take them to watch a 'democratic transformation.'  Is that what the protesters outside the Cabinet building are called?

In 2008, Russia spent over EUR 215 million on its image campaign, and the United States doled out about EUR 1.1 billion.  The Beijing Olympics may have addicted China to relatively easy tourism cash: The once isolated and mysterious nation plans to allocate a record EUR 4.3 billion to polish its image in 2009.

Statistics demonstrate that detractors who claim that spending public money on tourism campaigns is tantamount to subsidizing hotels and airlines miss the mark.  For every euro spent to build its tourism industry, the resulting tourists spend EUR 27, and an additional EUR 4 is generated in taxes.

If the government can organize its efforts and release significant funds, it should have a chance to attract its share of the global tourism industry.  Trond Moe, president of the European Business Association, is a believer: "While it would be na?ve to gloss over the problems, Ukraine does have a positive story; and, in relationship to some neighboring countries, it has a better story to tell."