Hoteliers Quietly Make Deals to Keep Beds, Parties Booked

By Ksenia Bilan

If the economic crisis has impacted Ukraine's finest Western-style hotels, the casual observer would never know it.   The lobbies are bustling, and room rates appear not have budged from pre-crisis levels. 

As with much else that happens in hotels, the battle against the recession is taking place in the back office, where managers cut deals that would have been unthinkable during better times.

Executives at three of the capital's best known high-end hotels - the SAS Radisson Hotel Kiev, the Premier Palace and the Opera Hotel - say that although they have maintained the published 'rack' rates, they regularly negotiate special deals with corporate travel departments, agencies and tour operators to keep occupancy rates high.

"In principle, we have not touched our published rates.  However, we negotiate with companies and travel agents on a case-by-case basis," says Bernard Micaleff, general manager of Kyiv's boutique five-star Opera Hotel, as well as of the Donbass Palace in Donetsk.
"The first signs of the onset of the crisis came in November and December, when several bookings were suddenly cancelled," recalls Claude Bult?, general manager of the 4-star Radisson SAS Hotel Kyiv. 

Managers say bookings rapidly fell off by seven percent or more - a scarier drop than it may appear, given the hospitality industry's historically narrow margins.  Tourism, still not as strong an influence in Ukraine as elsewhere in the region, was affected, but the most dramatic drop occurred as companies economized by cutting back on business travel.  Business travellers are bread-and-butter clientele for most hotels, and losing them means fewer beds booked on weekdays.  Weekends are the domain of more value-oriented leisure travellers.

"The downturn primarily influenced corporate clients, since companies immediately cut expenses for business travel, entertainment and events," said Tatyana Podgoretska, sales and marketing director for the Premier International chain, which includes the five-star Premier Palace Hotel in Kyiv.

The Opera Hotel's Micallef adds that "a considerable decrease was noticed in the conference market" as well. 
The hotels have also intensified efforts to attract locals in an effort to keep their bars and restaurants busy.  The Radisson SAS Hotel Kiev offers discounted specials in its restaurants, and the Opera has focused on special offers and packages.
"If we look at the spa, we would offer a one-off discount for a specific treatment for a period of time, then change it," Micallef said.

Managers say that their primary focus remains on providing guest with a flexible, individualized approach, with regard to the services offered as well as rates.  And, they are uniformly optimistic about prospects for the future. "Of course, some projects have been suspended, but this business is not about a short-term return of investment," Podgoretska said, adding that new hotels, including hotels operated by international chains, will continue to enter the Ukrainian market.
Management at the Opera Hotel and Donbass Palace is also looking to the future.

"Naturally, we've delayed projects inside both our hotels, but we have not stopped exploring the possibilities of expansion, which could take the form of acquisitions or management agreements," says Micallef.

Radisson's Bult? agrees:  "Ukraine is growing rapidly, and we agree with the general opinion that the country will continue to strengthen at the macroeconomic level, as well as in demand for the resources of our particular industry."