Central and Eastern Europe (CEE) is facing its worst macroeconomic crisis since the post-Soviettransition, and while the region weathers the crisis its tourism industry will suffer. For Ukraine, which isamong the countries worst affected, we expect the recession to subdue arrivals numbers in 2009, as themajority come from CEE. BMI forecasts a 12% year-on-year (y-o-y) fall in tourism arrivals in 2009, afterdouble-digit arrivals growth every year but two since 2002. Despite 2009’s bleak outlook, from 2010 tothe end of our forecast period in 2013 we forecast the industry to return to double-digit growth.
The majority of tourists arrive in Ukraine via road or rail. The country is well-placed for land travel as itborders seven countries, including Russia. Transport via road is forecast to substantially outpace railtravel. This coincides with the recent visa liberalisation between the EU and Ukraine so that EU citizensno longer require a visa to enter the country for stays under 180 days.
Ukraine is set to co-host the 2012 UEFA European football championship (Euro 2012) with Poland, andthis event is a key driver for the country’s tourism industry. Not only will it bring thousands of tourists tothe country, but also the requirements to be chosen as a host for the competition include an array ofinfrastructure investment that can only be regarded as positive for the industry. UEFA has given Ukraineuntil November 2009 to make progress on building work on the Olympic Stadium in Kiev, airports andother infrastructure. The final decision of whether the country will host the championship will be made in2011. Ukraine has said that it will allocate UAH76.2bn (US$15.14bn) for the construction andrehabilitation of roads, as well as the construction of dozens of hotels to make up for the lack ofaccommodation capacity, as part of the preparations for the event.
Although the Ukrainian hryvnia has stabilised recently, BMI expects the currency to sell off furtherbefore the end of the year. The hryvnia’s weakness is positive for the country’s tourism industry, as it hasincreased Ukraine’s price competitiveness.
Budget airline Wizz Air started offering services in Ukraine in 2008, and BMI expects the trend of lowcostcarriers in the country to increase in the coming years. The authorities at Boryspil InternationalAirport (KBP), which serves Kiev, are constructing another terminal exclusively for budget airlines. Thiswould be a positive development in our view, as it would drive down fare prices, making travel withinand to/from Ukraine more affordable, increasing tourism numbers. Wizz Air’s entrance to the market hasalready caused the largest Ukrainian carrier, AeroSvit, to reduce fares.
We do not expect the H1N1 flu (swine flu) pandemic to have a severe impact on Ukraine’s arrivalnumbers. Those concerned about the virus have generally been reassured by its moderate symptoms andrelatively low mortality rate.
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