Ukraine, it is often said, is a land of eternal promise and potential. Arguably, no sector has displayed more potential yet such little progress as the country's tourism industry. Blessed with natural assets, stretching from the imposing Carpathian mountains in the West to the rolling steppes in the East, Ukraine has a colossal range of landscapes, seascapes and riverscapes to offer the visitor. Nevertheless, Ukraine ranked a lowly 78th in the World Economic Forum's latest travel and tourism competitiveness report, which highlighted transport and tourism infrastructure as well as price competitiveness as one of its weaknesses compared to neighbouring countries.
In terms of revenue from the travel and tourism sector, Ukraine’s 8.3% of GDP in 2006 looks fairly respectable but is dwarfed by the likes of Bulgaria where tourism revenues provide 14% of GDP.
Moreoever, critics say that a large portion of Ukraine’s USD 3 billion in tourism actually comes from business travellers.
A window of opportunity
For a variety of historical and contemporary reasons, the tourism industry in Ukraine is still way behind those of its regional rivals, with a lack of global profile and often poor domestic facilities dogging development.
Investment has been inconsistent since the country gained independence, while bureaucracy remains excessive. However, the signs are there now that the sector faces exciting possibilities for rapid development following the minor boost from the Orange Revolution which put Ukraine on the must-see lists of many discerning travellers as one of the newest “undiscovered” destinations in Eastern Europe.
The next few years look especially promising, given the fresh momentum given by Ukraine’s success in winning the race to host the Euro 2012 football championships.
In February this year, President Viktor Yushchenko declared 2008 as the Year of Tourism and Resorts giving the Cabinet of Ministers until the end of the year to implement a number of policies aimed at developing tourism in Ukraine, promoting the country's image abroad and setting aside finance for the sector's development.
Recent political wrangling, however, has cast doubt on whether this well-intentioned policy package is likely to see the light of day.
Soviet legacy no bad thing
Historically, Ukraine was for a long time a popular tourist destination. In Soviet times, it was the location of both the luxury villas of the Communist Party elite and of massive holiday camps for ordinary citizens. These were mainly located along the “Soviet Riviera,” namely the Black Sea coast and the Crimean peninsula. The latter location enjoys a unique climate and the southern tip is blessed with almost Mediterranean weather. Ukraine was also home to several popular winter holiday resorts in the Carpathian mountains.
Ukraine's role as the Soviet Union's industrial heartland also required the construction of a number of functional business hotels, many of which are still in operation in Kyiv and other major cities such as Donetsk and the formerly closed city of Dnipropetrovsk.
Communications and transportation links with other parts of the Soviet bloc were also good, particularly north to Moscow, although routes west into the former Soviet satellite states of Czechoslovakia, Poland and Hungary and were never particularly well developed.
Nonetheless, train services were generally good and a whole series of regional airports was also constructed.
Reversing a slow decline
But that was then and this is now. The difference, as in much of the former Soviet Union, can be striking. Ukraine, along with many other states Soviet states, has seen its popularity as a tourist destination all but evaporate in the last decade and a half, with Crimea seeing a particularly sharp decline. Countries such as Turkey, Egypt and Cyprus have stepped in as the new beach holiday destinations for wealthier Ukrainians, while the popularity of winter breaks in Austria and city breaks in Western Europe have risen dramatically.
As a result, much of the international travel to Ukraine in recent years has been either work or family related. In the West of the country, many people have relations living in Poland, Hungary, Moldavia and Romania, while in the East, a significant proportion of the population has family in Russia. Throughout the early 2000s, around 75% of all foreign arrivals in Ukraine were from Russia or other former Soviet countries.
Meanwhile, with Ukraine now the world's number two source of ship crew after the Philippines, seamen are a fixture on many overseas and domestic flights as they travel to board their vessels at Odessa and the neighbouring container port of Ilichivsk.
At the same time, the continuation of much of the old system of bureaucratic state control and jobs for apparatchiks - as well as organised criminal activity - has slowed the transformation of the Ukrainian market, placing the country way behind its Central and Eastern European former allies in terms of liberalisation and tourism growth.
Central in driving the most recent expansion has been the relaxation of Ukraine’s visa regime. The new Orange government lifted visa restrictions in 2005 for visitors from the European Union, North America, Australasia and Japan. The result has been a spectacular success, particularly as by then Ukraine’s western neighbours Poland, Slovakia, Hungary and later Romania had become EU members.
Western air carriers - led by Austrian Airlines which established itself in Ukraine back in 1993 - have seen the benefit of this in ever-growing passenger numbers, which British Airways estimated in 2005 to be rising at around 50% year-on-year.
Land crossings too have shot up. At the Polish-Ukrainian frontier, the Polish authorities reported a growth in 2005 of 96.6% in the number of people crossing eastwards. This compared to a meagre 1% increase in the number of those heading into Russia, where the old-style visa regime, complete with mostly-bogus “letters of invitation” and bureaucratic obstacles, remains in force.
The relaxed visa regime has therefore been widely applauded in the travel and tourism sector, yet it remains an officially experimental measure, brought in on a temporary basis. The industry hopes it will not come under pressure due to criticism of western countries that fail to reciprocate with reduced entry requirements of their own for Ukrainians.
Infrastructural challenges
One other major area of concern with the domestic tourism industry is the internal transport infrastructure. While the rail network was once the envy of other Soviet regions, it has suffered from lack of investment since Ukraine’s independence, while the country's roads often fall way below European standards. Currently, only the Kyiv-Odessa highway has anything like motorway status, and then only for short stretches of dual carriageway.
At the same time, the internal air network - which is extensive - is plagued by a variety of problems. In the 1990s, domestic air traffic declined drastically, although it has picked up since 2002 when the Ministry of Transport required airlines to cut domestic fares.
While this programme has since been abandoned, it led to a mushrooming of domestic routes to some 43 destinations within Ukraine and the emergence of no less than 23 different carriers. Most of the latter were small companies with no aircraft of their own, often operating substandard safety and maintenance services. Most of the former airports were well below international standards too, belonging to local municipalities and therefore at the whim of local financial commitments.
Outlook still promising
While most sector insiders would readily concede that Ukrainian tourism suffers from a host of difficulties and challenges, most would also point out that such is the way of things in any emerging market, with the plus side being that the opportunities in the country are correspondingly huge.
There are of course a number of caveats to all this. First, most foreign and domestic insiders stress the need for local partnerships to negotiate the rapids of local bureaucracy and “unconventional” practices, while also stressing that nothing is likely to happen soon.
Nonetheless, for those prepared to face the difficulties, the future for Ukrainian tourism is likely to be a rosy one. While policy initiatives depend on the outcome of the ongoing political dispute, a process of change is underway that may already be irreversible while also boosting standards and increasing opportunities.
