KYIV – A shortage of cheap financing is jeopardizing the campaign to upgrade the capital's hotels in time for next year's meeting of the European Bank for Reconstruction and Development, according to city officials. Kyiv still lacks adequate accommodations for more than 3,700 of the 5,000 guests expected for the EBRD's big annual convention, Mykhailo Shparyk, the Kyiv City Administration's Hotels Department chairman, said Tuesday June 17. So serious are worries about the space crunch that the EBRD is likely to use Dnipro riverboats to house some of its staff, bank officials said at a press conference last week. 'The current state of the Kyiv hotels satisfies neither us, nor the EBRD,' Shparyk said at the June 11 press conference. The city made plans to refurbish 16 of its hotels at a cost of $100 million and approved construction of two new five-star projects to prepare for the EBRD meeting. However, of the 16 existing hotels slated for renovation, only six – Kievskaya Rus, Bratislava, Ukraina, Dnipro, Natsionalnaya and Express – have 'some of the money they need to finance the reconstruction,' Shparyk said. The likeliest financing sources to date, according to city officials, are commercial banks offering to lend at an annual interest rate of 15 percent Western credits channeled to them by the central government. Deputy Mayor Volodymyr Yaloviy complained about those terms last week. 'The hotels would agree to 10- or 12-percent credits and not more, especially since the hotels themselves will be mortgaged,' Yaloviy said. City officials have asked the EBRD to come up with the loans, but have not yet received a response, Yaloviy said. In the meantime, the bank is counting on riverboats renovated by the UkrRichFlot company with its help. EBRD Secretary General Antonio Maria Costa said last week the boats might accommodate 300 to 400 guests of the EBRD. 'The cabins there are nice, but a bit too small,' he added. On land, the best bets are two new five-star hotels, including one being built by the city. One of these, the 300-room Intercontinental-Kyiv, will be built by the Turkish firm Ay-Sel on Sofiivska Square at a cost estimated at $50 million. The other is to be built by the city on the site of the old Teatralnaya Hotel on Khmelnitsky Street. Vitaliy Kozak, the city official leading the project, said the 200-room hotel will cost $25 million. The German-Ukrainian joint venture Nigma owns 80 percent of the project, with the city holding the remainder. The new buildings together could house just 10 percent of the visitors expected for the EBRD meeting, however. Which is why city officials are anxious to renovate the older hotels built in the 1960s and 1970s to shabby Soviet standards. 'We will definitely be able to build new hotels, but we might be unable to carry out the whole volume of reconstruction work we planned by the May 1998,' said Shparyk. A survey carried out by EBRD experts earlier this month found that only 2 percent of hotel rooms now available to house EBRD delegates meet the standard for four-star hotel accommodations, the Interfax-Ukraine news agency reported. Another 22 percent rated three stars, and 27 percent earned two stars. Almost a half of the rooms surveyed merited only a single star. Parliament this week is considering government legislation that would exempt hotel projects tied to the EBRD meeting from some custom duties on equipment imports. Several other five-star hotels are expected to rise downtown over the next several years. These include the Hilton on Volodymyrska Street, Grand Hotel on Hrushevsky Street, Daewoo's hotel, shopping and office complex in Bessarabska Square, and hotel planned by a Swedish firm on Saksagansky Street. However, few if any of these projects will be completed by next spring.
Hotel renovation program in trouble
