City turns to tourism to lure investment, rescue economy
v would be booming with business.
Regardless of the fact that Lviv is not only one of Ukraine's most eye-catching cities but is geographically closest to the rest of Europe, its official economy has been declining steadily over years, and the city has seen few serious investment projects fulfilled.
According to the Statistics Ministry, the region's industrial output shrank by over 9 percent in 1998, compared with a decline of 4 percent the previous year.
At the same time, direct foreign investment in the region since 1991 has only been $82 million.
The region's largest investments went to the food industry, for example, to the Coca-Cola plant near the city and the Svitoch chocolate factory. Foreign investment has also been made in local oil refineries.
Once famous plants producing buses, optical equipment, TVs and military equipment are standing idle and waiting for serious investment into their crumbling, outdated and energy-hungry equipment.
In 1998, the official unemployment figure for Lviv region was almost 5 percent, while the city's unemployment figure was around 2.5 percent and the national average was 2.9 percent.
City officials themselves recognized that these figures are not that significant, as a quarter of the city and region's population were forced to take long-term unpaid vacations, while another 19 percent of the workforce are employed part-time.
According to the Lviv mayor's office, the average Lviv family subsists on official earnings of just Hr 207, or just over $50, a month. Approximately 45 percent of the money is spent on food, 25 percent buys toiletries and other necessities, and 16 percent is used to pay utility bills.
Yet somehow the city's numerous cafes and bars seem to be doing very well, and new ones open almost every month.
According to local people, small businesses – not always legal – keep residents employed and keep cash flowing in.
Many locals travel 70 kilometers to Poland, buy cheap foodstuffs and consumer goods there, and then resell them at a profit in Lviv.
But Lviv is rich pickings not just for private food sellers. Bars and restaurants are sprouting up every day, as well as private shops, law firms and travel agencies. And recent months have seen the arrival of new private hotels to rival the glamorous Grand Hotel, which opened three years ago.
All this – as well as the city's rich architectural, cultural and historical heritage – could help turn Lviv into one of the country's major tourist attractions. Last autumn Lviv was added to UNESCO's list of cities with world-important architectural and cultural heritage.
But currently the city receives only 70,000 tourists per year, of whom 20,000 are foreigners.
To promote tourism, the city created a special Fund for Tourism Promotion and freed travel agencies from municipal taxes. Industry insiders say it's still not enough.
'I only pay Hr 7 of municipal taxes – I don't need exemptions. What I need is a special person in the mayor's office who would deal with the problems the tourist business faces,' said Natalya Hladylova, director of Lviv-based Mandry tourist agency.
The Fund for Tourism Promotion could become such an organization: It intensively campaigned to get the city on UNESCO's list and introduced a new fied of study at Lviv University – tourism management.
It has also printed some city-promotion brochures in Ukrainian and English.
Industry insiders complain that lack of tourist infrastructure in the city, as well as a lack of support from the central government in Kyiv, are slowing down the revival of the tourist industry in Lviv.
According to Hladylova, in 1937 Lviv had over 50 hotels, while now there are barely a dozen. Many of the existing hotels are overpriced, even though the quality of service is often two-star or less.
Also, the city's old airport runway is too short for many modern airplanes. Currently only the Polish national airline LOT and Germany's Lufthansa have direct flights to Lviv from abroad. Other airlines, such as Hungary's Malev and Czech Airlines, also have expressed interest in providing direct flights to Lviv, but they have been denied permission by the central authorities in Kyiv, Hladylova said.
