Results are mixed for the one-off business successes.
With tens of thousands of football fans flooding into Ukraine for Euro 2012, the nation is destined to earn badly needed tourist cash. But the event is turning out to be a disappointment for at least some businesses in downtown Kyiv, restaurants and pubs.
The mixed results are building upon the uncertainty of analysts who question how much Ukraine will cash in as co-host of the biggest sporting event to be held in Eastern Europe since the 1980 Moscow Olympics.
Ukrainian officials said they expect the nation to earn up to $1.5 billion in tourist spending, but many think that number is too high. A random survey of some central Kyiv businesses during the first few days of games found that business was down, not up.
More than 500,000 fans are expected in Ukraine for the three-week tournament. The presence of tens of thousands of Swedes was noticeable in Kyiv, where their team is playing all of their first round games.
During the first days of the tournament, some 60,000 tourists visited Lviv, spending more than $1.1 million, Lviv authorities reported on June 11. Nearly 90,000 foreigners arrived into Ukraine through Kyiv’s Boryspil Airport during the first three days of games, about 20 percent up compared to the same period last year.
And, of course, prostitutes were set to cash in. Many fans have been peppered on the main Khreshchatyk Street with business cards advertising 24-hour massage parlors with available women of the night.
But out of four restaurants and pubs located right next to Kyiv’s fan zone, only one reported an increase in sales, while others said client numbers had actually decreased.
Handily located across the street from the Vladimir Lenin statue on Shevchenko Boulevard, Chaikoff cafe seems to be doing great. Oleksandr Tereshchenko, the cafe’s administrator, said sales picked up by 20 percent.
Sales figures have not yet been made public, but beer, food and souvenir sales are, however, clearly booming at the jam-packed fan zone on Khreshchatyk.
In contrast, the lunchtime scene on June 11 at the nearby Naturlih pub was mixed. It was full of visiting Swedes, but staff said that does not mean necessarily equate to more than the regular business it gets during regular working days.
“We have not had more clients, even though the number of foreigners has gone up,” the pub’s administrator said while refusing to provide his name. A few days earlier, when the championship started, the bar switched to 24/7 operation. “But it hasn’t paid off yet,” he added.
Naturlih’s competitor, Bochka pub, located in the back yard of Bohdana Khmelnytskoho Street, says it has not gained any business, either. “We have just as many clients are we used to just before the games,” said Serhiy Golik, the pub’s manager. Since many roads in the center are blocked off during the games, suppliers are having trouble delivering orders, he explained.
Located just around the corner from Kyiv Pecherskiy District Court, Bochka picked up a lot of business during the abuse-of-office trial of ex-Prime Minister Yulia Tymoshenko and other opposition leaders. They added extra daytime clientele because many journalists and opposition politicians frequented the affordable food and drink establishment to take a break from the long hearings.
We have just as many clients are we used to just before the games,
– Serhiy Golik, the Bochka pub’s manager.
In summertime, indoor restaurants in Kyiv usually experience a drop in sales while those with summer terraces – like Bochka – get a boost. But with the crowded fan zone posing major competition during Euro 2012, the bar has been losing business, Golid said. “Considering our investment into advertising and promotion, this is not likely to pay off and it’s not what we expected,” he said.
By contrast, Polish media report that restaurants are experiencing such a jump in demand that some eateries are running out of necessities such as salt.
Economists have praised the billion-dollar infrastructure upgrades conducted in Ukraine in the run-up to the games as achievements that will pay off for the economy in the long term. But they have questioned how much the nation will actually make during the games.
Despite charging prices higher than in many European countries, Ukrainian hotels are booked. Increased airline passenger traffic will offer a boost.
Citing various estimates, London-based consultancy Capital Economics said in a May report that Ukraine and co-host Poland could each receive “around one million extra visitors, with each tourist spending as much as 150 euros a day.”
“On the (admittedly arbitrary) assumption that each visitor stays for a week, spending per visitor would amount to 1,050 euros. Hence, total additional tourist spending as a result of Euro 2012 could be as much as 1 billion euros in each country – equivalent to 0.3 percent of gross domestic product in Poland and 0.8 percent of gross domestic product in Ukraine,” Capital Economics added.
This short-term boost could help counterbalance current economic risks facing Ukraine. Even though the country’s GDP increased by 5.2 percent last year, the near-term future does not look as bright in light of the mushrooming Eurozone crisis. Ukraine’s fragile economy, still very vulnerable to external shocks, is expected to post about 1.6 percent of GDP growth this year.
Foreign direct investment into Ukraine since independence is only a fifth of that pumped into Poland, the only European economy to post growth during the 2009 recession that hit Ukraine particularly hard.Apart from this one-off Euro 2012 economic boost, if Ukraine is serious about raising bigger and long-term investment and tourism dollar inflows, it should just fix the economy and investment climate, not pin its hopes on one-time sporting events, said Vasyl Yurchyshyn, economic analysts at the Kyiv-based Razumkov Center.
“Overall, the criterion [for long-term] success will be on whether there is an increase in foreign direct investment – if investors want to invest into the country,” Yurchyshyn added.
Kyiv Post staff writer Yuriy Onyshkiv can be reached at [email protected].
