Owners of hotels using soccer championship for added exposure, chance to enter still unsaturated market.

As dusk settled across the capital, a blue building crane fitted with spotlights continued to swing on Shevchenko Boulevard in the center of Kyiv. Working in the darkness and sometimes rain, building teams pressed on with work on the 5-star Hilton hotel, set to open in time for the Euro 2012 soccer championship.

"We are trying to do everything necessary to finish the project on time, however a hotel of this category is very difficult to finish in two years," noted Boris Fuksman, one of the new investors of the project. "But we are not giving up yet. We have a plan that will permit us to get it done in this period. At the moment this is the purpose."

The world economic crisis hit in 2008 and idled building sites across the capital as financing dried up. But work on the Hilton restarted after Fuksman and Oleksander Rodnyanskiy, founders of 1+1 television channel, purchased a 50 percent share of the hotel project in March, according to Magisters law company, which advised the businessmen. Hilton International is slated to be the operator of the $150 million project.

The Hilton is one of a number of projects now going ahead full throttle.

Colliers real estate consultancy, in its last market overview, listed another four hotel projects in Kyiv that should be completed ahead of Euro 2012 – the five-star Fairmont and Radisson Royal, 4-star Holiday Inn and 3-star Ibis. The new hotels should add some 1500 new rooms.

Work is also carrying out in the other three cities that will host games for the European soccer championship. There are three new projects under development in Lviv, several in Donetsk city and two in Kharkiv, according to property analysts.

The list of new hotels in Ukraine in 2012 could have been even more impressive were it not for the economic crisis. With no financing available for hotels, around half of the project ideas remained on paper.

"We believe that the [building] process has started far too late. There has been too much talking; negotiating, haggling, arguing and too many obstacles have been put in front of willing developers and investors to get hotels constructed on time and on budget. Then came the crisis," noted David Jenkins, head of hospitality in Russia and the Commonwealth of Independent States with DTZ, another international property consultancy. "Now of course there is a sudden push for things to happen."

The hotels under construction will mostly be used to house soccer fans during Euro 2012. The teams themselves and official guests will stay in existing hotels.

Most market players agree, hence, that championship is not the true reason behind the surge in hotel building, but rather provided a timely boost and good public relations opportunity for entering the market.

The real reason is that the hotel market is in an embryonic state. In the capital of Ukraine, only 3 hotels are managed by international networks. Kyiv would need at least eight such hotels for the market to be considered mature, according to Colliers.

Demura admitted the quality, particularly of low-star hotels, is a concern. "I have no doubts that hotels such as the Hyatt, Radisson and Premier Palace all correspond to international standards," he emphasized. "I am more concerned about the local three-star hotels that are not included in any chain. Sometimes what you see here is horrible."

For example, Demura added, Ukrainian hotel rooms may be large, but are often badly equipped and furnished. Electrical sockets may be near windows and covered with curtains, forbidden by European fire code.