Ukraine’s largest hospitality company Reikartz Hotel Group is looking beyond domestic markets to international expansion opportunities to grow the portfolio of hotels it operates, according to the company's head of sales Maxim Bogdanov.

Reikartz manages 40 hotels in Ukraine, three more than it did at the start of the pandemic.

The company operates in virtually all of Ukraine’s major cities, with approximately 2,500 hotel rooms overall.

The COVID-19 pandemic wreaked havoc on Ukraine’s hospitality industry, but it has not prompted the company to alter its investment plans, Bogdanov said.

“Before the pandemic, we believed that a 30% slump in occupancy we evidenced in 2015 after [Russia’s annexation of] Crimea was the worst possible scenario we may ever encounter,” Bogdanov said, adding that COVID-19 changed such thinking after the firm had to close all its hotels for approximately two months in 2020.

“This was a tough time, and the worst part was not knowing when and how we would get out of it,” he said.

In 2019, Reikartz’s average hotel occupancy was 64%, a figure Bogdanov said only a few hotels in the country managed to achieve that year.

In 2020, the firm marketed special programs to domestic tourists, which brought in some demand, but all of its hotels fell short of 2019’s operational performance, he said.

“Do bear in mind that we are the country's biggest hotel company. Independent hotels found themselves in a predicament far worse than ours,” Bogdanov said, adding the company has taken advantage of a diversified sales policy.

Reikartz signed numerous corporate agreements to attract travelers from foreign markets, he said. The company also began working more closely in 2020 on state contracts. Booking.com accounted for only 4% of sales before the pandemic, as the company has deliberately limited bookings through this channel.

The firm does cater to meetings, but not large-scale events — another factor that allowed it to be more flexible in its operations during the second half of the last year, he said.

Since the start of the pandemic, Reikartz has opened three new hotels in Lviv, Rivne and Chernomorsk, which is a popular tourism destination on the Black Sea coast.

“COVID-19 has not altered our investment plans, although it may take more time to implement them now,” Bogdanov said.

He said company executives anticipate that hotel performance could return to pre-crisis levels by late 2021 or early 2022, depending on how coronavirus is tackled in Ukraine and globally.

“The biggest question is when the travel resumes," he said. "This is equal for hoteliers in Rome, Barcelona or New York. In terms of the pandemic, we are all in the same boat."

In 2019, Ukraine attracted approximately 15 million foreign tourists, down from 25 million in 2013 when almost 50% of all annual arrivals were Russian tourists.

Due to political issues in recent years, travel between the two countries has nearly come to a complete stop, Bogdanov said.

Ukraine has benefited from expanded tourist flow from the European Union — a source hotel firms hope will continue to grow as travel demand rebounds.

“This tourist flow was growing, and we hope it will start growing soon again. Ukraine remains poorly explored by foreign visitors, although the country offers interesting travel directions and new locations,” Bogdanov said, adding foreign tourists are primarily visiting big cities such as Kiev and Lviv, which both feature largely in hoteliers' investment plans.

Reikartz also operates in Sweden and is currently looking to new markets, including Kazakhstan, Belarus, Poland and Sweden.

The pandemic has not affected these plans either, Bogdanov said.

“Our business model envisages opening not a single hotel, but a network of five to 10 hotels [in each market]. We target to go this way in Kazakhstan, covering the country’s biggest cities,” he said.

Bogdanov said Reikartz has applied common EU service standards across its entire chain.

“From the very beginning, we have looked at the countries severely affected by COVID-19 such as Italy and others to see how hoteliers are coping,” he said.

The company is expanding its “Swedish” operation model, which was established at its hotels in Sweden.

"Its main distinctive feature is that we don’t have a porter or waiter. We have a hotel employee instead, and he could have different duties,” he said.

The company also introduced flexible working timing for staff. Some have been put on part-time schedules, especially during the low season, which has helped the company to cut some operational costs.

Some layoffs were inevitable, but the company sought to limit the reduction in its workforce to make ramping back up easier, he said.

“The general concept was that we would not be able to keep dragging a boat with 10 employees, especially if eight are enough to keep it afloat,” he said.

"We also re-negotiated on contract terms with our suppliers. We are a big company — before the pandemic, we had 50,000 visitors per month in our hotels. Now, this figure is around 35,000 to 40,000, but still, that's a lot, and we managed to urge our suppliers to meet us in the middle in terms of costs,” Bogdanov said.

The current crisis has pushed the company to cut rates by between 10% to 15%, Bogdanov said, adding this has attracted some additional corporate clients.

Reikartz also launched a marketing agency called Alliance, uniting dozens of hotels in Ukraine from several hotel-management firms.

“We use it to make sales [to other hotel firms] in the cities where we are not present, or where we are present in a different price segment,” he said.