How the war affected the hotel and restaurant business of Mykolaiv

The full-scale war significantly changed the sphere of hotel and restaurant business in Mykolaiv. The city became one of the key targets of Russian attacks, which forced thousands of people to leave their homes. As a result of constant shelling, not only residential buildings and critical infrastructure were seriously damaged, but also business facilities, including hotels and restaurants, which provided part of the economic development of the city.

The situation is also complicated by the lack of water, caused by the destruction of the water main, and frequent power outages, which have become the norm due to damage to the power grids. This significantly affected the possibility of doing business, as the lack of basic resources paralyzed the work of many institutions.

How Mykolaiv entrepreneurs overcome the challenges that the full-scale war put before them, read in the NikVesti article.

Hotels: losses and challenges

Mykolaiv's hotel sector suffered losses — several hotels that used to host tourists were seriously damaged. On March 21, 2022, the Russian military dropped a bomb on the Ingul Hotel in the center of Mykolaiv.

«After the start of the full-scale war, our hotel did not work. A month after the start of hostilities, there was a bombardment, we were forced to suspend our activities, says the owner of the hotel, Olesia Diatlova.

Later, on July 20, 2023, the Russians hit a nearby hotel building with a rocket, which caused even greater destruction. Currently, the building has been recognized as emergency, and it will have to be dismantled in the future.

The owners had to say goodbye to the staff, which is about 100 people. Olesia Diatlova cannot say what will happen to the building in the future. He says that it is difficult to think about the future, but tries to live today.

«The plans are, you know, dreamy. Because now it is actually very difficult to think about the future. That is why we live today. And there are no far-reaching plans. I want everything to be over, and only then we will make some decisions,» says the owner of the hotel.

Inhul Hotel is not the only Mykolaiv hotel that became a «victim» of Russian aggression. On July 31, 2022, two Russian missiles hit the Reikartz River Mykolaiv hotel. At that time, it was the heaviest shelling of Mykolaiv since the beginning of the full-scale war. After some time, the hotel resumed its work under the new name Optima River Mykolaiv. However, he did not have time to work for a year when the Russian army struck the hotel for the second time on the night of April 28, 2024.

Some of the hotels in Mykolaiv that were not under fire had to temporarily stop working, failing to withstand the test of the lack of pre-war visitors, the loss of employees who decided to leave the city, problems with water, electricity, etc.

The Department of Economy of the Mykolaiv City Council NikVesti told that 15 out of 16 hotels and hostels that operated before the full-scale war were operating in Mykolaiv. However, the research was conducted in the fall of 2024, before the second bombing of the Optima River Mykolaiv hotel. So the actual figure for August 2024 is 14 hotels.

« As for the number of hotels in operation, according to statistics, 16 hotels and accommodation facilities will be in operation by 2022. There were about 1398 seats. In principle, almost everyone who was affected has resumed their work, and now there is demand,» said the director of the economy department, Tetiana Shulichenko.

There are currently 14 hotels available on the popular Booking platform for booking accommodation in Mykolaiv, which continue to operate despite all the challenges of the war. The choice of accommodation is not limited to hotels — you can find about 100 accommodation options, including apartments and apartments, which offer guests a variety of living conditions. The average cost of a night in a hotel is 1,800 hryvnias, while the rent of apartments and flats varies considerably — prices start at 400 hryvnias and can reach 2,500 hryvnias per night. Airbnb accommodation search platform for accommodation in Mykolaiv, housing options for tourists. These are mostly apartments and flats.

NikVesti asked the Department of Economy of the Mykolaiv City Council whether the owners of such apartments pay tax to the city budget. The director of the department, Tetiana Shulichenko, noted that according to the State Tax Service, today there are 81 taxpayers for this type of activity. This indicates that part of the owners probably do not pay taxes to the city budget, which can affect financial receipts in the local treasury.

Impact on the city budget

One of the indicators by which you can follow the development of the industry in Mykolaiv is the tourist tax. In 2021, Mykolaiv demonstrated positive results, reaching 3.2 million hryvnias in revenue from the tourist tax, which exceeded the approved plan of 1.95 million hryvnias. It was a time of active development, as compared to 2020, the tourist tax increased by 182%.

«Before the full-scale war, there was a gradual increase in this indicator due to the arrival of various tourists to the city, both foreign and Ukrainian,» says Tetiana Shulichenko.

However, the situation changed dramatically in 2022. Instead of the planned 2.38 million hryvnias, the budget received only 563 thousand hryvnias. The reasons for this are clear: constant shelling, mass exodus of the population, destruction of infrastructure.

2023 marked the beginning of a slow recovery. Although the planned indicators were significantly reduced to 240 thousand hryvnias, actual receipts amounted to 737 thousand hryvnias. This was an unexpected improvement against the background of the previous year and indicates a gradual return of interest to the city, primarily from foreign partners who visit Mykolaiv.

«Starting from 2023, the tourist tax gradually began to grow as a result of the arrival of foreign delegations that came to participate in reconstruction projects, for example,» says the Department of Economy.

For the first half of 2024, the tourist tax amounted to 662 thousand hryvnias, which is 77% more than for the same period of the previous year. In general, the budget for 2024 provides for 750 thousand hryvnias of tourist tax. Although these figures are still far from pre-war figures, they demonstrate the gradual return of life to the city, as well as the readiness of Mykolaiv residents and businesses to fight for their future in wartime conditions.

«We are already visited by non-business tourists. For example, there was a family from Poland that came to see the places where there were the biggest destructions in Ukraine,» notes Tetiana Shulichenko.

The work of restaurants in the conditions of war

The increase in tourist tax also depends on the recovery of other economic sectors. In August 2024, 900 catering establishments will operate in Mykolaiv, which has a positive effect on the general economic climate of the city.

However, Mykolaiv's restaurant sector has also experienced serious challenges. The war significantly changed working conditions and presented business with challenges that no one had faced before. Maksym Yavorskyi, the owner of the Entrecot restaurant, assesses the modern hotel and restaurant business in the city as extremely complex and unpredictable.

«We found ourselves in a situation where we have to fight not only for the preservation of business, but also for survival,» he says.

However, one of the main problems was the physical destruction of institutions. The restaurant was repeatedly damaged during shelling, and the restaurant premises eventually became unusable. This put jobs and team retention at risk.

«We lost the premises, but we did not lose the spirit. We were forced to look for new places to work and even opened new establishments in other regions,» says Maksym Yavorskyi.

In addition to physical destruction, entrepreneurs are faced with problems of lack of resources and interruptions in the supply of electricity and water. For an establishment specializing in a grill menu, these factors are critical.

«Our products require special conditions, such as proper ventilation and availability of charcoal for grilling. But finding suitable premises in Mykolaiv became a real challenge,» shares the restaurant owner.

Maksym Yavorsky calls himself the record holder for the number of Russian hits. In addition to the Entrekot restaurant, the entrepreneur also owns a number of public catering establishments in Mykolaiv, in particular, the gastro-bistro Sil. The institution was located in the building of Mykolaiv RMA, which was shelled by the Russian army on March 29, 2022. Another establishment of Maksym Yavorskyi called L'eclair was located in the building of the destroyed Inhul Hotel of Olesia Diatlova.

Many facilities have been forced to suspend operations or reduce operations due to security risks and economic difficulties. However, according to Tetiana Shulichenko, director of the city's economy department, at the moment it is impossible to accurately estimate how much money Mykolaiv's budget lost from the activities of the restaurant business during the full-scale war.

«This may be partly due to the tourist tax, but we cannot say separately by industry. You can also see how much was received in 2021, and how much now, from the single tax. But there will be no significant losses, as some industries have been replaced by others, more appropriate for this time,» the department says.

According to reports on the implementation of the budget published on the website of the Mykolaiv City Council, the single tax for the first half of 2024 amounted to 341.5 million hryvnias, which is 44.98% more than in 2022, when it amounted to 471.1 million hryvnias.

If we compare 2024 to 2023, assuming the second half of the year is similar to the first, we see an increase of 26.67%. This is a significant increase after a slight decrease in 2022 compared to 2021, when the tax was 517 million hryvnias.

However, already in 2023, an increase of 14.45% compared to 2022 was recorded. Therefore, it is possible to observe the gradual recovery of the city budget, despite the impact of the full-scale war, which is probably connected with the stabilization of business activity.

To summarize, the hotel and restaurant business in Mykolaiv is going through difficult times, as the devastating consequences of the war left a significant mark on the development of the city. The risk of new attacks and uncertainty about the future make the recovery process much more difficult. Entrepreneurs face numerous problems, which negatively affects the financial stability and ability of the business to function at the previous level.

Despite these difficulties, there are signs of positive changes. The gradual growth of revenues, in particular from the tourist tax, indicates hope for the recovery of economic activity. The emergence of new establishments, the restoration of old ones and the increase in the number of visitors can become important factors in restoring the economic stability of the city. However, many challenges still need to be overcome for full recovery.

We created this material as a member of the Recovery Window Network. Find out everything about the recovery of the affected regions of Ukraine on the single recovery.win platform.

Olena Kozubovska, NikVesti