Ukrainian Hotel Real Estate – Every Project Has the Potential to Be Better Than the Last

Arthur Lupashko, founder of Ribas Hotels Group, sat down with Igor Ilchyshen, developer and founder of Arha Group, to discuss income-generating real estate in Ukraine. In addition to residential projects, Arha Group is currently building three hotel complexes that Ribas Hotels Group will manage upon completion. The two experts analyzed how the country’s hotel real estate market has evolved and shared their forecasts for its future development.

Igor
To put it briefly, the hotel real estate market in Ukraine is waking up and returning to reality. You could say it’s a shift from dreams and fantasies to the real world. Today, everyone understands what kind of returns a quality-built hotel should generate — and a quality-built hotel simply cannot come cheap.

Arthur
I completely agree. Both developers and investors have come to understand this. In the past, when most hotel real estate projects were being developed for the first time, even major players found hotel projects to be a serious challenge — one of the most complex products out there.

Igor
Exactly. For instance, I had no idea a hotel could have such high construction costs. But once we started running the numbers with our partners during the design phase of the AMA hotel, it became clear that the high price tag comes from many factors — among them, nearly 100% interior fit-out of all spaces and highly complex engineering. The challenges and rising costs are especially pronounced when building hotels in mountainous areas. A mountain hotel is, first and foremost, about terrain. Then there’s the construction season. In the Bukovel mountains, it’s quite short, with long winters and heavy moisture. For the AMA hotel, we had to build a retaining wall — and all of that drives up the budget.

Arthur
Absolutely, and it’s frustrating that investors don’t understand why hotel real estate requires significantly higher investment than residential. Most people don’t account for costs like retaining walls or hauling construction materials up a mountain. More often than not, guests judge a property by its infrastructure and amenities, because people come to us to escape the city and experience something different. That different experience is exactly what they’re willing to pay for — and pay handsomely.

We’re seeing average nightly rates rise dramatically right now. It would have been hard to imagine, even six years ago, that a hotel room in Ukraine could cost $500 a night with full bookings. Today, that’s perfectly normal. And these prices aren’t about businesses trying to maximize profits — they reflect what guests are genuinely willing to pay. If cheaper options exist but guests are still choosing to pay a premium, it means the offering matches their expectations for quality and service. This is intensifying competition between hotels, just as it does between restaurants. As a result, every new project strives to outdo the last, and I love that this trend is only gaining momentum. We need to compete harder for guests and be more creative. Thank God Ukrainians are an incredibly creative people — our teams come up with brilliant ideas all the time.

I’m also proud of the diversity of our portfolio. The AMA hotel in Bukovel, for example, sits high in the mountains with views of the ski lifts — it’s a retreat from urban life, far from civilization. We also manage complexes such as Ribas Karpaty, WOL.07 by Ribas, Helios by Ribas, and WOL.Green Polyana.

For those who want to be in the heart of the action, there are city hotels. In Vinnytsia, which has been in dire need of new hotel options, we’ll be opening WOL.Vinnytsia this year. Business travelers and all guests visiting the city will finally be able to stay in a brand-new hotel with river views, right near McDonald’s and a local church.

Igor
Finding great locations for new projects is genuinely difficult. Nobody outside our teams knows how many sites we’ve reviewed, walked through, and ultimately passed on. Some of them were decent enough, but not the best location. And it’s the top-tier location that carries a project through any crisis. That’s what makes our projects profitable and liquid for investors.

In today’s world, it’s better not to paint optimistic scenarios but to think about the possibility of an even deeper crisis — and in that case, a prime location will always pull the project into profitability. So even when building in challenging terrain feels daunting — and it really is hard work — if the location is right, we move forward with construction and development. Once you take on that responsibility, you have to be fully committed: in terms of money and in terms of time.

Arthur
Exactly — it’s a conscious choice. And whenever anyone spots a great location, we’re always ready to come out, run the numbers, take a look, and think it through. Personally, I’d love our next project to be in Kyiv or Lviv. In the capital, demand for real estate has recovered even during wartime. And Lviv is the best logistical hub and the heart of Western Ukraine.

I also want to highlight how the investor has changed. We’re seeing investors become less emotional and more rational — and I think that’s a good thing. The emotionally driven investors who were so prevalent in 2022 and 2023 were buying hotel units without really understanding how the business works. Then, after the first few months of operation, the same impulsiveness that drew them to the project had them demanding their 17 percent returns. You can imagine our surprise at how disconnected some people were from the reality of what they had actually purchased. That’s precisely why we start educating investors early: the first year is about building momentum, hitting operational benchmarks, and refining service. Strong occupancy typically begins in the second year, and by the third year, we’re hitting the targets set out in the financial model.

Igor
A lot is changing, and I remain optimistic about the market’s future development — whatever others may say. Despite the difficult situation, cities are growing and urbanization is accelerating. People are moving from small towns to larger ones, and that creates real demand for new housing stock.

Arthur
I also see strong long-term prospects for hotel real estate, tied to domestic tourism, inbound travel, and expat demand. The market will continue to mature and find its structure. Eventually, it will stabilize after periods of growth and correction. And our investors will come to understand that real estate investment is not, and cannot be, a short-term play.

Arthur Lupashko — founder of  Ribas Hotels Group Instagram: [@artur_lupashko] | LinkedIn: [Artur Lupashko] | Facebook: [Artur Lupashko]

Igor Ilchyshen — developer and founder of Arha Group Instagram: [@igorilchishen] | Facebook: [Igor Ilchyshen]