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Tourism in Ukraine. V.Tsybukh, Chairman of the State Tourist Administration of Ukraine

Assessment of achievements and of new prospects for the future of the State Tourism Administration of Ukraine on its first anniversary.

Anew tourism-related state body of the executive power of Ukraine was set up in December 2001. The State Tourism Administration of Ukraine (STAU) was designed to promote and realize state policies in the sphere of tourism. Such an organization initiates new ways of dealing with the issues of developing tourism in Ukraine at a state government level and solving problems comprehensively. It would be wrong to say that full-scale development of tourism in Ukraine began after the STAU was founded, but analysing the achievements of its first fourteen months, one can declare with a great degree of confidence the considerable changes both in the tourism and the recreational spheres.

In the last ten years the market for tourism has been actively expanding; the number of companies in the industry has grown greatly and now is in excess of five thousand. If we proceed solely from these figures, it can be concluded that the Ukrainian tourism industry had been fully formed. But the main problem lies in the fact that the National Tourism Product occupied an insignificant place in this rather developed market of tourism services, and could hardly contest with the offers of competitor-states, comparatively of a better quality and often more economical. Thus, the demand for Ukraines tourism-related goods and services, and the place our country occupied in the world tourism market was not satisfactory. In recent years, the formation of the Ukrainian National Tourism Product persisted spontaneously, without comprehensive support from the state. This can be explained by the fact that the tourism industrys very foundation, made up of recreation complex territories and means of accommodation (hotels, resorts, etc.), was out of the field of competence and activity of the central body of the executive power in charge of tourism. The current law on tourism does not offer a legal foundation for the activity aimed at providing services in accommodating tourists. This encourages the emergence of a powerful shadow market of hotel services, which, in turn, damages law-abiding hotels economically.

Furthermore, the construction of a competitive National Tourism Product involves an efficiently coordinated, tourism-friendly transportation system, a multitude of cafes and restaurants, effective maintenance and sanitation of beaches and parks, restoration of historical landmarks and monuments, functioning museums, prolific souvenir production. A new system of additional services for the tourists yacht clubs, golf courses, aqua-parks, and entertainment centres, should be created.

The charter regulating the State Tourism Administrations activity established a new paradigm in our work task coordination among all the bodies of state power and of enterprises connected with tourism.

Naturally, one of the most important problems facing the newly created ministry of tourism was to map out the ten-year strategy delineated in the State Programme of Tourism Development for 20022010, adopted by the Cabinet of Ministers on April 29 2002. I want to reiterate that our main strategic goal is the creation of a powerful national tourism industry capable of producing a competitive tourism product. It should be emphasized that Ukraine inherited the powerful Soviet system of sustaining mass tourism and health treatment more than four and a half thousand hotels, tourist complexes, health resorts with the total potential of accommodating 62 620,000 persons. As a Soviet Republic, Ukraine was a major centre for prophylactic and therapeutic treatment, tourism, and childrens recreation. However, due to the new demands of the market, 90% of this infrastructure is in need of considerable investments for reconstruction and overhaul.

We have managed to take the first key steps in the implementation of several investment ideas; we have analysed and promoted certain projects in coordination with local tourism authorities. These were our achievements at the international investment conference in Istanbul, at the investment forum in Lviv, and at the economic summit of the Central European Initiative in Skopje, and in the course of the numerous bilateral talks with the representatives of investment and hotel enterprises from the USA, Spain, Russia, Turkey, Italy, France, Austria, Morocco, and Saudi Arabia. The total value of planned investment is in excess of two billion US dollars. We are far from being too optimistic over the results of preliminary negotiations, but 2003 promises several important projects. It should also be mentioned that Ukrainian investors have become more active. Thanks to them the Ukrainian tourism industry increased its operational potential by several dozen hotels and resorts, pioneer aqua parks of global standards, and new skiing centres.

One of our prominent aims was to create a favourable tax and normative climate for the development of infrastructure, and in this respect we have also managed to take several weighty steps. One of these steps was the following: the State Tourism Administration of Ukraine jointly with some public organizations had put forward an initiative to have the hotel tax reduced or abolished altogether. We have been lobbying this issue for quite some time and now it has been submitted for consideration to the Verkhovna Rada. This tax is detrimental to our hotel industry and makes it incompetent in the presence of global players. But I want to emphasize that this tax, as long as it exists, hinders the investment processes in the hotel business.

In August 2002, the Ukrainian government passed a resolution which had been worked out by the State Tourism Administration of Ukraine following the directive of the Prime Minister of Ukraine. It should be mentioned here that as little as a year before this document was adopted, both the bodies of power and public organizations were patiently explaining to the management of hotels the necessity of strictly abiding by the clauses of the Constitution and by the corresponding Ukrainian laws in dealing with foreign customers, as well as the inadmissibility of different prices set for foreigners and local citizens. The experience gained at the Dnipro Hotel in Kyiv was analysed and the results were made public in specialized printed editions. Financially discriminatory practices as far as foreign customers were concerned, were doing a lot of damage to the prestige and world-image of Ukraine, hampering the development of the Ukrainian tourism industry. We kept receiving complaints both from the diplomatic representatives in Ukraine and from foreign tourist agencies and organizations, the World Tourism Organisation included. This is why, a new approach, painful as it may have been for some managers, was, in our opinion, both correct and timely.

The draft of changes to be introduced into the Law on Tourism developed by a group of members of parliament jointly with the State Tourism Administration of Ukraine was widely discussed. It should be emphasized that one of the most significant characteristics of this legislative draft is its qualifying the tourism industry global practices and standards should be introduced into the organization of the Ukrainian market, with the functions of tour operators and tour agents clearly separated. At the same time, the legislative draft creates a normative base for the functioning of units of accommodation, which, in turn, maximally simplifies their registration and work regulation, and alleviates competition, eliminating shadow markets.

This legislative draft was submitted to and registered by the Cabinet of Ministers. Experts analysed it, and now it is being prepared for consideration in the first reading, after which we think there will be a number of important changes to be introduced.

Alongside with stabilization in legislation, a challenging goal we undertook was the development of a new marketing strategy of Ukrainian tourism with the creation of a new global and local image of our tourism-related goods and services.

I have to admit though that our last years budget, compared to that of our principle competitors could not even be called modest. Turkey, for example, spent over 60 million dollars on advertisement and promotion of its tourism product, by contrast we had been allotted only 200,000 dollars for our needs, most of which we received only at the end of the year. Nonetheless, even with such modest financial backing we managed to achieve quite a good deal.

The Ukrainian National Tourism Organization managed to effectively represent Ukraine at the exhibition stands at the Ukrainian national expo, at international tourist fairs in St Petersburg, Russia, and in Poznan, Poland (Russia and Poland, as things look today and in prospect, are most likely to be among our priority external markets). At the London Travel and Tourism Exchange we managed to unite all the participating Ukrainian tourism-related enterprises within the framework of a single stand. Such a unity was achieved for the first time thanks to a subsidy we provided for the two principle organizers. UITT and Ukrayina, tourist expos held in Kyiv with the support of the STAU and WTO, have become more professional and attract greater numbers of participants and visitors.

We managed to establish a full-fledged cooperation with a number of leading newspapers and magazines, which began regularly publishing articles about the problems and potential of Ukrainian tourism. Among the more notable achievements in this respect are a regular column about tourism in the newspaper the Day, the publication of Ukraine Incognita, a book that shines a light on less known parts of Ukraine and non-prominent events in its history. An effective system of cooperation between the State Tourism Administration of Ukraine and the Ministry of Foreign Affairs helps in disseminating information about, and promoting our tourism industry. The 2003 budget will allow us to provide all Ukrainian embassies with advertisement and reference materials for professionals. An official STAU website commenced activity before the Day of Tourism. The site provides practically all the necessary information for industry professionals: normative and legislative bases, lists of tourism agencies, materials about major events; conditions of participating in tourism expos organized under the patronage of the State Tourism Administration of Ukraine. Incidentally, our new exhibition strategy will be duly tested at a Berlin trade fair in March 2003, where our countrys tourism market will be represented in a unified stand, the participation of Ukrainian tourism companies will be financed by the state.

In September 2002, official Ukrainian tourism symbols were adopted for the duration of the Ukraine Invites campaign.

The governments decision to simplify the entrance formalities played an extremely important role in the growth of the industry from April 2002 foreign citizens can obtain entrance visas for up to 8 days at the airports of Symferopol and Odesa, and at the Odesa Sea Port. This experiment was initiated by the State Tourism Administration of Ukraine as the first step towards the introduction of a visa-free entrance regime for EU, US, Canadian, Swiss, Japanese, Australian and South Korean tourists. According to our estimates, the extension of this visa-free experiment to Boryspil Airport in Kyiv, on the week-end in Kyiv basis, will allow the Ukrainian air companies, hotels and restaurants to earn about 40 million dollars a year. It should be mentioned that the problem of tourists crossing the Ukrainian borders has always been in the focus of the State Tourism Administration of Ukraine; this is the topic of a continuing dialogue between the management of the customs service and with the State Borders Guarding Committee.

In the year proclaimed a Year of Ecotourism by the United Nations Organization, the State Tourism Administration of Ukraine directed its main organizational efforts at the development of rural green tourism, at the support of various Union of Promotion of the Development of Rural Green Tourism in Ukraine initiatives. An important role in encouraging these initiatives was played by the Euroasia Fund, which financed seminars and projects, designed to promote rural tourism in several regions of Ukraine. At present, about 1,500 agricultural enterprises practically in all parts of Ukraine receive tourists. According to our estimates, this potential can grow twofold.

Thus, another important direction in our activity is strengthening our cooperation with the Ministry of Culture and the Arts, with local authorities whose goal is effective utilization, maintenance and preservation of cultural and historical landmarks and monuments.

In late November 2002, an agreement on cooperation was signed between the State Tourism Administration of Ukraine, small historical towns in Western Ukraine, and the US organization RTI, which works on the municipal development of Ukraine. The leitmotif of this agreement, which resulted from a joint initiative, is the development of tourism and of handicrafts, as a strategic element in the development of the urban areas of Ukraine.

A considerable increase in the budget financing activities directed at the development of tourism can be regarded as a signal victory for the State Tourism Administration of Ukraine, and as a recognition of considerable growth of its authority. Most of the means received through this financing will be channelled into advertisement and promotion of the Ukrainian tourist product. This showed that the Cabinet of Ministers, Verkhovna Rada and the President had appreciated our common efforts and achievements, and attached an ever-increasing attention to the strategic development of tourism.

The most important task in the beginning of 2003 for the State Tourism Administration of Ukraine will be the working out of the measures directed at the development of internal and incoming tourism which will be adopted by the Cabinet of Ministers of Ukraine. The draft document was discussed at the board meeting of the State Tourism Administration of Ukraine, at other central and local bodies of power, which are interested in the development of tourism, at the meetings of hotel associations and tourist companies.

It will be the most important action-spurring document for us, as it indicates the way of the realization of the clauses of the state programme of the development of tourism and can concretize each individual point.

I am afraid that even in the extended space of this article it will not be possible to tell about all the aspects of our activities even in a brief form. It is not accidental that they say that the tourist sphere encompasses practically all the branches of the economy and social and cultural life. In conclusion I would like to say that our work can be successful only in case if we manage to create an effective model of interaction between the executive power and parliament, mayors of towns and cities, managers of companies, public organizations and international funds, to involve all those who are interested in the development of tourism in coordinated work.

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