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How Hotel Business in Uzbekistan Tries to Catch Up with Rising Flow of Tourists

In the country, tourism already has high priority and authorities are providing this type of business with finance

Image: Andrei Bortnikau/Shutterstock

By the end of 2021, Uzbekistan is planning to double its number of guest rooms as the market requires more of them for foreign tourists.

Pavel Nosachev
Tashkent

About 6.7 million foreign tourists visited Uzbekistan in 2019. Three years earlier this figure was only 2.2 million. As the World Tourist Organization (UNWTO) estimates, Uzbekistan holds the fourth position among countries with fast-developing tourism industries. However, the rising flow of foreign guests showed some shortcomings fir Uzbekistani tourism. One of the main pressure points is a low number of guest rooms.

Bed space under Uzbek sun

According to the State Tourism Committee of Uzbekistan, early this year there were 1,200 hospitality business sites including hotels (70%), hostels (18%) and other options (12%). The total number of rooms is about 24,000, with a total of50,000 beds available. “On average 83% of all rooms were booked in 2019. This is a very good result. Sometimes in peak season, it’s very hard to find available rooms in famous tourist centers like Tashkent or Khiva, Samarkand, and Bukhara,” says Shukhrat Isakulov, head of the Department on Strategic Development and Human Resources of the State Tourism Committee.

As Farangiz Abdullaeva, head of the Uzbekistan Association of Hoteliers noted, because of high demand the seasonal swing is no longer crucial. “Usually Uzbekistan tourism is considered seasonal, but in 2019 demand for room inventory was throughout the year,” she stated.

Support by the money

Authorities labelled tourism a strategic industry and are now trying to resolve problems with the shortage of available rooms. In 2019 the country launched a program to subsidize the construction of new hotels. The state covers developers' expenses in the amount of 40 million Uzbekistani soʻm ($4,200) for one room for three-star hotels and 65 million sums ($6,800) for a room in four-star hotels.

Aziz Tashev, the owner of the three-star Sogdiana Hotel in Samarkand, is one of those entrepreneurs who has already taken advantage of such support. “Thanks to this subsidy, we were able to cover our expenses by 20%; in total, we received 4.08 billion soʻm (equivalent to $ 428 thousand). This is significant support for us. It is impossible to develop tourism so fast without support from the state,” Tashev said.

The subsidy program will run until 2022. During this time, the number of hotels in the country should double (up to 2,400) and the number of rooms should increase to 50,000. Last year, 270 new hotel business facilities were built in Uzbekistan.

Change one’s lifestyle and become a hotelier

Uzbek authorities are ready to support local entrepreneurs not only with money but also with administrative power to simplify the procedure and requirements for obtaining a license for this type of activity. As a result, the number of guest houses and hostels has risen sharply in the country. According to Shukhrat Isakulov, these small businesses helped to manage the situation during peak periods in the 2019 tourist season.

The first hostel in Tashkent was opened by Abdulaziz Ikramzhanov and his parents more than a year ago. Now he is very confident that this type of hotel has great prospects in Uzbekistan. “We do not feel much competition, and there is no diversity among hostels either. Uzbeks are used to living in large houses, and now more and more people understand that it is normal to use their home to accommodate guests for money. Moreover, no additional paperwork is needed,” Ikramzhanov says.

The lack of bureaucracy to start a hotel business leads some owners of apartments to register their property as a hostel. According to Tashkent realtors, this trend is driven by a lack of available rooms in hotels and demand for apartments by daily rent. As Uzbekistani law requires foreigners to register at a place of stay if they do not leave the country before three days, hostels help to do that because they are registered in the state database.

“Now we see that many entrepreneurs are interested in tourism and shift here from other business segments. Businesses in tourism can be paid off very quickly, especially when there is such high demand for rooms,” Shukhrat Isakulov describes.

The deficit in rooms also affects the pricing policy of hotels, he says. “At the moment, hotel prices in Uzbekistan are relatively higher than in other countries. In Tashkent or Bukhara, a room in a three-star hotel will cost about $40-50,” Isakulov said. He is confident that the situation will change when more hotels in the country start operation.

Living well is not forbidden

The growth of tourist activity provoked interest in Uzbekistan from companies that specialize in the construction of five-star hotels and large hotel complexes. Currently, there are only two hotels of the highest segment in the republic - Hyatt Regency and Hilton, both located in Tashkent. According to Farangiz Abdullayeva, by the end of the year, the Marriot hotel will be opened in the Uzbekistani capital.

“Negotiations are ongoing with Sheraton and InterContinental - these are the brands that were on our market, but for some reason left it. Now they are returning, and very active. There was information, but not yet confirmed that the Four Seasons wants to enter our market. Big brands show great interest in Samarkand. Large hotel chains want to enter the local market because there are many different preferences for hotels in the country,” Abdullaeva emphasized.

Another reason why global hotel chains are so interested in Uzbekistan is the growth of business activity in the country. In turn, it stimulates the development of such a direction as MICE tourism which involves holding large business events, forums, congresses and so on. “We see that strong demand is the main reason more hotels with conference rooms currently are under construction. Therefore, Uzbekistan can pose itself as an effective platform for various business events,” she said.

Hotels without service - money down the drain

The development of the hospitality industry has also required new, well-trained workers. To guarantee high-quality service and to train personnel, the State Tourism Committee has created an institute of tourism development (methodological center for new standards and training programs development) as well as Silk Road International University in Samarkand for future tourist managers. Besides, last year 18 professional colleges in all regions of the country came under the jurisdiction of the State Committee for Tourism. The Association of Hoteliers of Uzbekistan opened its academy of hospitality. These education centers are expected to train personnel for the whole industry and hotels in particular.

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Food Delivery Business Booms in Kazakhstan

Many people want to minimize personal contacts during the quarantine

Photo: Ofeliya Zhakaeva

Two Kazakhstani cities, Nur-Sultan and Almaty, are now under quarantine. All cafes and restaurants are obliged to work with food delivery services. This market rose exponentially after an emergency was declared amid the global coronavirus pandemic, with people wanting to reduce any social contact.

Food is in priority 

For now, the only food market driver is through delivery, with the number of orders increasing by three to four times in recent days. On March 15 Arbuz.kz, a food delivery service, found itself in a situation where it needs many more refrigerator trucks, says Aleksey Lee, CEO of Arbuz.kz. He refused to specify an exact number of trucks because the situation changes very fast.

The company hired new staff for its call center, with employees in the call center working 14 to 16 hours per day. At the moment they just receive and process orders, so the obligation to keep client relations was temporarily transferred to delivery men. 

To protect staff, the company provided personnel with masks; regular medical check-ups are also underway. If the client pays online, the delivery is made without any contact; a delivery man just sets the product on the floor, knocks on the door and leaves. Cars that are used for delivery should be cleaned after each route. 

The delivery zone is expanded

According to Chocofood.kz, the increase in the orders is medium. Nikolay Sherbakov, the company CEO, said that some of his employees work distantly. All orders paid online are delivered without contact with clients. In this company, delivery personnel are also provided with medical masks as well as sanitizers for hands and their delivery bags. 

Because of lack of sanitizers on the market, the company produces them on its own. While national currency is devalued, the public food industry doesn’t work and food delivery demand rises, the prices might also go up, Sherbakov said. So far Chocofood.kz sees a flurry of orders and tries to support the stable work of all business processes.

“To make delivery from as many restaurants as we can to the maximum number of clients, that is our current goal,” the Chocofood.kz CEO says. To achieve this goal, their delivery zone was expanded, thanks to no traffic jams on the roads.

No subscription any more

International delivery service Glovo is expanding the line of products it can carry including restaurant meals, grocery food, medicine, and mail.

If Glovo clients do not want to contact the delivery man, they have to pay online and make a proper comment in the service application. Delivery will be made in a door-to-door manner and the carrier just makes a call; no client’s signature is needed. As the company representative noted, if the situation with COVID-19 worsens, the option to pay by cash might be deleted from the application.

Again, Glovo carriers have all needed sanitizers, masks, and gloves. Moreover, delivery personnel are obliged to clean their bags with alcohol-based sanitizers.
 

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