In 2023, the hospitality industry in the countries of Central Asia, Belarus and parts of the Caucasus seemed to rise to the challenge of the times following Russia’s full-scale invasion of Ukraine, as they experienced a wave of change leading to astonishing growth.
According to news portal infoline.spb.ru, all of the above countries’ hospitality sectors recorded double-digit growth in their local currencies. For example, Kazakhstan (25%), Uzbekistan (12.6%), and Kyrgyzstan (24.9%), as well as Armenia (25.4%) and Azerbaijan (12%), showed steady growth both due to the natural evolution of the industry and the increasing share of legal business. Armenia and Kyrgyzstan, in particular, attributed their dynamics to a sheer increase in the number of customers — the inflow was provided by both tourists and migrants from Russia.
The hospitality industry in Central Asia is still in its formative stages, but the prospects for its development look extremely promising. This is due to several factors:
–The demographic factor. The population of Kazakhstan, for example, has grown by 18% over the last 13 years, which is the main driver of demand for catering services;
–New players in the market: the emergence of new chain restaurants from different countries provides an additional impetus;
–Growth in tourism. Inbound tourism to Central Asia is growing strongly, with Uzbekistan and Kyrgyzstan attracting significant flows of foreign tourists, creating a huge demand for catering services;
–Transformation of the Russian market. The Russian hospitality market — due to the war in Ukraine and international sanctions — is undergoing a period of significant transformation despite its size and maturity. Since the beginning of 2022, major international chains such as McDonald’s, KFC and Starbucks have ceased operations in the country, creating ruptures and opportunities in the industry.
In this context, Russian restaurant chains are showing increased interest in the Central Asian market, recognizing its potential for growth and development. Brands such as Shokoladnitsa, Yakitoria, Osteria Mario, Shvili and others have announced plans to expand into Kazakhstan, Uzbekistan, as well as Azerbaijan and Armenia. They are targeting increased revenue and profits due to low rent, material costs and the lower level of competition in these countries.
The revolution in the world of hospitality that’s sweeping Central Asian countries is opening new horizons for the industry. Rapid growth and transformation is creating unique opportunities for investors and entrepreneurs in the sector.
