DEVELOPMENT TRENDS AND THE COMPETITIVE ENVIRONMENT OF UZBEKISTAN'S HOTEL INDUSTRY: CAPACITY OUTRUNNING DEMAND, SPATIAL CONCENTRATION AND THE HERITAGE PREMIUM

Abstract

Uzbekistan's hotel industry has expanded rapidly since the opening of the tourism sector in 2017, and the expansion is usually reported as a count of new hotels. This article reads the official series of the Statistics Agency for 2010 to 2025 to ask what kind of growth it has been and what competitive environment it has produced. Three questions are asked: whether capacity has grown in line with demand, whether growth has spread the industry across regions or concentrated it, and what explains the regional distribution of hotels. Capacity and demand moved together until 2019 and apart afterwards. Between 2010 and 2019 guests grew 9.8 per cent a year and beds 8.4 per cent; between 2019 and 2025 beds grew 11.2 per cent a year and guests 7.5 per cent. Guests per bed fell from 47.0 in 2019 to 38.4 in 2025: at the 2019 rate, 2025 demand would have filled 72.0 thousand of the 88.1 thousand beds, a surplus of 18.2 per cent. Hotels also became smaller, from 52.1 beds on average in 2010 to 39.0 in 2025. Growth has concentrated the industry rather than spread it. The Herfindahl index of hotels across fourteen regions rose from 0.109 in 2010 to 0.146 in 2023 and 0.184 in 2025, the effective number of regional markets fell from 9.2 to 5.4, and Tashkent city, Samarkand and Bukhara raised their share of hotels from 49.1 to 63.3 per cent. The dispersion of hotel density across regions widened, and poorer regions did not catch up. In a pooled regression of hotel density on fourteen regions over fourteen years, with standard errors clustered by region, regional income is associated with density on its own (0.903, t = 2.92), but the coefficient falls by 59 per cent and loses significance once investment, World Heritage status and capital status enter. Heritage cities have 98 per cent more hotels per head than other regions with the same income and investment, and the capital 122 per cent more. The industry that has emerged is one of intensifying rivalry within a few heritage and capital destinations and thin supply elsewhere.