Hotel Investments in UzbekistanIndustry Development and Government Support Measures

Uzbekistan is now becoming one of the most dynamically developing hotel industry markets in Central Asia. The growth in tourist flow, the construction of new hotels, and the entry of international hotel brands are forming the basis for an investment boom. The state actively supports the industry, and foreign and local investors are increasingly considering the implementation of hotel projects in Uzbekistan as an optimal region for long-term capital investment in the tourism sector.

Tourism Development and Hotel Development in Uzbekistan

The main national projects supporting the tourism sector include the “Uzbekistan 2030 Strategy” program and the state program “Pearls of Ancient History.” The task of implementing the “Uzbekistan 2030 Strategy” was introduced by Presidential Decree No. UP-37 dated February 21, 2024, “On the State Program for the Implementation of the ‘Uzbekistan 2030’ Strategy in the ‘Year of Supporting Youth and Business’.” The “Pearls of Ancient History” program provides for the restoration of 745 cultural heritage sites and the creation of open-air museums at 20 architectural monuments. One of the goals of this program is to increase the number of tourists to 15 million by 2030.

Thus, tourism in Uzbekistan, including business tourism, is becoming a strategic sector of the economy, leading to record rates of development of hotel infrastructure.

Among the most notable hotel projects are: JW Marriott Tashkent, scheduled to open in late 2025; Hilton Samarkand Regency; Hyatt Regency Tashkent; InterContinental Tashkent; Mövenpick Samarkand; Mercure Bukhara Old Town; Wyndham Garden Tashkent; and others.

Besides Tashkent and Samarkand, active hotel construction is underway in Bukhara, Khiva, and the Fergana Valley. Here, the demand for apart-hotels and resort complexes aimed at both domestic and inbound tourism is growing.

State Support for the Hotel Business

The Government of Uzbekistan is consistently developing a system of incentives for investors in the hotel sector, modernizing support measures.

Currently, the program compensating investors for part of the costs of constructing and equipping new hotels that meet certain criteria and commissioned by December 31, 2026, is concluding.

Among the most attractive current support measures, the following initiatives can be highlighted:

I. Tax Benefits

• VAT Refund
  Hotels and tour operators are eligible for a refund from the budget of 20% of the VAT paid to the budget, starting from October 1, 2024[^1].
  To receive the VAT refund, the total monthly turnover for these types of activities must be at least 90% of the entrepreneur’s total monthly turnover. However, an initiative to develop softer requirements for high-category hotels is currently under consideration.
• Other Taxes
  From January 1, 2022, until January 1, 2027, for hotels with an area of more than 5,000 sq.m., the rates of land tax and property tax are reduced by 90% of the established rates[^2].

II. Hotel Support

1. Subsidies are provided for newly built hotels that have received an eco-label certificate (“green hotel”), are at least 5 stories high, and are commissioned by December 31, 2026, meeting the following room fund requirements depending on the hotel’s “star” category[^3]:
   • Category 3★: room fund of at least 60 rooms;
   • Category 4★ and 5★: room fund of at least 120 rooms.
   [The subsidy is provided as a lump sum, and its amount is indexed annually upon approval of the State Budget:]{.underline}
   • 40 million soums per room (3★);
   • 65 million soums per room (4★/5★).
   For hotels built in areas without categorized hotels, subsidies are increased by 50% for the first two hotels of category 4★ or 5★ and the first three hotels of category 3★. If the hotel category is downgraded within 5 years from the date of its provision, the subsidy is subject to return to the budget.
2. Business entities that equip at least 3 rooms for use by wheelchair users and install displays and voice devices for the hearing and visually impaired receive a subsidy for each specially equipped room:
   • “Starred” hotels: 2 million soums;
   • Non-categorized hotels: 1 million soums^4^.
3. From September 1, 2025, to January 1, 2028, a compensation of 50% (but not more than 50 million soums) of the expenses of hotels, catering establishments, and restaurants for creating and promoting audiovisual products (video films, video clips, music videos, and anime clips) aimed at promoting their activities is provided^5^.

III. Franchising Support

Partial funding is provided for organizations that have entered into franchise agreements with global hotel brands ranked in the top-50[^4]^6^.

[Amount of annual funding per room:]{.underline}

• First 50 hotels of category 3★: equivalent of 200 USD
• First 30 hotels of category 4★: equivalent of 400 USD

Funding is provided once a year for three years from the effective date of the franchise contract.

In the next publication, we will discuss how to legally structure relationships with an international hotel brand and what mistakes investors most often make.

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This material was prepared by Arina Dovzhenko, Partner and the Head of the Real Estate & Construction Practice at Nordic Star Law Offices, and Aleksey Niyazmetov, Partner at TOP ADVISOR.