Uzbekistan’s tourism industry is showing impressive growth dynamics and is becoming a centre of attraction for investors. This trend is due to a unique combination of rich cultural heritage, modern infrastructure development initiatives and government efforts to create an attractive investment environment. In 2023, the President of the Republic noted that 800 infrastructure projects in the tourism sector had been implemented since 2022.
This article provides a brief overview of the advantages of the hotel market in Uzbekistan, government support measures for the tourism and hotel business in Uzbekistan, and the specifics of the legal regulation of the industry.
Tourism potential of Uzbekistan
Uzbekistan has significant tourism potential thanks to its UNESCO World Heritage Sites, including Samarkand, Bukhara and Khiva. These regions continue to attract tourists from around the world, facilitated by targeted marketing campaigns and the increasing availability of transport links. In 2023, the country experienced record tourist flows, highlighting the growing interest in its cultural and historical attractions. In addition to traditional tourist centres, regions with underdeveloped infrastructure offer prospects for investors interested in creating new facilities. Improvements to the transport network, including the introduction of high-speed trains and the modernisation of airports, are further enhancing the attractiveness of the destination.
Government support
To stimulate the industry, the government provides significant incentives, including subsidised interest rates on loans for hotel construction and renovation, as well as tax breaks for hotel companies. These measures make the market attractive to both local and international players.
The main national projects to support the tourism sector include the “Strategy Uzbekistan – 2030” programme and the “Pearls of Ancient History” state programme. The task of implementing the “Strategy Uzbekistan – 2030” was introduced by the Presidential Decree dated 21.02.2024 “On the State Programme for the Implementation of the Strategy “Uzbekistan – 2030”. “Pearls of Ancient History” provides for the restoration of 745 cultural heritage sites and the creation of open-air museums in 20 architectural monuments. One of the goals of this programme is to increase the number of tourists to 15 million by 2030.
These programmes provide for active state support in the tourism sector in order to increase the flow of tourists to Uzbekistan.
The state has introduced the following key preferences in the field of tourism
- Visa-free regime. A visa-free regime for a visit to Uzbekistan of up to 30 days is provided, for example, for citizens of the EU Member States, the United Kingdom, the United Arab Emirates and Turkey. Citizens of Azerbaijan, Georgia, Russia, Armenia, Kazakhstan, Belarus, Moldova and some other countries have the right to visit Uzbekistan without a visa for an unlimited period.
- Tax incentives for hotel investors. Presidential Decree No. 238 of 27 July 2023 provides for a number of tax incentives. For example, until 1 January 2027, hotels and shopping centres with an area of more than 5,000 square metres will pay land and property tax at a rate that is 90% lower than the standard rate. In addition, for the purpose of calculating income tax, the cost of buildings will be included in depreciation for 2 years. From 1 April 2022 to 1 January 2025, the following rates will apply to restaurants, hotels, shopping malls, tour operators and travel agencies operating in tourist areas in 28 counties and cities:
- Sales tax – 1%;
- Real estate and land tax – 1%.
For the same period, the social tax rate for businesses in the hotel sector will be set at 1%. To finance new initiatives in the service sector, banks will provide loans of up to 2 billion soums at an interest rate of 14%. The NBU will provide them with 200 million dollars for a period of 5 years.
- Partial reimbursement of expenses for the construction of luxury hotels
An additional advantage of the measures under consideration is the system of state compensation of a part of the investors’ expenses for the construction (except for reconstruction) and equipment of new hotels with no less than 5 floors, which will be put into operation by 31.12.2026. In this case, the “star” category must not be lower than 3. The amounts of compensation from the state budget of the Republic of Uzbekistan are determined as follows- for 3-star hotels – 40 million soums for each room (approximately 333,000 rubles);
- for 4 and 5 star hotels – 65 million soums for each room (approximately 542,877 rubles).
Characteristics of the legal environment
The legal environment of Uzbekistan in the field of tourism is aimed at ensuring high quality of services provided.
A significant innovation in the tourism sector of the Republic of Uzbekistan was the establishment of updated requirements for the state standard for the allocation of stars to hotel facilities from 1 October 2023. Thus, the State Standard Oʻz DSt 3296:2023 establishes a system of classification of hotels on the basis of points. Categories are marked with the symbol “” (star) and are divided into five categories. For accommodation facilities – the highest category is “” (5 stars), the lowest is “*” (one star).
The awarding of a star rating depends on the following criteria:
Cleanliness and hygiene;
appearance of the hotel (facade, presence of a balcony, etc.);
availability and volume of infrastructure within the hotel complex;
hotel facilities (quality of lifts, quality of water supply, electricity, facilities for the disabled, etc.);
availability of a 24-hour luggage delivery service; and; additional criteria defined by the government standard.
The introduction of hotel classification by star rating has made working conditions more transparent for international operators.
On 30 August 2024, a resolution was signed on the development of public-private partnerships (PPP) for 2024-2030. According to the resolution, Uzbekistan plans to implement 63 PPP projects worth more than $30 billion by 2030. This initiative aims to attract private investment in key sectors of the economy, including the modernisation of Tashkent and Urgench international airports.
Recommendations for investors
The growth of tourism in Uzbekistan will continue thanks to strategic investments in infrastructure and government support. The current level of supply in the tourism sector does not meet the growing demand, creating attractive investment opportunities.
Despite government support, it is necessary to obtain professional legal advice when entering the Uzbek market.
The Nordic Star team has extensive legal expertise in the hotel market. We work with both investors (future hotel owners) and hotel operators. We understand the specifics of hotel projects and help to balance the interests of the parties involved in order to implement the project as quickly and successfully as possible. We assist investors and operators in the optimal structuring of their business when entering the hotel market of Uzbekistan, taking into account tax and other peculiarities, with the development of corporate documents and adaptation to the requirements of the legislation of Uzbekistan. Our team provides legal structuring of hotel projects and support for the full cycle of their implementation, starting with the legal analysis of the land, support for the construction of the hotel, through to the conclusion of a package of contracts for the management of the hotel with the operator.
*The material was prepared by Arina Dovzhenko, Partner, Head of Real Estate and Construction and Hotel, Hospitality and Leisure Practice at Nordic Star, and Vagif Kazimov, Managing Partner of Cerberus.Legal.