A general lack of demand and oversupply of
hotels has driven Prague’s hotel industry key performance
indicators deep into negative territory.
Official statistics show that foreign visitors
to Prague were down 10.8% in the first half of 2009, and that the
Czech Republic as a whole, has seen the supply of four and
five-star hotel rooms more than double since 2000 by an 118%
Recent openings in the Czech capital
include the Clarion Congress hotel (559 guestrooms), the Sheraton
Prague (160), the Augustine (101), the Kempinski Hybernská (75)
and the Buddha Bar Hotel (39).
“The knee-jerk reaction to these two stimuli has
been a dramatic decrease in rates,” said Elizabeth Randall,
managing director of STR Global, of the 17.9% decline in
ADR for the year through July 2009. “The city’s hoteliers just
doubled up on the pain as price cuts did not stimulate demand that
However, some improvement
is on the horizon. “The slowing of the rate of decline for
Prague’s year-on-year occupancy over the last few months has
stalled the downward pressure on rates,” Randall said.
According to data compiled by STR
Prague’s struggles are particularly pronounced when compared with
the rest of Europe. The market experienced a 30.6% decrease
in year-to-date RevPAR compared to last year;
Europe as a whole posted a 20% decrease.
also is selling itself short on rate. At €80.65, the market’s ADR
was 14.4% lower than the rest of Europe, which had an
average of €94.29, and 3.7% lower Eastern Europe( Belarus,
Bulgaria, Czech Republic, Hungary, Poland, Moldova,
Romania, Russia, Slovakia and Ukraine), which
had an average of €83.79.
Other factors are also at play.
The city has no dedicated marketing campaign for tourism.
Furthermore, a poor meeting infrastructure makes it difficult to
fill the city’s hotels with the thousands of guests that travel to
such events in cities like Vienna, Frankfurt and Barcelona.
the upside, the Czech Crown is currently trading at around CZK25.5
: €1, which is slightly weaker than the CZK29: €1 rates of 2008.
Thus, the city’s attraction to euro-spending visitors should make
for an improvement in its fortunes.
“As the economies of feeder
markets, particularly Germany, are showing signs of recovery, this
should add some much needed impetus to the Prague market,” Randall
An estimated 30,000 additional room nights
from Prague’s hosting of the presidency of the EU for the first
six months of 2009.
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