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Prague Hotel Industry Statistics for H1 2009

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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% increase.

 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 wasn’t there.”

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 Global, 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.

Prague 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.

On 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 added.

An estimated 30,000 additional room nights were generated from Prague’s hosting of the presidency of the EU for the first six months of 2009.

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