LONDON—Results for Prague were consistently gloomy for the year to date, as a general lack of demand and oversupply of hotels drove the market’s key performance indicators deep into negative territory, according to data from STR Global, the leading provider of market data to the world’s hotel industry.
Source: STR Global
Foreign visitors to Prague were down 10.8 percent in the first half of the year (Source: Czech Statistical Office). The Czech Republic as a whole has seen the supply of four- and five-star hotel rooms more than double since 2000—an astonishing 118-percent increase (Source: Czech Association of Hotels and Restaurants). 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”, explained Elizabeth Randall, managing director of STR Global, of the 17.9-percent decline in average daily rate 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.
Hotel performance for year-to-date July 2009 (€)
| |
Occupancy YTD 2009
|
Occupancy YTD2008
|
% change
|
ADR YTD 2009
|
ADR YTD 2008
|
% change
|
RevPAR YTD 2009
|
RevPAR YTD 2008
|
% change
|
| Europe |
59.6
|
65.5
|
-9.0
|
94.29
|
107.29
|
-12.1
|
56.23
|
70.30
|
-20.0
|
|
Eastern Europe*
|
49.6
|
59.7
|
-16.9
|
83.79
|
110.00
|
-23.8
|
41.59
|
65.71
|
-36.7
|
|
Prague
|
53.1
|
62.9
|
-15.5
|
80.65
|
98.25
|
-17.9
|
42.86
|
61.77
|
-30.6
|
Source: STR Global
Prague’s struggles are particularly pronounced when compared with the rest of Europe. The market experienced a 30.6-percent decrease in year-to-date revenue per available room compared to last year; Europe as a whole posted a 20-percent decrease.
Prague also is selling itself short on rate. At €80.65, the market’s ADR was 14.4 percent lower than the rest of Europe, which had an average of €94.29, and 3.7 percent lower Eastern Europe*, 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 said.
With an estimated 30,000 additional roomnights generated from Prague’s hosting of the presidency of the EU for the first six months of 2009, it is sobering to think how much worse it could have been.
*Eastern Europe
Belarus, Bulgaria, Czech Republic, Hungary, Poland, Moldova, Romania, Russia, Slovakia and Ukraine
About STR & STR Global:
For more than 20 years, STR has been the recognized leader for hotel industry benchmarking and research. STR and STR Global offer monthly, weekly, and daily STAR benchmarking reports to more than 37,000 hotel clients, representing over 5 million rooms worldwide. STR is headquartered in Hendersonville, Tennessee, and STR Global is based in London. For more information, visit www.strglobal.com or www.HotelNewsNow.com.
Media contacts:
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Director of Marketing
STR Global
KAuernheimer@strglobal.com
+44 (0)207 922 1961
Jeff Higley
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STR/STR Global/HotelNewsNow.com
jeff@smithtravelresearch.com
+1 (615) 824-8664 ext. 3318
