Accession to the European Union, the arrival of low-fare airlines, and an international televised ad campaign promoting the Czech Republic have all helped to attract foreign tourists to Prague. What have these trends meant in terms of revenue for local hoteliers and developers?
EU accession, budget airlines, and weekend British stag parties: it all adds up to increased numbers of foreign tourists flocking to Prague. After years of global stagnation after the 9/11 terrorist attacks — and a regional drop following the August 2002 floods — opening a hotel in the Czech capital again appears a safe investment, and one that will yield a quick return.
Prague is hot on the heels of Paris as the top weekend-break destination for Britons. According to a recent survey of 10,000 people by Morgan Stanley Credit Card, Prague was the only central or eastern European city to make the survey's Top Ten. The top attractions: architectural treasures — and cheap beer.
Whatever the attraction, foreign tourists, who stay on average at least three days in the Czech capital, are filling hotel beds, even in the off season. Many top hotels are enjoying 80 percent occupancy rates during much of the year with 90 percent occupancy rates in the summer. On average in the EU, it stood around 60 per cent last year.
This all translates into quicker returns for investors in Prague and local hoteliers, returns of up to 20 percent, in fact, with project profits coming on average now within a five-year time span. That's two years sooner than in other EU countries, according to the study Real Estate Overview 2004 made by real estate adviser Cushman & Wakefield/Healey & Baker.
"Although the number of beds in Prague hotels increased by around 10,000 last year, average hotel revenues rose by 25 percent year- on-year in the first five months of the year," according to a report by the Czech daily Hospodarske noviny, which drew on analysis from that overview and a report by a competing firm, CB Richard Ellis.
Those studies show that although a stay in a luxury hotel here will set a tourist or businessperson back far less than in most EU capitals, investment returns remain high. Some 14 of the world's largest hotel chains now operate in Prague, including Hilton, Marriott, the Four Seasons and Accor.
The Czech Tourist Authority — CzechTourism — says that by the year 2001, "every tenth person in the Czech Republic was employed in the travel and tourism industry or in some directly related sphere." The travel industry accounted for over 5 percent of GDP last year.
According to the CzechTourism agency, first-class Prague hotels were at 90 percent of capacity over the summer.
The local developer Orco Group, for one, has begun construction on a 50 million euro plus "plaza site" this summer, in order to promote the "synergy" between hotel and office space. In Prague, businesspeople may represent up to 20 percent of the hotel occupancy and developers are increasingly looking at building flagship "residency" hotels, for those staying in the Czech capital for extended periods on business.
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