The crisis is always an opportunity. Especially for strong players and established multinational brands. This also applies to luxury Prague hotels, which have been experiencing a frantic ride on the caterpillar track for the last year and a half.
In June this year, the average occupancy of Prague hotels did not exceed 13.5 percent, and the prices correspond to this. They sank deep into the basement. A room in many five-star hotels will cost less than two thousand crowns a night during the holidays.
“The start of tourism depends on the full opening of air traffic, which is still subdued. However, all indications are that clients’ motivation is lacking, and once the measures relax, the market recovers, ”said David Nath, who leads the hotel team for Central and Eastern Europe at Cushman & Wakefield.
He bases his words on the figures from last summer’s season, where the obsolescence of Prague hotels climbed to 22 percent. Which may not seem like much, but compared to the rest of Europe, these are optimistic numbers: in Rome it was less than twelve percent, in Brussels or Budapest less than fifteen percent, while London reported similar results as Prague.
Investors are not losing faith in a better future either, although the year-on-year consumer of tourists by 330 thousand, which was predicted by analysts from Delloitte before the covid crisis, is not even expected by staunch optimists today.
Despite this, in the metropolis without tourists, the reconstruction of several new five-star hotels under the auspices of premium brands is in full swing. In the next two years, icons such as Hyatt, Ritzz Carlton and Fairmont should open their branches in Prague.
Some of them have been looking for years to enter Prague, but there were no suitable opportunities in suitable locations. The reputation of the Czech capital and the local hotel revenues were also negatively affected by the previous crisis, when, according to the expert server Hospitality Net, prices fell the most by as much as 26 percent. In Europe, Hamburg saw a comparable decline, and prices fell even more dramatically in Reykjavík alone (by 36 percent).
That is why there is little luxury accommodation in Prague. “In Prague, only 3.6 percent of hotel beds have a five-star rating,” say Nath of Cushman & Wakefield.
In Vienna, however, it is slightly over six percent, Budapest or Warsaw have about twice the highest-rated beds compared to Prague, and in the western capitals, the share of the luxury segment is usually double-digit. “In Warsaw, however, projects are currently under construction that will increase by up to 33 percent,” says Nath.
Martin Dell, director of Four Season Prague, a chain that has been operating on the local market for twenty years and has so far held a relatively privileged position, also welcomes the new competition in the Czech capital. “Wider competition will raise service standards in general, increase the value of the destination and attract more creditworthy clients to Prague,” summarizes Dell’s benefits.
However, according to him, the Czech capital would primarily need a vision for the further development of destination tourism. “Prague has a high rating due to its sights, cleanliness and safety. But there are no big events here, because of which interesting clients would like to return repeatedly, “says the chief provider of the Prague hotel.
So what’s going on in the capital?
Andaz Prague (Hyatt)
Andaz Praha is closest to opening, which requires the operation of the American hotel chain Hyatt from next spring (Andaz is the highest number of chains). The reconstruction of the Cukrovarnický Palace into a luxury hotel was planned ten years ago by the investment group J&T, but after the outbreak of the financial crisis, the plan fell through.
The Austrian company UBM Development, which has already completed thirty hotel projects in Europe, has now embarked on monument-sensitive reconstructions. And according to the head of the Czech branch of UBM, there is no danger of further delays.
“Andaz Prague is a showcase for the whole corporation. Hyatt carefully selects its location and has only four hotels across Europe. Prague will be the fifth after Vienna, Munich, London and Amsterdam, “says Josef Wiedermann.
According to Wiedermann, the pandemic did not affect the original concept of reconstruction, it still counts with 175 rooms, extensive conference facilities and a wellness center. And he believes that in time the hotel will target the influx of tourists after the pandemic.
Marriott hotels in W
More than two years ago, the Art Nouveau Hotel Evropa on Wenceslas Square was sold by the Prague Prime Home Management of the Julius Meinl Group to entrepreneur Ferid Nasr, the founder of Exim Tours. The project already included a contract with the future operator, the W application, which belongs to the Marriott and which so far has only nine of its 68 hotels in Europe.
According to the original plans, Europe was supposed to open this autumn, but the coronavirus pandemic and the difficulties associated with the complex building plot and restoration work postponed the opening date until the second half of 2022.
Originally a Tunisian businessman, he claims that he is primarily trying to preserve the original First Republic atmosphere of the hotel, from where, for example, Nicolas Winton managed the rescue of Jewish children before the war.
“I want it to be a luxury hotel in Central Europe again, but also a place where anyone can go for coffee. I owe it to Prague, “says Nasr. And he adds that the local traditional two-storey café should return to its original form. There will be several stylish bars.
Golden Prague Hotel (Fairmont)
In January 2023, the first guests should also be welcomed by the former Intercontinental Hotel. Rather than a coronavirus, investors’ plans here threatened local people’s protests against the planned construction plans, but at present it seems that a compromise can be found and officials have given the project the green light.
The investment company R2G, which manages the family assets of Oldřich Šlemr, Pavel Baudiš and Eduard Kučera, agreed to operate two years ago with the Fairmont chain.
“Their philosophy is not based on opulent luxury, they rather represent a clever luxury style that attracts the most demanding sophisticated clients and celebrities,” says Jakub Dyba, a representative of R2G Group investors. “Fairmont hotels are often the center of social and cultural life, for example in Montreaux, Switzerland, the local Fairmont hosts the most important jazz festival in the country. We have prepared a film theater concept for Prague, “he adds.
Another pillar was to be an exceptional gastronomic concept with five restaurants. According to Dyba, respect for the spirit of the award-winning brutal building was also an important measure in choosing an operator.
“The interior design follows the original appearance of the interior, a number of reconstructed original elements will return to it,” he says, adding that investors have invited a plethora of top Czech design brands to cooperate. “It is important for us that the hotel preserves the Czech spirit and that the guest finds a Czech trace in each room,” says Dyba.
R2G bought the hotel for 225 million euros. Renovation of the buildings, including the surrounding public space, will cost another € 100 million.
For the year 2023, it is still planned to open the Prague addition to the Almanac chain, which is a benjamin among large multinational brands. The owner is the Austrian development group WSF Group, which currently belongs to seven European European hotels, including the Prague Alcron.
However, the planned financial renovation was hampered by the planned renovation of existing hotels and the reconstruction of other hotels associated into new boutique networks. The WSF Group did not open the first hotel under the Almanac commitment until 2018 in Barcelona. After the pandemic, in addition to Prague, more hotels should be added in Vienna and Budapest.
The main currency of Almanac Prague will be the extensive Vital Center, which we have offered health and wellness procedures on a generous 1,500 square meters. According to available information, the investor is currently dealing with project financing.
The Ritz Carlton
The endless story of the reconstruction of eight historic houses a short distance from the Old Town Square into a hotel bearing the resounding name that is synonymous with luxury in the world – the Ritz Carlton – may be approaching limitations.
Ogi Jakšič, head of the investment company Akroterion, claims that it will open in Prague in the near future in 2023. To start with a break in 2014, when Akroterion obtained a building permit and a positive opinion from the Prague Monument Care Department. However, the project was not liked by the National Monuments Institute, because with the construction of the hotel, rental apartments will disappear.
Four years ago, the city terminated the lease agreements for investors for four of the mentioned houses (the rest of the real estate belongs to Akroterion), which are to bring approximately 20 billion crowns to the city coffers by 2081. In 2018, however, the town hall renewed the contracts and now Jakšič claims that the project is running according to plan.