According to the STR group, which provides data on the hotel business, summer was the year for the recovery of Prague hotels. Occupancy reached 32 percent in July and 44 percent in August.
So far, these numbers are close to the values achieved by the coronavirus crisis, as August occupied 88 percent in 2019, but is about a 50 percent increase over the first year, when less than a third of the rooms were occupied during the summer holidays.
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Thanks to this year’s relatively good summer season, Prague and the last place in the ranking of the 35 main hotel markets in the European capitals, where it stayed until the beginning of the summer holidays. The metropolis is still a long way from re-ranking among the best-performing markets, but in July it reached 28th place and in August 23rd place, ahead of Amsterdam, Sofia and Rome, for example.
“The summer season brought relatively fast demands, which is a very good trend, but in Prague more than half of the room capacity remained empty. However, it must be said that many hotels achieved much higher occupancy than the Prague average, some over 70 percent, due to good location, proactive marketing and pricing strategy and also in some cases due to the use of hotels by film crews who filmed during the holidays in Prague, ”comments Bořivoj Vokřínek from Cushman & Wakefield.
According to STR, almost nine out of ten hotel rooms were opened in Prague in August, which is slightly below the European average. Although the average price per room per night increased compared to last year, in 2019 it reached only 75 percent of the then amounts. It was 87 euros.
Thanks to the good performance of Prague hotels, they overcame a critical point and returned to operating profit. Over the past three months, hotel profitability has reached about 23 percent, according to HotStats.
Autumn means a slowdown
However, with the arrival of autumn, the situation begins to change. “Unfortunately, from September, it is necessary to expect a further decline in the performance of Prague hotels. The reason is the traditionally lower demand from leisure travel and also the rather slow return of corporate clients and conference tourism, “warns Vokřínek.
In September, occupancy was still 42 percent, which is a very good result in the context of this year, but in the European rankings, Prague is moving lower again, to 29th place – which is still ahead of Brussels or Lisbon.
However, the positive results of hotels in the past three months and the possible favorable future development do not guarantee that all hotels will cope with the problems caused by the coronavirus crisis.
“According to our recent survey, more than half of hotel owners in Central and Eastern Europe will have to refinance within two years. Although the availability of financing will improve again, it can be expected that banks will remain more prudent in the medium term and will offer a lower level of loan to value than before the crisis, ”adds Vokřínek.
For many hoteliers, therefore, after a year and a half of declines and losses, it will be difficult to find other ways of financing. “Some owners will have to quickly find an alternative source of capital or consider selling their hotel,” concludes Vokřínek.