News

Czech hotels going through hard times, main problem is excess hotel capacity

According to the latest study by Deloitte on the European hotel industry, the slump in tourism and growing competition in the hotel business negatively affected the income and occupancy rates of Czech hotels to such a degree that the hotel business ranked among the worst affected by the crisis in the European Union.

In the first nine months, the average revenue per available room (revPAR) in Czech hotels was down 26.9% to CZK 1,126, while average room rates fell 14.8% to CZK 2,392. Occupancy rates of hotel facilities in the Czech Republic fell to 55.3% from 64.4% in the same period last year.

Prague, which is the key territory of the Czech hotel business, saw a 26.4% year-to-September revPAR decline to CZK 1,161. During that same period, average room rates decreased by 14.6% to CZK 2,053. At the end of September, hotel occupancy in Prague dropped to 56.6% from 65.6%.

“The downward trend in the hotel business is caused more by the rise in the number of new hotels than by a lower number of foreign visitors, as this number fell year-on-year approximately 8.1%, which is not dramatic given the current situation. In addition, a higher number of local clients to some extent made up for the lower number of foreign visitors. Hotel capacity excess is expected to remain even after the recession has ended. To cope, hotels will have to continue their savings measures and target different customer segments such as local clients or visitors from Asia”, noted Diana Rádl Roger, Partner in Deloitte.

Sedat Nemli, General Manager of the Kempinski Hybernská Prague hotel, stated that “the Kempinski Hybernská Prague hotel has been in operation for only a year so we cannot compare its results to last year. Nevertheless, the falling interest in visiting Prague is a sad fact and 2010 will not likely see a rise despite our hopes. Still, we are optimistic about our future.”

Hoteliers from other European countries had to face similar downward trends in their business. With an occupancy rate of 61.6% in all of Europe, the year-to-September revPAR of the first nine months dropped 19.2% to EUR 58. Commenting, Alex Kyriakidis, Global Managing Partner of Tourism Hospitality & Leisure at Deloitte, said: “The past year has been one of turbulence for European hoteliers as the economic crisis has taken its toll. Soaring unemployment, the outbreak of the H1N1 influenza virus, and the strength of the Euro against many world currencies has seriously impacted hotel performance throughout Europe.”

Download the file bellow for more.

Spain was affected the most by the drop in demand because of a general decline from its traditional markets, namely Britain, Germany and France. Of these three, however, it was mainly the British who, seeing the weakening of the pound against the euro, opted for a “staycation” over travelling abroad.