While a room in the four-star Diplomat Hotel Prague last year cost CZK 5,500 per night, the price is now 50% lower, according to the website hotely.cz.
“Prices are hovering around EUR 90 per room per night depending on occupancy,” the hotel’s receptionist said. Diplomat is not the only hotel adjusting prices in response to declining visitor numbers in Prague.
The number of foreign tourists was down by 18% year-on-year according to data from government agency CzechTourism. As a result, hotel occupancy fell by a tenth annually to just 50.9% at the end of May.
Experts say the situation could lead to a wave of bankruptcies. For example, the Chairman of the Association of Czech Travel Agents, Viliam Sivek, who owns the biggest Czech hotel chain EuroAgentur Hotels & Travel, forecasts that 70 hotels in Prague might go bust. “They’ll wait until New Year’s Eve when more tourists come, but I doubt they’ll survive into the new season,” Sivek says, adding that he is considering closing two hotels down.
Early collapses
Bankruptcies have actually started already. For instance, Hotel Floor, which had 40 rooms in the very centre of Prague on Na Příkopě street, closed down at the end of June. Prague Investments Corporation (PIC), which rents out the space, is now searching for a new lessee. “A contract with the new tenant is soon to be signed, but the hotel will operate under a different name,” said a company spokeswoman.
The four-start Bellagio Hotel also had to shut its doors on U Milosrdných street in Prague’s centre. Manager Miroslava Hurdová said that high rents were the reason.
The hotel has reopened under the same name in premises on Klimentská street. The plan originally was to extend operations in the new building, but this is no longer relevant due to the crisis on Prague’s hotel market.
Hoteliers are starting to feel the impact of the economic crisis so intensely that they are cutting prices by up to 50% to keep guests. It’s a difficult task since there are 427 hotels in Prague, and the total number of available beds, including those in guesthouses and hostels, amounts to 120,000 – more than in Vienna.
“The situation is really dismal. You can now buy a room in a four-star hotel in Prague for as little as EUR 50. When you deduct VAT, accommodation fees, payments for copyright protection, energy bills, laundry, cleaning, and the cost of breakfast and staff, then you almost see a loss,” said Perla Hotel head Tomáš Startl.
The Secretary of the Czech Association of Hotels and Restaurants, Václav Stárek, said that some smaller hotels may eventually be converted into flats.
Sales plunge
The annual decline in turnover across the Czech accommodation sector hit 16% in the first half of the year, according to the Czech Statistical Office.
Hotel operators in Prague are even worse off, facing a yearly decrease in the range of 20%-35% per room. Since last year supply has exceeded demand in most regions.
Hotels put emphasis on having good-quality staff, but they are not seeking replacements for those who leave. Le Palais Prague Hotel had to resort to job cuts. “Unfortunately, we had no other choice,” director Jiří Gajdošík said.
The InterContinental Hotel expects a maximum decline of 10% in guest numbers for the full year. Only summer holiday bookings are improving the situation, spokeswoman Petra Kazdová said.
Despite all this, Prague’s accommodation capacity is constantly expanding. Just this year, the “hotel fleet” was extended to include three new names: the Buddha-Bar Hotel, the Sheraton, and the Park Inn Prague. Three others – Rocco Forte, Hotel Kings Court, and Jury’s Inn – should open by the end of the year.
