Old Town’s streets and cafes seem somehow emptier these days than at the same time last year, and Prague’s previously thriving tourism industry is in for its thinnest season in years. Worse, the long-term firming of the crown and the notoriously poor quality of Czech services raise doubts as to whether the crowds will return when the global economy has finally bounced back.
“Our customer numbers dropped by 15% last year,” says Nils Jebens, owner of Kampa Group, which runs five upmarket restaurants in Prague. “The crisis has by now forced most restaurants to introduce special offers. We have cut prices in general and come up with less expensive lunch deals.”
Last year the country as a whole attracted some 6.7 million visitors from abroad, roughly as many as in 2007, according to the Czech Statistical Office (ČSÚ). A marked decline among Germans, Brits, Italians and Americans was offset by a magical influx of Russians and Poles (see table: Foreign Guests). But, as the global crunch spread east and the rouble crashed around the turn of the year, even Russians and Poles lost their appetite. The first three months of 2009 saw all arrivals tumble 17.1%, the largest slump since devastating floods shut down Prague in the summer of 2002.
What sector insiders find even more troubling is that this decline and the changing composition of the foreign clientele indicate a more substantial shift in the pattern of customer behaviour and are part of a long-term trend that started years ago and has been merely aggravated by the present recession.
Visits getting costlier
Until a considerable correction in the second half of last year, the crown ranked for years among the world’s fastest-appreciating currencies. Even today, at CZK 19 per dollar, 27 per euro and 31 per pound, tourists pay almost twice as much in constant prices as they did in 2000, when the exchange rate was CZK 40 per dollar, 36 per euro and 55 per pound. With most three- and four-star hotels in central Prague now charging over EUR 100 per night and a dinner at an average high-street restaurant costing EUR 15, the Czech capital is no longer exactly cheap.
A foreign visitor last year spent about CZK 2,200 per day on average, 14% less than in 2007. Russians, Americans, Japanese and Brits were the biggest spenders, but the total amount of money they leave in the country is now shrinking fast with their less frequent arrivals and shorter visits. Total tourism revenues in 2008 declined by 30%, according to a survey by AČCKA, an association of Czech travel agencies. This year revenues are expected to continue in their steep fall.
The owner of a deli near Prague Castle said, for example, that, although her revenue has not been affected by the recession, compared with 10 years ago, she now sees more tourists and backpackers buying alcohol in a supermarket and snacks from her and then consuming them on a park bench, whereas they previously might have gone to restaurants.
The strong crown has not only made everything Czech more costly for the rest of the world, but also the rest of the world more affordable for Czechs. This has undermined efforts by the Czech tourism industry to benefit from the locals’ increasing prosperity and to use it to prop up the faltering profits. ČSÚ figures show the number of Czechs treating themselves to a holiday abroad last year jumped by 10%, while their presence in local holiday resorts was the same, although the former cost them about three times more.
Czech exporters and other businesses hurt by the strong crown have long urged the government to adopt the euro as soon as possible. But politicians have been hesitant to push the public sector deficit below 3% of GDP, a prerequisite for eurozone membership. As slumping retail sales and corporate profits hurt tax revenue and growing unemployment strains social spending, the country will likely run a deficit of some 5% of GDP in the next two years and will not be able to adopt the euro before 2014. Meanwhile, analysts expect the crown to get even stronger.
Bad publicity
Yet the biggest obstacle for renewed growth seems to lie in the Czech tourism sector itself. Most travel agents, tour guides, economists and visitors themselves agree that the quality of services, infrastructure and marketing is painfully lagging behind western Europe. Prague cabbies cheat, unwatched purses vanish fast, waiters rarely smile, trains are slow and shabby, museums close too early, castle guides bore visitors to death, and the range of places speaking no English is still shocking, to name just a few common complaints. This, more than anything else, tourism professionals say, discourages foreigners from visiting Prague more than once and maybe staying a bit longer to explore other parts of the country.
“Most westerners who wanted to see Prague have already done so. Now is the time for their second visits,” says AČCKA vice-president Tomio Okamura. “Whereas their first visit was mainly motivated by curiosity, now they expect to relax rather than have to worry about their wallets getting stolen. Our association has been urging Prague City Hall for years to pass a simple law forcing taxi drivers to place the meter on top of the dashboard instead of hiding it behind the gear stick. We’ve called for higher penalties for pickpockets. But the officials do nothing.”
These two most embarrassing deficiencies are now among the first things mentioned by every guidebook – and among the first experiences of those who still come to Prague despite the warnings. To make things worse, the international media reported last year on a gunfire exchange in broad daylight between two Russian-speaking mafia gangs in one of Prague’s most touristy streets. A huge Christmas tree collapsed on Old Town Square in 2003 breaking a British tourist’s spine; City Hall only paid damages after being dragged through courts and the media for years.
Still, Prague remains a huge magnet. Euromonitor’s Top City Destination survey ranks Prague as the eighth most popular city in Europe and 23rd in the world. With 3.7 million visitors a year (4 million according to Czech statistics), Prague is a notch above Vienna and draws crowds almost twice as big as Athens, Berlin or Budapest. Where the Czech tourism industry completely fails is in its efforts to make the crowds come back, stay longer than just a night or two and spend more.
The capital can’t do it all
“Here the single biggest holdback is the lacking infrastructure in other Czech regions. Prague is the only place offering comprehensive tourist services that meet western standards,” Okamura says with undisguised irritation. “Litomyšl is a UNESCO-listed town and the birthplace of the famous composer Bedřich Smetana. Yet travel agents can’t include it in their catalogues because the place has no four-star hotel that could fit more than 50 guests at a time. Český Krumlov has a small five-star hotel that is always fully booked, so coach tours would rather spend the night in Salzburg on their way from Vienna to Prague.”
As a result, 60% of all incoming tourists never venture outside Prague. Only South Moravia and the chic spas in Karlovy Vary win a noticeable slice of some 7% each; the rest of the country gets meagre leftovers. This is not because the other regions have nothing to offer. The country is abundant in gorgeous yet affordable mountain resorts, picturesque medieval towns and splendid chateaux, local microbreweries, and the highest concentration of UNESCO World Heritage sites in the world. It is just not able to sell them to tourists.
“Neighbouring Austria attracts 22 million visitors a year; the Czech Republic gets a mere 6.7 million,” Okamura says. He thinks town halls and regional governments should channel EU funding to help build larger four-star hotels with comprehensive recreational and conference facilities ensuring year-round occupancy. To put themselves on the map, Czech towns should develop and adequately advertise their local gourmet specialties and other unsung attractions.
In a number of recent conferences and press releases, tourism professionals have reiterated that cheap beer, Charles Bridge and a few posh Prague hotels simply cannot do the trick alone, and that a more comprehensive strategy is needed. “The pooling of financial means for the country’s promotion abroad is based on voluntary agreements between individual businesses and local or state administration,” reads a statement by the ACKČR tourism association. “A nonbureaucratic tourism law setting binding rules for the country’s marketing would be much more efficient.”
The Regional Development Ministry, which is supposed to coordinate these efforts and pass on EU subsidies to worthy regions and projects, was until recently headed by Jiří Čunek. Two weeks after his appointment in 2006, it turned out that the minister did not speak a single foreign language, and he spent the rest of his term covering up allegations of corruption and racism earlier in his political career. “All he did was hold us back for years,” Okamura says. “Tourism is simply not the government’s priority.”
Post-crunch outlooks
Okamura insists that the outflow of western tourists cannot be reversed. Yet he hopes that the increasingly wealthy central and eastern Europeans, including locals, may bring about a partial recovery of tourism figures after the global recession ebbs. “There are 40 million Poles living next door, which is a tremendous opportunity,” Okamura says. “Slovaks are less numerous but have a special relationship with this country. And a lot of Russians are yet to visit.”
Crowds may eventually return to Old Town streets, only the conversation over coffee will be increasingly in Slavic languages and less in English or German. Restaurateurs and hoteliers may have to tone down their prices a bit to accommodate the new clientele. It is now for the authorities and businesses to decide on the future of the Czech tourism industry. It can remain dependent on visitors flying in for a chic weekend in Prague, or it can exploit the country’s other undisputed attractions to become a major holiday destination, where visitors stay for a week or two and maybe come back next year – just like in Austria.
