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Despite competitive hotel environment Prague witnesses good growth in RevPAR.
Friday, 8th March 2013
Source : Jones Lang LaSalle
Despite a competitive hotel environment, hotels in Prague have witnessed a 6.3% growth in RevPAR  in 2012 bolstered by a robust growth in inbound tourism.  In 2013, we anticipate continued growth in trading performance due to a slowdown in supply growth and further interest in foreign tourists.

As at December 2012, hotel supply in Prague consisted of approximately 341 hotels and 26,400 hotel bedrooms. The city is dominated by upscale hotels, with 4-star and 5-star establishments representing roughly 52% of the entire hotel bed stock. This hotel segment saw considerable growth between 2000 and 2010 and as a consequence has become very competitive. Development activity has been subdued and many projects face funding difficulties. Hotel supply is expected to remain stable over the next 2 years.

Despite growing economic difficulties in Europe, Prague’s tourism industry remained robust in the first 9 months of 2012 with arrivals and bed nights increasing by 7.7% and 5.6% respectively, when compared to year-to-date September 2011.  Growth was driven by a buoyant domestic market and a strong increase in international arrivals, accounting for 90% of overnight stays, particularly from emerging markets including China (+20%), Brazil (+22%), Russia (+22%) and other Asian source markets.

Angus Wade, Executive Vice President Hotels & Hospitality at Jones Lang LaSalle commented: “The competitive hotel environment in Prague, especially in the upscale segment, has made a quick recovery very challenging. The market is still suffering from the significant supply growth in recent years that has made it very difficult for hotels to raise their room rates despite an increase in demand.  Moving forward we believe trading performance will continue to improve on the back of robust growth in tourism arrivals which should lead to a rise in occupancy and average room rates.”

Angus continued: “The hotel market is expected to benefit from growing demand from emerging markets. Eastern Europe, Asia and South America, in particular, have evolved into dynamic new source markets that are anticipated to become more influential in the coming years. The city benefits from a wealth of cultural and historical attractions that will appeal to many overseas visitors. What will also support trading performance growth is a significant slowdown in supply growth which will allow hoteliers to become more confident in growing room rates in the short to medium term.”
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