For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
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Prague is the Czech Republic’s industrial, political and financial centre and is an important gateway to Central and Eastern Europe. It is considered to be predominantly a leisure destination, but increased business activity and meetings, conferences and events over the last few years are indications of its improving international profile and of the further potential of the commercial segment. The city is primarily a spring, early summer and autumn destination. Success has been achieved in developing the city as a short-break destination and as part of the Vienna-Budapest-Prague triangle travel route. The city is also a weekend-break destination all year round, particularly around Christmas. Affordable hotels and a high proportion of discount airlines servicing the city make it an attractive destination for stag parties and the like, and although the city does have a plethora of historic and cultural attractions, it generally lacks the high-end shopping and culinary experiences that tend to attract luxury tourists.
Prague’s visitors are primarily foreign tourists, traditionally constituting 85% of total visitation. The primary foreign source countries for Prague are Germany, the USA and the UK. The most notable growth in visitation in recent years was achieved by Chinese tourists. Owing to the greater weight of leisure demand in Prague, the city’s visitation, overnight demand and occupancy are somewhat more pronounced than in other city destinations. The market’s high season for leisure runs from the Easter weekend to September, while March, April, June, September and October typically have strong commercial and MICE demand. Increasing visitation to the city is reflected in the growing occupancy and average rate in the years leading up to the pandemic. Prague recorded a compound annual growth rate (CAGR) for occupancy of close to 2.5% from 2014 to 2019, and a CAGR for average rate of a staggering 5.0%, in euro prices. In 2020 and the first half of 2021, the pandemic resulted in the market experiencing single-digit occupancies, while the second half showed some signs of recovery. In 2022, both occupancy and average rate recovered significantly, ending up with a triple-digit increase in RevPAR compared to 2021 (above 250%). This was the result of a very strong end to the year, with Q4 being close to 2019 levels in RevPAR terms.
Prague’s pipeline remains modest, at around a 4.0% increase over the next few years, with most of the new projects falling into the upscale and upper upscale categories. Nevertheless, some notable new openings are on the horizon for the city. The expected new hotels include the 523-room Hard Rock Hotel Prague (Q1 2024), the 40-room Six Senses Liv Nordic Prague (Q1 2024) and the 297-room Fairmont Prague (Q3 2024). In 2022, the market remained quiet in terms of hotel transactions with no hotels being sold.
Our HVI analysis indicates a marketwide increase in hotel values of around 2.0% in euro prices. Prague was one of the most impacted cities in Europe in terms of RevPAR decline in 2020, but is showing promising signs of recovery. With the limited new supply and the healthy pre-pandemic growth in visitation, a rebound in performance to pre-COVID levels is expected by 2024.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
For the Latest Information and Analysis on the Impact of COVID-19Click Here
If you’d like to speak to someone personally to review details of our most current analysis, please don’t hesitate to contact
us directly.
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