Europe -  Prague, Czech Republic

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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. Prague’s main convention centre underwent significant renovation and modernisation in 2017 and is currently expanding with a new 5,000 m² exhibition hall. These improvements are expected to provide a further boost to the MICE market in the long run. 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.

The city has seen a strong increase in visitation over the past five years, growing by around 5.5% on average. Prague’s visitors are primarily foreign tourists, constituting 85.0% 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 recent years. 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. Most recently in 2020, the city experienced a significant downturn in all metrics linked to the COVID-19 pandemic.

Prague’s pipeline remains modest, at around a 7.0% increase over the next couple of years, with most of the new projects expected to be upscale and upper upscale hotels. The notable expected openings include the 109-room MGallery by Sofitel Hotel Maria Prague (2022), the 175-room Andaz Prague (2022) and the 523-room Hard Rock Hotel Prague (2023).

The Czech Republic’s capital saw only one hotel transaction in 2020 compared to six transactions in 2019, a decrease of over 80.0% in volume. The 152-room NH Carlo IV was sold for around €100 million (€670,000 per room). Our HVI analysis indicates a marketwide decrease in hotel values of close to 19.0%, in euro prices, (6.0% decrease in local currency). Prague was one of the most impacted cities in Europe in terms of RevPAR decline in 2020, owing to a heavy reliance on international visitation and very early restrictions imposed by the government that forced hotels to close. However, with limited new supply and the healthy growth in visitation pre-pandemic, a rebound in performance to pre-COVID levels is anticipated by 2024.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
[email protected]
  • +44 20 7878 7722 (w)
Nikola Miljković
[email protected]
  • +44 20 7878-7721 (w)
  • +44 7 593572865 (m)