Prague is the second most attractive market in CEE for hotel operators with a presence or interest in the region. Its popularity is backed up by H1 being a period of healthy recovery for Prague hotels which achieved the second-highest (after Budapest) RevPAR (revenue per available room) among the region’s capitals1. In this year’s first six months, it reached EUR 69, which is an increase of 57% versus H1 2022, and already a 5% increase versus the pre-Covid H1 2019. This was primarily driven by the strong ADR (average daily rate) growth, which surpassed 2019 levels by over 20%. Hotel operators are optimistic about the industry’s outlook and keen to expand across the CEE region. However, 28% of planned hotel projects in the region are facing delays or put on hold, mainly due to the increased development costs.
Prague: the second most attractive market in CEE
In Cushman & Wakefield’s latest Hotel Operator Beat survey, Prague placed as the second most attractive market in CEE, reaching 4.2 points on a 1–5 scale where 5 means very high interest. Budapest is a little step ahead with 4.3 points, and Warsaw, Krakow and Bucharest complete the top 5 markets targeted by hotel operators. The interest in Prague remains stable, having reached nearly the same score in H2 2021 when the survey was last taken. In the top 5 list, a 10% growth of interest in Budapest is the most significant change, elevating the Hungarian capital to the first place this year.
Among the top 20 CEE markets monitored, Brno is another potential Czech target. It experienced a 2% increase in interest compared to the last survey, reaching a score of 2.7. Due to the city’s considerable development, Brno has recently attracted several international hotel chains, which have and seek to establish their presence in the city.
David Nath, Head of Hospitality CEE & SEE, Cushman & Wakefield: “Prague’s hotel market resounds with optimism as the region's second most sought-after market for operators. Driven by the restrained supply growth over the past few years, lower brand penetration and a modest luxury supply share compared to its CEE peers due to high barriers to entry, Prague is poised for a performance boost. The imminent arrival of major luxury brands such as the W Prague Hotel and Fairmont Golden Prague Hotel, coupled with a gradual resurgence of airport passenger numbers to pre-Covid levels, invigorate prospects for elevated market performance.”
Optimistic outlook mainly for upper-class and extended stay hotels
As the performance of hotels soars above the pre-pandemic levels, regional and international operators are optimistic about the industry's outlook and keen to expand across the CEE-12 region2.
The positive trends are expected to continue, with operators expressing positive sentiments about the future performance of hotels in the region, particularly for the top two classes, with 71% of respondents being optimistic or very optimistic about luxury hotels, and 82% about upper-upscale hotels. The most optimistic outlook was recorded for extended stay hotels (79%) and urban hotels (75%).
Quarter of planned projects on hold, Prague expanding its luxury capacities
Still, challenges are faced: around 28% of the 140 projects proposed by the surveyed operators across the CEE region are facing delays (17%) or being put on hold (11%). The most common delays range from 6 to 12 months, according to 40% of the respondents. These are caused mainly by increased development costs and challenges with debt funding, according to 65% and 35% of operators, respectively.
David Nath, Head of Hospitality CEE & SEE, Cushman & Wakefield: “In Prague, following from the recent opening of the Andaz Prague and The Julius Prague, the openings of the reconstructed W Prague Hotel and Fairmont Golden Prague Hotel are upcoming, which will expand the Czech capital’s luxury hotel capacities. Still, the share of luxury hotel rooms will remain behind comparable markets such as Budapest or Vienna in this respect, while Prague arguably should offer more to reach its full potential. With its profound beauty and unparallel cultural heritage, Prague deserves to be the leading high-end destination in Europe.”
About the Operator Beat survey
Cushman & Wakefield conducted the Hotel Operator Beat Survey in H1 2023. It was completed by more than 25 senior executives representing hotel operators with an existing presence in the CEE-12 region or interest to enter it. They operate more than 450 hotels with over 72,000 rooms in CEE-12, plus over 140 proposed hotels comprising more than 22,000 rooms in the pipeline. The survey is being extended to various regions across Europe, offering distinctive and exclusive insights at a pan-European level. It covers other areas such as trends in contract terms and environmental considerations, which will be published shortly.
1/ Source of performance indicator data: STR
2/ For the purpose of the Hotel Operator Beat survey, the CEE-12 region includes Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia, and Ukraine