Prague in the Centre of Hotel Operators’ Interest, its Performance Above Pre-Covid Levels

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 region.

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.