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Luxury hotels on the rise in Golden City

Prague's spike in high-end venues helps funnel money, tourists into Czech capital

By Adam Daniel Mezei
For The Prague Post
May 16th, 2007 issue

Over the past decade, Prague has seen a surge in the number of luxury hotels springing up along its cobblestone streets.
COURTESY PHOTO
Luxury hotels have popped up all over Prague in recent years.
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The phenomenon is being closely monitored by a slew of industry observers. Cushman & Wakefield goes as far to say that the city’s hotel business has seen 250 percent growth since 2004.
“In a short space of time, we learned quite a lot, and it’s paid off for our clients very well,” says Stewart Coggans, a regional director at Cushman & Wakefield who has been studying the market for the past five years.
With the city’s hotel rates presently on par with a lot of West European tourist hotspots, many top international hotel chains such as Hilton, Marriott and the Four Seasons have started pouring enormous amounts of cash into the Czech capital.
According to Coggans, several factors have contributed to the city’s luxury-hotel spike, including the proliferation of budget airlines such as easyJet, Smart Wings and SkyEurope, which have made Prague’s Ruzyně Airport one of their routine Central and East European destinations. Saving money on flights has left travelers with more disposable income to spend on luxury hotel stays and premium services, Coggans concludes.
Greg Gibb, the investments director at Ceres Group, accounts for the growth in Prague’s luxury segment from a slightly different perspective. He describes what is happening here as part of a “natural progression” by those who demand “more secondary and tertiary options” when they travel. People are seeking specialized luxuries, such as boutique hotels, ski resorts and spas, according to Gibb.
“Take apartment-hotels, for example,” he says. “These are accommodations with concierge services just like in more name-brand locations, only these are situated in properties like old castles and manor homes — off-the-beaten-track sorts of places. And they charge rates similar to what some of the name brands charge for a night’s stay in town.”
Where are these tourists coming from?
Coggans cites Americans, Germans, Brits, Italians and Russians — in that precise order — as Prague’s most prolific and spendthrift visitors. While hoteliers in the Czech regions may occasionally gripe about the disproportionate amount of attention Prague receives when compared to other parts of the Czech Republic, the “bottom line is that 80 percent of the business is here in the city,” Coggans says.
Coggans helms a five-person unit at Cushman & Wakefield that works closely with hotel developers months before construction even begins. The advice his unit gives ranges from architectural conceptualization to management agreements to knowing the local scene to understanding the relationship between the various local players, government officials included. Cushman’s “hotel team” presently operates in eight countries.
“Our competitive advantage lies in the fact that we know the luxury hotel brands cold, and we know which properties in the pipeline are specifically geared toward which particular brands. Over the course of the five years we’ve been doing this, there’s no one else on the market who can address our clients needs like we can,” he says.
Still, the global hotel chains and their developing partners aren’t the only ones with deep pockets and an eye on the lucrative Prague luxury hotel market. Ceres Group says it has seen an increase in interest in the luxury hotel sector from its pre-existing clients. Gibbs says the company currently has a few deals cooking in Prague that will likely lead to the opening of another two or three luxury hotels in the city, worth between 2 million and 20 million euros.
All in all, the big question Czech tourism seems to be facing these days is how to lure one-time visitors back to its sprawling capital city. Industry statistics reveal that once a typical West European Union visitor comes to Prague, he generally won’t return. What’s more, countries further east, such as the Baltic states, have started to be big tourist draws.
Despite this, Gibb says there continues to be massive influx of Asian interest in Central Europe and, specifically, Prague. As a result, Gibb reveals, Ceres has already had loose discussions with several Indian and Chinese investors with an interest in entering the market. It’s a path that could see many other developers following suit in the coming months and years.

Adam Daniel Mezei can be reached at specialsection@praguepost.com


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Reader's comments:

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[14:12 13/06/2008] : I'm quite surprised with the fact that you mention that tourists visiting Prague don't return. Actually I saw opposite statistics. I saw that about 44 percent of tourists are repeat guests to the country - here is my source: http://ftp.czechtourism.com/upload/1095144156(microsoftword-resultsofbordercrossingssurvey,foreignvisitorstoth_205).pdf .
By the way, tourists visiting the Czech Republic tourists get information from family members, friends and relatives, and travel agencies and media.
Therefore, we can create a growing impact of Internet influence, i.e. on-line hotel bookings like http://www.prague-hotels.org.uk/ (I asked 20 random tourists and 5 of them used this one), e-based travel tickets and sightseeing tours reservations.
Nancy Johnson
London
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