Hotel rooms are half empty

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As many as 70 hotels face the threat of bankruptcy, insider says

According to Hoerth, "A long-term advertising plan to boost Prague's profile is absolutely necessary."

The number of guests staying in Czech hotels was down almost 9 percent in the first half of 2009 over last year, worrying hotel owners who are struggling after a second straight season of disappointing tourism numbers. According to data released Aug. 17 by the Czech Statistical Office (ČSÚ), the number of foreigners visiting Prague was down 10.8 percent in the same period.

The downturn has already stoked fierce competition among Prague's many lodging establishments, which total more than 400, to entice a shrinking number of tourists. Large chain hotels such as Best Western and Marriott have reduced their rates up to 40 percent according to Pavel Hlinka, who heads the Czech Association of Hotels and Restaurants.

"Reducing rates is fine for larger hotels [that] have 4,000 rooms," Hlinka said. "But what about the hotels with [only] 200 or 300 rooms? They just can't afford it."

// In an Aug. 18 report in Hospodářské noviny, Chairman of the Association of Czech Travel Agents Viliam Sivek said he expects up to 70 hotels in Prague to go bankrupt by spring of next year.

Tourism is an important source of revenue for Prague, a fact that shouldn't come as a surprise to anyone who has observed the city's glut of tour operators, souvenir stands and high-end hotels. Of all the regions, Prague had the highest occupancy rates at 55.1 percent, but, across the country, five-star hotels saw the biggest drop in occupancy at 11.2 percent. Among the nationalities visiting Prague in the biggest numbers, British and Russian visitors dropped the most at 27 percent and 19 percent, respectively.

Hlinka added the situation is unique to Prague, and that he was against the very principle of renting luxury hotel rooms at drastically reduced prices.

"The value that customers are getting is much, much higher than the cost," he said. "Other cities - Paris, Vienna, London - are not lowering rates this much. So why is Prague doing it?"

One of his efforts as president of the association is to discourage hotel managers from making such price cuts. However, with more than half of Prague hotel rooms empty, it's understandable that hotel owners are anxious for a solution, he added. Hlinka's organization is calling on the state to assist the Czech Republic's flagging tourism industry.

"Without the help of the government, hotel owners will have big problems very soon," he said.

The association is urging state officials to recognize the essential role of tourism in Prague's economy, and owners would like to see fewer fees and more incentives to boost tourism during the peak months of the summer.

Clemens Hoerth, the general manager of Prague's Mandarin Oriental, also said the state would need to step up to revive the city's tourism industry, through marketing and tax breaks for the hospitality industry, which employs a significant number of residents.

"A long-term advertising plan to boost Prague's profile is absolutely necessary," Hoerth said. "Tax incentives for the industry are essential to guarantee the employment of 120,000 people."

To some extent, these requests are being granted. Prague city council has created the Commission for Providing Grants to Tourism to meet with tour operators and find new ways to attract international visitors. Efforts so far have led to the creation and promotion of more affordable city events, and international advertising campaigns that highlight Prague's standing attractions. Maintenance of well-known landmarks and buildings is also under the umbrella of the commission; according to the group's most recent meeting minutes, improvement projects are planned at Vyšehrad and Prague Ruzyně Airport.

Despite the decreasing numbers of international visitors, local traffic has been increasing. According to the ČSÚ, the number of hotel stays by domestic guests grew 2.3 percent in the first quarter of 2009. Hotels are also focusing on attracting business clients who can't choose where they travel, only where they stay. But the recession's transformative effect has meant nearly every sector will see its field of competition narrowed, with the firms that had a solid financial base and adjusted to the new climate adeptly surviving. Hoerth said hotels will have to balance cutting costs with maintaining a standard of service if they are to survive the downturn.

"During this slow period, we are increasing the hotel's resources and training employees. As in any crisis, only the strong survive," he said.  Zdroj : The Prague Post


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