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News Release


EUR 250 million of hotel assets changed hands in the Czech Republic during 2013

​Prague, 14 April 2014 – The economic crisis had a significant impact on hotel performance and hoteliers posted a steep decline in performance during 2008 and 2009. However, improvements were registered between 2010 and 2013 with Revenue-Per-Available Room (RevPAR) recording an average yearly growth rate of 4.1% to approximately EUR 50 in 2013. This growth however, was fuelled primarily by an increase in occupancy which grew from 62.6% in 2010 to 69.5% in 2013, reflecting an improvement of 7.3 percentage points. Average Daily Rate (ADR) on the contrary stagnated due to very competitive market conditions. Although performance has improved since 2010, RevPAR levels still remain about 30% below their pre-crisis levels. 

“The hotel environment in Prague is very competitive which has therefore made a quick and strong recovery very challenging. The market is still suffering from the significant supply growth which has made it very difficult for hotels to raise room rates despite an increase in demand. We believe however trading performance will improve in the years ahead on the back of robust growth in tourism”, says Robert Brydone, Head of Valuation at JLL.

In addition, activity in the Czech hotel investment market also improved in 2013, particularly towards the end of the year with JLL acting as advisor to Best Hotel Properties in its acquisition of the 372-room InterContinental Prague hotel, the largest single asset deal in the country for almost a decade. The 75-room Kempinski Prague on Hybernská was also sold for an undisclosed sum. JLL represented the seller. Moreover, the 78-room Grand Hotel Bohemia Prague, the 254-room Crowne Plaza Prague and the 105-room Grandhotel Brno received new owners as part of a wider 11 hotels portfolio. In total, approximately EUR 250 million of hotel assets changed hands in the Czech Republic during 2013, indicating investor confidence is returning.

As a result, the hotel market in Prague is expected to see a gradual improvement in yield levels, driven by rising occupancy rates and a limited future supply. “We expect there to be an increase of capital flow to the Central and Eastern European region within 2014 which will help strengthen yield levels. We consider centrally located 4- and 5- star hotels with an international brand and a large volume to remain the key target for hotel investors going forward. We expect that appetite for smaller, less centrally located hotels will be less attractive to investors unless they have strong performance fundamentals and an established operational track record”, explains Robert Brydone and continues: “It is important therefore to have in place an effective asset management program which will allow them to build on improving market conditions and maximise value. This can only be achieved through a deep understanding of asset management, its impact on a property’s cashflow, operational performance, and retrospectively its effect on value”.