Hotel rates increased but occupancy dropped across the region in 2008 (CEE)

Despite the continuing impact of the global economic crisis some good development and investment opportunities exist in the region.

Economic growth in Central and Eastern Europe (CEE) has experienced a slowdown, particularly compared with the recent period of rapid expansion. Even with the slowdown, most forecasts still suggest substantially higher GDP growth rates in CEE countries than Western European countries in the long-term.

The hotel development pipeline in most CEE countries remains robust, with Prague leading the way in terms of number of added bedrooms for 2009. Tight lending conditions resulted in some major projects being postponed as developers look to focus on current projects while the availability of finance is scare. In addition, hotel performance indicators in the region have been poor in comparison with recent years. International brands remain interested in the region, although they are selective in both location decisions and types of operating agreements they propose.

Martin Thom – Associate Director – CEE Hotels adds: "In general, hotel performance for 2008 across CEE was not as good as 2007. Occupancy fell 6,7% while ADR (average daily rate) increased by 7,4%, resulting in a minor increase in RevPAR (revenue per available room) of 0,2%. Bucharest and Prague were amongst the weakest performing cities with RevPAR in both locations falling in excess of 11%."

Adrian Flueck – Analyst – CEE hotels comments on Prague market: "The opening of the Clarion Congress, Barceló Premium and Kempinski Hybernska were the key additions to the Prague market in 2008, with the Clarion improving the city's capacity for conferences. 2009 is expected to be a similarly tough trading year for Prague's hotels."

Source: CB Richard Ellis

Related News