In the CEE and SEE region, Prague, Budapest and Warsaw and several smaller regional cities are in the top 30 list of target locations for hotel operators. Bratislava ranked 18th, as the local hotel market saw a decline in average prices last year with revenues per room falling 76.4% compared to the previous year, and an average annual occupancy of 19%. Hotel operators anticipate a relatively fast market recovery for smaller cities as early as 2022 and 2021 for the capital cities.
The world's leading real estate consulting company Cushman & Wakefield conducted an exclusive survey of hotel operators for the 4th quarter of 2020, among regional and international hotel operators active in the CEE and SEE regions. The survey examined hotel operators' preferences, plans and developments, as well as their views on the impact of COVID-19 and market recovery expectations. The purpose of this survey is to increase the understanding of hotel markets in the CEE and SEE region and the prospects for recovery in this sector, thus supporting stakeholders in their business activities throughout the region.
Data on the European hotel market in 2020, just published by STR, confirmed what was visible last year: within the European hotel markets Prague was most affected by the coronavirus crisis. The year-on-year drop in average revenues per room reached 84.6%, similarly only to Barcelona, Rome and Lisbon. The impact on other major hotel markets in Europe was slightly lower, with an average decrease in room revenue of 69.7%. The main reason for the decrease in sales in Bratislava was the drop in occupancy by 71.7% (to 19%), but also the decrease in average prices by 16.6% to 66.50€ per room. The decline in accommodation prices was lower than the overall average in Europe (-18.4%), partly due to a reduction in VAT on accommodation services from 20% to 10%.
Table 1: Appeal of Destinations in CEE and SEE
Source: Cushman & Wakefield, Operator Beat
David Nath, Partner and Head of the Hotel Team for Central and Eastern Europe at Cushman & Wakefield said
"In the ranking of the attractiveness of 30 cities in the mentioned regions, Prague took the leading place: on a scale of 1 to 10, it reached an average of 8.8 points. Budapest with 8.3 points, Warsaw with 8.1 points, Bucharest with fourth points with 7.6 points, followed by Krakow with 7.3 points just just before the sixth Dubrovnik. Bratislava placed 18th with 5.7 points, just behind Riga and Ljubljana, but ahead of Tirana and Debrecen."
For hotels not sold last year, we expect the situation to improve in 2021
Recovery in 2022 - 2024
Larger and more important regional cities should be better off than capital cities: more than half of respondents estimate a recovery for 2023. According to them, smaller regional cities should be recovering even faster, helped by domestic demand: most respondents estimate 2022.