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Wednesday, June 13, 2001
Industry buoyed by IMF and end of Balkans conflict
By Jennifer Hamm
After enduring a dip in traffic because of the Kosovo conflict and sweating the fallout of a violence-marred international banking summit, those in the country's hotel business say life is looking up.
"Last year was like an explosion," said Daniel Senn, resident manager at the 400-room Movenpick Hotel in Prague 5, where occupancy shot up 20 percent in the past year. The surge prompted the hotel's management to hire 30 new employees and improve services to accommodate 32,000 more guests than it housed in 1999.
The Movenpick is not alone. Hoteliers across Prague rode a record wave of international tourism last year, spurred by a strong global economy and special events tied to the millennium. Nearly 698 million international trips were made to destinations around the globe in 2000, 50 million more than the previous year. It's a growth rate that hasn't been reached since 1992, when world travel picked up after a Gulf War-induced lull.
Prague saw an increase last year in both the number of people visiting the city and the amount of money those visitors spent. The city's hotels reaped a 13 percent increase in occupancy, reaching an average of 74 percent. They also improved their revenues by 33 percent, according to the Hotel Industry Benchmark Survey compiled by Andersen Consulting earlier this year.
In fact, Prague was one of only five cities to see double-digit growth in hotel occupancy rates. The others were Istanbul, which struggled with natural disasters and political instability in 1999; Hannover, which hosted the EXPO 2000; Moscow and St. Petersburg.
Southeast Asia saw the biggest overall growth in tourism, according to the Andersen report, but Europe reigned as the globe's star performer, with 403 million international visitors, nearly 25 million more than in 1999.
Travel to and around Europe was inspired by a record number of major events, including Expo 2000, Euro 2000, the Vatican Jubilee and the International Monetary Fund/World Bank meetings in Prague.
The turnaround is particularly sweet here after a tough 1999, when tourism dipped because travelers were apprehensive about visiting any place in the same region as the Balkan crisis. It didn't matter that Prague is 400 miles (645 kilometers) away from Kosovo and that the two countries share no common borders.
Unusually pleasant weather in May and October 2000 extended the tourist season. The country also had the chance to host the largest, most prestigious conference in its recent history, the annual meetings of the International Monetary Fund and World Bank. Major cash was pumped into renovating hotels, hiring staff and tightening security for the event.
The effect of the 10-day meeting on hotel occupancy figures was actually limited, according to the Andersen report, but it did contribute significantly to a growth in room rates, which averaged $97 (3,890 Kc) a night over the year. This was a 7 percent increase from 1999.
Many hotels said they couldn't point to actual business that's come to them due to the exposure of the conference, but few question that the industry will be better off for it.
"The world thought World War Three was breaking out in Prague ... but I think we will benefit in the long term because the world knows Prague can host large conferences," said Movenpick's Senn. "I think people will remember the good things."
The city also benefited from the controversy surrounding the ascent of right-wing Austrian leader Jorg Haider, according to the report, with convention business relocating from Vienna to Prague because of it.
The figures, however, were not all positive. The Czech Statistical Office (CSU) painted a different picture, announcing that although income from foreign tourism rose by 5.4 percent, accommodation facilities -- from five-star hotels to youth hostels -- had about 1.2 million fewer visitors than in 1999.
Stepan Hervert, head of the CSU tourism unit, said the office changed methodology in the middle of 2000, collecting data once a month instead of twice a year. The office is also reassessing which facilities it surveys. But Hervert stands by his figures.
The market is expanding, with Prague adding 700 new rooms in the past six months, including 162 at the world-renowned Four Seasons. The upmarket hotel chain maneuvered for eight years before completing its 49th hotel near the Charles Bridge. Ritz-Carlton, which has long been eyeing Prague, is to begin work on a 124-room hotel in the center this summer.
The pace is expected to continue for at least the next few years, with more than 1,000 new rooms planned. The Andersen report says there is plenty of demand for such growth, especially as the country moves toward European Union membership.
In addition to more rooms, the quality of local hotels and their services is improving, said Marek Dian, who works in sales and marketing at the Hotel Pariz.
"You can visit Prague and Amsterdam and you will find the same level of services, and in Prague it will cost less," he said.
Hotels are focusing more on customer service, perhaps driven by new competition like the Four Seasons. The Movenpick recently hired a second person specializing in training staff members in hospitality. It has also installed safes in every room and is upgrading technology services.
Though the first part of 2001 has shown growth, officials remain cautious about for the rest of the year. The upward trend was stifled in March in several countries, which many believe is the first sign that the slowing U.S. economy will undoubtedly hit global tourism.
Jennifer Hamm's e-mail address is jhamm@praguepost.cz
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