WORLD PROPERTY CHANNEL ®

(PRAGUE, CZECH REP.) -- Hotel owners in the Czech Republic are experiencing their second straight season of slumping occupancy.

The number of guests staying in Czech hotels was down almost 9 percent in the first half of 2009 over last year. More than half of Prague's hotel rooms are empty.

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 Prague Post reports "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 chains like Best Western and Marriott have reduced room rates up to 40 percent,  according to Pavel Hlinka, president, Czech Association of Hotels and Restaurants.

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

Viliam Sivek, chairman of the Association of Czech Travel Agents,  expects up to 70 hotels in Prague to file for  bankruptcy protection 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 has 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 largest numbers, British and Russian visitors dropped the most at 27 percent and 19 percent, respectively.

Hlinka says that is an unusual situation for Prague which has attracted tourists in volume for decades. He doesn't believe slalshing room rates at luxury resorts will help.  

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

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 says.

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

Clemens Hoerth

Clemens Hoerth, the general manager of Prague's Mandarin Oriental, says the state also should provide new marketing and tax breaks for the hospitality industry.

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

Hoerth of the Mandarin Oriental hotel adds, "During this slow period, we are increasing the hotel's resources and training employees.  (But) as in any crisis, only the strong survive," he said.  

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