Prague hotels fight for clients as room prices fall up to 50 percent of pre-pandemic value

Roughly CZK 170 billion have been allocated by the state to support businesses since the coronavirus pandemic hit the Czech Republic in March 2020. The subsidies have now been cut, but the Czech hospitality sector is still struggling.

A competition war is currently underway among hoteliers with room prices as low as 50 percent of their pre-pandemic value, Aleš Bláha, the owner of Prague’s Hotel U Zlatého jelena, told Czech Radio. The occupancy rate in his hotel is still extremely low, ranging from just 20 to 30 percent and he expects that the hotel will be forced to borrow money in order to cover its expenses this year.

Photo: Paul Sableman,  Flickr,  CC BY 2.0

His situation is similar to that of many other hotel owners in the Czech capital. According to the President of the Czech Association of Hotels and Restaurants Václav Stárek, hoteliers are also facing problems in several other of the country’s leading tourist destinations, for example in the picturesque Český Krumlov. He says that the sector would benefit from the extension of the so-called kurzarbeit (short-work) scheme, which provides government subsidies to businesses unable to continue paying their employees.

Negotiations have been going on for two months, says Mr Stárek, but the government refuses to restart the scheme which finished with the end of lockdown earlier this year. Instead, the plan is to switch to indirect compensation in the form of bank loan guarantees.

According to Industry and Trade Minister Karel Havlíček, focus needs to be put on restoring demand. He believes that this can be achieved by supporting investment through various schemes either on the basis of guarantees for investment loans or of a new depreciation regime.

Václav Stárek | Photo: Czech Television

The ministry is currently working on updating and simplifying its system of investment incentives, with Mr Havlíček stressing that whoever invests today will earn significantly more than if they invested two or three years down the line.

However, several business owners have criticised the government for acting too slowly when subsidies were still in place, with some only recently receiving the money that was intended to cover last year.

For Martin Blažek, this hiccup in the process meant that he was forced to close his business last autumn.

“It didn’t really work out last year. I think this is a big red light for the whole government, which we believe failed. I know about colleagues who were just forced to quit, because they couldn’t support their business from their own money anymore.”

Authors: Thomas McEnchroe , Jakub Horáček
run audio