Hotel owners in Prague’s Old Town are struggling to compete with Airbnb
Shared accommodation platforms such as Airbnb are taking an increasing share of Prague’s tourism sector. Hotel owners in the city are trying to respond to this trend through new development projects.
Each year, the number of tourists in Prague increases by about 300,000. However, the number of hotel beds in the city has risen by just 1.4% in the past two years. In contrast, the number of short-term shared accommodation platforms—such as Airbnb, which we covered in depth here—has increased by 34%, reaching 14,000 apartments in 2018, according to a study by consulting firm Deloitte.
That said, the growing popularity of short-term rental platforms doesn’t mean hotels are empty. The occupancy rate for hotels in Prague has remained at a strong 78% over the past two years—a high number by any standard. One consequence is the rise in average hotel prices, making Prague comparable to Vienna in terms of accommodation costs.
Today, a room in a 4- or 5-star hotel in Prague costs around €90, compared to €120 in Vienna. According to statistics from the Czech Hotel Association, hotel prices in Prague rose by 2.2% and occupancy by 0.7% compared to the previous year.
Miroslav Linhart, property manager at Deloitte, stated that the potential for high returns from short-term rentals is driving people in the city center to use these platforms. He expects this trend to expand into other neighborhoods—particularly those near the Old Town, such as Karlín, Žižkov, and others.
According to data from Cushman & Wakefield, 16 hotel development projects are currently underway in Prague, expected to add 2,900 hotel rooms. However, only 42% of these are actively under construction. For example, the Ritz-Carlton is building a luxury hotel near Old Town Square—a project that began construction only recently, though it was planned as far back as 1998.
Bořivoj Vokřínek, a hospitality market expert at Cushman & Wakefield, says: “Considering the strength and size of Prague’s hotel market, the planned development is modest in relation to demand and will likely go unnoticed—especially when you realize how many years it may take before these hotels are completed.” In short, this is an excellent time for real estate investors in Prague, particularly those focused on its historic Old Town.
With over a decade of experience supporting real estate deals in Prague’s Old Town, don’t hesitate to reach out to us now—we’re here to help!
