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Hoteliers swim upstream
Written by: Klára Smolová
Photo: Petr Poliak
While the Czech Republic is struggling
with a slump in foreign visitors, accommodation capacities are
still growing. There are still some niches in the market, but in
the tough fight for clients, hoteliers are finding an improved
promotional campaign is key.
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| Martin Ykema |
AT THE END of January, the World Tourism Organization (WTO), announced
the results of the travel industry for 2002. Forecasts of a crisis
didn't materialize as the number of international border arrivals
recorded a growth of 3.1% compared with 2001, with central and
eastern Europe seeing an increase of 3.9%. However, this growth
did not relate to all regions, as Poland and the Czech Republic
recorded a decline of over 5%. According to the Czech Travel & Tourism
Center, 4.6 million foreign tourists visited the Czech Republic
last year, which is 400,000 less than in 2001. Another drop is
expected for this year. There are differing opinions as to why
less tourists are coming to the Czech Republic - some insist that
it is a consequence of such global problems as the economic recession
and the political situation in the Middle East (which is affecting
all destinations, not only this country), while others say that
Prague, and thus the whole country, undervalued its promotion abroad
and lacks any coherent marketing strategy for the future.
Not resting on any laurels
After the iron curtain fell, the Czech Republic became the gateway
to an unknown and mysterious eastern Europe, which was seen as
a chance to taste forbidden fruit without having to exert much
effort. However, after 13 years this euphoria has faded away
and it has become necessary to do something to promote the country. "Prague
has not done anything on a regular basis to promote itself abroad.
There is no strategy for how to present the city," complains
Martin Ykema, general director of Novotel, part of the Accor
Hotels chain. He adds that along with the economic recession,
last year's floods and the recent war, Prague's poor accessibility
can be seen as another detrimental factor. "Flying to Prague
is more expensive than to other destinations," Ykema points
out. Likewise, the basic highway network is not yet finished,
and those considering train travel are discouraged by the poor
quality of the railways.
However, most hoteliers agree that Prague has huge potential. "Prague
is a well concealed secret; a fascinating city that is worth a
visit. But people have to learn about it," says René Beauchamp,
general director of the five-star Four Seasons hotel, which was
hit heavily by last year's floods, and which will open its doors
again on 28 June after extensive reconstruction. According to Josef
Santin, general director of the Diplomat hotel, it is necessary
to penetrate the public conciousness. "You may have an excellent
product, but if nobody knows about it then it means nothing. Today
there are many beautiful tourist destinations, yet people choose
places they have learned something about," says Santin.
Recently local hoteliers, together with the American Chamber of
Commerce, initiated a meeting with Prague's Lord Mayor Pavel Bém
to propose the preparation of a strategic plan to increase promotion
of Prague abroad. "We have to compete with other cities such
as Budapest and Warsaw and not with each other (hoteliers)," notes
Ykema. However, some hoteliers are skeptical about cooperation
with City Hall. "I am not convinced that the magistrate will
really do anything. They know that they need tourists, but for
now we are only exchanging ideas. When talk swings to money, things
will change," Santin avers. His worries are probably justified.
Councillor Igor Němec, who is in charge of the travel industry
for City Hall, is of the opinion that Prague's presentation abroad
is sufficient. "Prague is the seventh most visited city in
Europe. Vienna is in tenth position," Němec points out. He
notes that Prague is presented mainly at travel industry trade
fairs. "In the first three months of this year, we went to
trade fairs in Lyon and Bratislava, and we won first prize for
the most impressive exhibit at both of them," he boasts. He
was not informed about the hoteliers' meeting with Bém. Allegedly,
Prague is not planning any special action. "Prague's budget
for the travel industry is only 20 million crowns," he adds.
Changing strategies
In the meantime, everyone must fend for themselves in order to
compensate for losses. At the present time, the average occupancy
in hotels is around 50%, while the usual figure would be about
70%. "Some hotels started slashing prices, but this is very
unhealthy, and their behavior is often close to unethical," says
Ykema. After decreasing prices, it is very hard to increase them,
and such a situation hurts the whole market. "Statistics
prove that slashing prices has a negative influence on new investors,
for example," he adds. It is also a fact that such hotels
take guests away from others. "Hotels focused on tourists
have decreased their prices, and therefore we are losing customers
because they go for cheaper offers," complains Regina Sieberová,
general director of the Sieber Hotel, which focuses mainly on
business clientele. In order to balance the given situation,
Sieber Hotel turned its marketing activities towards Czech companies
with headquarters outside of Prague and guests from Europe who
don't have to travel too far.
Most hotels chose this path due to recent events that have discouraged
people from traveling overseas. For the Hilton hotel, whose priority
is usually North America, intensifying its marketing in European
countries was a must. Hotels oriented toward conference tourism
or business travelers have chosen a strategy of special offers.
The Diplomat created packages of conference services not only for
foreign, but also domestic companies. "It is a lot easier
to differentiate the prices in this area without creating a dangerous
precedent by reducing them. We also strengthened our sales team
and tried to bring an offer that was precisely targeted," Santin
explains.
It is possible to attract local clients by offering additional
services: restaurants, fitness centers and other activities. Klaus
Pilz, general director of the Crowne Plaza hotel (formerly the
International hotel) in the Prague residential area of Podbaba,
is planning to open a garden next to the restaurant in which there
will be a barbecue. "We also have a playground for children,
so people who don't want to cook at home and want to spend a pleasant
afternoon outside can come here on the weekends," says Pilz,
adding that twice a month the hotel organizes classical music concerts
in its congress hall that are open to the public. The Four Seasons'
Beauchamp also assumes that his hotel's local advertisement will
mainly be focused on its Allegro restaurant, which was declared
one of the best in Prague a year ago.
Luxury attracts
Regardless of the difficulties of the travel industry, last year the capacity
of hotels reached almost a half million beds and this year over 10,000 more
should be added, states the Czech Travel & Tourism Center in its regular
iNFO-bulletin. However, most of the newcomers are narrowly specialized on
a specific type of clientele. They include so-called design and boutique
hotels or small luxury hotels (see sidebar on page 42) that are filling a
niche in the market. Residences for mid- and long-term stays are a very specific
segment that is not yet saturated.
Early this year, the local scene was enriched by Hotel Juliš, which focuses
on short- and mid-term stays. It is operated by the Swedish firm City Apartments,
which has its background in Scandinavian countries. "We want to focus
above all on corporate clients, but we have started with traditional hotel
guests prior to establishing a customer base," explains Jan Doškář, hotel
manager. He points out that their biggest advantage is locality and the prices
for accomodation, which are half the price of similar residential facilities.
But those often offer real apartments made up of several rooms, which is not
the case with Hotel Juliš.
In the coming months, other newcomers will shuffle the deck with lodging capacities
- the luxury boutique hotel Aria (see sidebar on page 40), part of the American
network HK Hotels, will have 52 rooms and the five-star Grand hotel Boscolo,
part of Italian network Boscolo Hotels, will have 148 rooms and conference
capacity for 400 people. They are both located in the center of the city and
will focus on more demanding clients. The Orco Group is also stepping in with
a luxurious project. In the spring of next year, it intends to begin operations
in a five-star residence named Pachtův Palác, with the ambition to compete
with the current number one, Four Seasons.
Most hoteliers claim this development helps to weed out the competition. "There
is still room for competition here, which will contribute to the improvement
of Prague's image abroad, and everyone will profit from it," insists Beauchamp.
He says that Prague was long known as a destination for backpackers, but today
it is necessary to promote the possibilities for sophisticated dining and shopping.
Santin has a similar opinion: "These hotels will attract completely different
people to Prague, which is beneficial."
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One day in, next day out
In 1999 ČSL held a tender for building a
hotel in the center of terminal North. Development firm ECM
Airport Center submitted
the best bid but, according to ČSL spokeswoman Anna Kovaříková,
failed to provide evidence that it had sufficient finances
to secure the construction. Ondřej Buršík, ECM's project
manager, says that in 2001 ČSL terminated the agreement citing
financial reasons. However, he adds that at the time, ECM
had an agreement with Živnostenská banka, which promised
to finance the project. According to Buršík, the company
has already invested about CZK 100 million into the project
and is determined to bring it to completion. ECM filed a
lawsuit against the airport administration. The State Construction
Office stopped the construction procedure for the area until
a court ruling on the issue.
Thus far only one project carried out by Czech company M.I.P.
Group has been completed - in May, the group opens the first
hotel in the Prague airport. Airport Hotel Prague is situated
near the South terminal that serves for VIP clients, including
large multinational companies. The three- to four- star conference-type
hotel has 56 suites and three apartments and will provide
services for clients who come to the Czech Republic for a
meeting and need to fly back the next day. It will also offer
service for travelers who have missed their flight. M.I.P
Group started construction in May 2002. According to company
supervisor Helena Vonková, ČSL welcomed the project. "Our
business plan did not meet with any special obstacles because
there was a need for such a hotel in the area," she
says.
Kateřina Zapletňuková |
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A celebration of history
and music
FREQUENT WORLD travelers probably know the famous Library
Hotel in New York, or at least one of the three other thematic
hotels run by HK Hotels: The Casablanca Hotel (Moroccan style);
The Hotel Giraffe (art deco); and The Hotel Elysée (French
countryside). Their fifth hotel will be opened in August
of this year, this time in the heart of Europe - Prague.
The luxurious, boutique Hotel Aria, with a capacity of 52
rooms, has four floors planned, with each one devoted to
a different musical genre - modern, classical, opera and
jazz. Each room or suite will be devoted to different artists. "The
hotel is focused on tourists and business travelers who want
something more. They desire a special experience from their
trip," explains Alison Pollitt from the PR agency Fision
Group, which represents HK Hotels.
The owner of the chain, Henry Kallan, entrusted this USD
15 million project to Spatium of Milan and its architects
Rocca Magnoli and Lorenzo Carmellini, who became well-known
through their cooperation with fashion designer Gianni Versace.
Luxury will be apparent here with every step - from mosaics
on the floors through a music library and salon with fireplace
to the winter garden and the latest technological achievements.
The services that are typical in hotels of this category,
such as business and fitness centers, will also be an integral
part. Naturally, gastronomy has not been overlooked. The
Aria Hotel's restaurant will be managed by the well-known
restauranteur Nils Jebens, who operates several top restaurants
in Prague, including Kampa Park.
The price per room will range between EUR 352-975 (for comparison,
it is EUR 158-365 at the design Hotel Josef), and this new
hotel will fill a niche in the sector of Prague's design
and boutique hotels. "This hotel represents what Prague
needs - high quality," says Pollitt. It is aiming to
attract clients from the US, Europe, Japan and Russia who
expect the most luxurious services." The hotel's target
group has been partially determined by its location - on
Na Tržišti street, near the American Embassy and Prague Castle.
Anita Lišková |
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Targeting specific travelers
The trend towards hotels with "added aesthetic value" is
fully recognizable in Prague. During the past two years,
three large design hotels have opened in Prague: Holiday
Inn Congress Center, Anděl's hotel and Hotel Josef. They
are doing quite well, despite the fact that many are still
trying to build a regular client base in the face of a decrease
in foreign visitors to this country. This is expected to
change following EU accession. "If we look at the first
quarter of 2003, the average occupancy rate was 62.5%," says
Manfred Tobolka, Hotel Josef's general director. The situation
is similar at the Holiday Inn Congress Center, where occupancy
was 60%: "Our main advantage is that the hotel is located
right next to the congress center. This is extremely important
to business clients, as they don't have to spend hours traveling
around the city," says Michaela Veselá, sales and marketing
manager.
Besides design hotels, small luxury boutique hotels are opening
too. They offer around 30 rooms and a near-familial attitude
towards the clients. "To be in a strange city is stressful
enough, so a hotel should offer coziness, warmth and affection," says
Eva Kaplánová, director of the art nouveau Hotel Liberty
in the center of Prague. Although a large amount of visitors
are still going to chain hotels, which are identical everywhere,
Kaplánová feels that there is a notable trend towards smaller
hotels with an unusual environment and an individual attitude. "90%
of our visitors are business people, and many of them say
that large hotels are too anonymous for them. They are turning
to small hotels with a family atmosphere," confirms
Michael Panenka, director of the boutique hotel Elegant.
Tourists also can't resist the magic of design and boutique
hotels. "Originally, we expected corporate clientele
in the Riverside hotel, but we are surprised by the amount
of tourists who wish to see Prague and are staying here for
five to seven nights," says Jarmila Migelová, hotel
development manager for the Orco Group, which operates the
Riverside hotel. "Travelers' expectations are still
increasing. Despite the present boom it is clear that there
is still room for hotels of this type in Prague," Migelová
adds. Her words are backed by the fact that the luxurious,
musically thematic, boutique hotel Aria of the HK Hotel chain
(see sidebar on page 40) will open in August.
Anita Lišková
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Fringe hotels may suffer
Hotels outside Prague are partially dependent on how the situation
with the hotel business is developing in the capital. Milan
Pavelka, sales and marketing manager of Orea Hotels, says that
while the travel business is down due to the Iraqi crisis,
international hotel chains in Prague can afford dumping prices
that steals business from others outside of the capital. Orea
is the largest hotel chain in the Czech Republic, operating
26 hotels all over the country - four-star category Orea Hotels
Exclusive, three-star Orea Hotels Classic and lower category
Orea Hotels Tourist. Only one of them - hotel Pyramida - is
located in Prague.
On the other hand, Pavelka expects an increased interest in
domestic tourism as a result of the recent international economic
and political situation. "The majority of Czech tourists
will prefer a holiday in the Czech Republic to going somewhere
over the ocean, or close to crisis areas," he says. However,
he doubts that the number of Czech clients will be large enough
to save the business, because locals only account for half
of Orea Hotel's clientele. The remaining 50% come from the
West, mainly Germany and EU countries. Therefore his company
tries to attract local business people as well. One Orea hotel,
Devět skal, located in the Czech Moravian highlands, caters
mainly to corporate clientele that come here for seminars,
trainings, and congresses. Pavelka explains this success by
pointing out the hotel's favorable geographic position, halfway
between Brno and Prague.
Klaus Pilz, general manager of the Crowne Plaza hotel and the
Grand hotel Bohemia in Prague, is optimistic about the future
situation of destinations outside of Prague, as his company
also runs the Grand Hotel in Brno. "Brno is already very
active, it organizes a lot of cultural festivals and events
which attract tourists," says Pilz. He claims that the
travel business will mainly profit from the accession to the
EU next year, and he expects an increase of congress tourism
to Prague. "The whole country will profit from that, as
there are usually pre- and post-congress tours organized to
destinations outside of Prague," Pilz notes. Vladimír
Štětina, general secretary of the National Federation of Hotels
and Restaurants, agrees: "With the accession to EU the
tourism is expected to grow, since the borders will be down.
But along with that hoteliers will need to increase prices
in order to be on the same level with international rates."
Kateřina Zapletňuková
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