Two new hotels are opening in the capital: the Mellow Mood Group has just completed the Expo Congress Hotel in Kőbánya, and Uniqa has completed the First Site complex on downtown Kossuth Lajos Street with the four-star Eurostars Hotel. However, the line cannot be resumed at this time, as there will be no new deliveries in the capital in the next one or two years, apart from Ablon’s Blaha Lujza Square.
This is not surprising either, as quite a few developments stopped for example in Warsaw and other Polish cities. We know that investments are stalling throughout the region, some have been completely abandoned, and others have been struggling to obtain funding.
The performance of hotels in the capitals of the CEE region has been weak since the summer of 2008. Hotel occupancy and average daily room rate (ADR) continued to decline in the first quarter of this year, previously reported by CB Richard Ellis. Vienna hotel room occupancy in the first quarter was 12.6 percent lower than a year earlier. The 14.8 percent drop in Vienna Airport’s arrival traffic was a major contributor to the decline.
Room occupancy in Bratislava, Budapest and Prague fell by more than 20 percent in the first quarter of 2009 compared to the first quarter of last year (Bratislava -25.8 percent, Budapest -24.1, Prague -22.9). Bratislava Airport saw a 30 percent drop in passenger traffic in the first three months of 2009, while hotels in Prague reported a significant drop in guests arriving from the UK and the US for private purposes. Similarly, average daily room rates in all three Central European capitals decreased in early 2009.
Budapest improved slightly in the second quarter, but this is more of a positive seasonality. However, our room-to-room revenue has fallen by 32.8 percent in the last twelve months, which, in addition to the general decline in demand, is also attributable to the weak HUF. At the same time, it is beneficial to the business that hotels have been moving into the lower VAT band since July, said Adrian Flueck, an analyst at CBRE Hotels in Prague.