CBRE: Hotel performance declines across CEE

Hotel performance across the capital cities of Central & Eastern Europe has been under pressure since summer 2008. Performance figures for the first quarter reveal a continuing decline in occupancy and Average Daily Rate (ADR) – it was said at the latest briefing of CB Richard Ellis Hotels in Budapest.


Hotel occupancy levels in Vienna for Q1 2009 are approximately 12.6% lower than Q1 2008. A contributing factor is the decrease in arrival numbers to Vienna Airport, which showed a decrease of 14.8% in Q1 2009, compared to the same period last year. Arrivals from Spain, USA and Italy decreased the most. Nevertheless, Vienna showed the smallest decrease in hotel performance across the region. Notably, RevPAR (Revenue per Available Room) for hotel chain operated assets showed a larger decrease than the overall market. “However, as we approach the summer season and tourist numbers grow, we expect chain hotel performance to improve as they benefit from the strengths of their brand and revenue management systems,” commented Martin Thom, Associate Director at CBRE Hotels.

In Bratislava, Budapest and Prague, occupancy in Q1 2009 decreased by more than 20% compared to Q1 2008 (Bratislava -25.8%, Budapest -24.1% and Prague -22.9%). Passenger numbers at Bratislava airport decreased 30% in the first three months of 2009 compared to the same period in 2008, while Prague hoteliers reported significant drops in the number of leisure visitors from the UK and USA. Similarly, ADR in the three cities decreased in Q1 2009 compared with the previous year. Martin Thom said: “Hotels are pursuing a reduced number of visitors. These visitors, corporate and leisure, are more price sensitive. In addition, supply in these cities continues to increase and hence the drop in ADR is unsurprising.”

The sharpest ADR declines in Q1 2009 were reported in Warsaw and Bucharest (-21.6% and -23.6% respectively compared to the same period last year). In both cases the national currency has been subject to significant depreciation against the US Dollar and the Euro. Bucharest suffered from the largest occupancy drop across the region, a decrease of 26.4% compared to Q1 2008.

Adrienne Konthur, Managing Director of CB Richard Ellis, Hungary, added: “As CBRE earlier published, we will see some major additions to the hotel supply of Budapest in 2009 and 2010. As an example, a four star Eurostars Hotel in the CBRE-represented First Site Hotel and Business Complex on Kossuth Lajos street will open this summer.”

Source: CB Richard Ellis