After two years of forced closures, hoteliers in the Czech Republic are looking forward to better times. Although the restart of tourism has been driven more by the regions, while large cities still lack a significant number of tourists from abroad, business clients and the organisation of congresses and corporate events have returned.
”Everyone wants to meet and catch up with the last two years,” says Miroslav Kosnar, CEO of Cimex Group. Cimex is one of the largest private investors in the Czech Republic and is part of the Orea Hotels & Resorts hotel chain, which accounts for about sixty percent of its turnover.
During the pandemic, Kosnar said, hotels had to lay off hundreds of people who are now missing. ”All hoteliers and catering businesses are facing the fact that workers have left this segment, a large number of them probably irrevocably,” he says.
You have embarked on building fully equipped serviced offices for individuals and companies with flexible lease terms. To what extent do you want to apply the concept in your existing buildings?
We are moving towards greater flexibility in general, gradually transforming spaces left by tenants who have left. We want to provide companies with immediately available solutions with the possibility of short-term, but also longer-term rental. Companies do not want to get too tied down at the moment, the share of long-term lease contracts in the office market will probably decline.
The closest thing to a coworking centre is our Mo-Cha concept, which is currently in operation in Pankrác in the Vista House building, and we are also planning to launch it at 37 Václavské náměstí or in our Garden 11 building in Vršovice.
When will it be?
The whole building on Wenceslas Square will be taken over, we have resolved the obstacles in the permitting process and I expect to start the reconstruction of the building in the autumn.
Last year, Prague added the fewest new offices in five years. What’s the problem?
The ideal scenario for a developer is to have a building permit, a fixed construction price, a pre-negotiated number of leases in the upcoming project and secured financing. However, it is currently impossible to control construction costs, companies do not want to commit themselves in advance under lease agreements and even banks are cautious.
How do tenants in your office buildings deal with expensive energy?
The costs associated with the operation of the building are in principle borne by the tenant. Of course, the moment they grow significantly, some may rebel. It’s individual, we have a discussion with them and it also depends on the contract they have signed with us. We try to do everything we can to keep operating costs as low as possible and the impact on tenants as low as possible.
Why are you converting some of your offices into apartments?
In some locations, this makes more sense given the market situation. The market is changing.
Which ones are they?
We are preparing one project for such a conversion in Pankrác, it used to serve as a residential hotel, then it was converted into offices, and today we are moving it back to apartments.
How busy are the Orea hotels now?
We are at or above 2019 levels, depending on the type of hotel. From our point of view, this year is positive both in terms of occupancy and the average price per room, which we have managed to increase thanks to investments in renovations and a qualitatively higher standard of the product.
Do you observe also within your network that regions are recovering faster than Prague and Brno?
Prague is a specific market, mainly geared towards foreign tourists, who are still fewer than before the pandemic, but the situation is improving. In our Prague hotel Pyramida we had our best month in three years.
Since the covid restrictions ended, companies have been trying to catch up for the last two years. Everybody wants to meet, to organize postponed congresses and at least our June outlook is very promising in this respect.
Do you have enough staff in your hotels?
All hoteliers and catering businesses are facing the fact that workers have left this segment, a large number of them probably irrevocably. It’s hard to motivate people to return, as well as to find new ones in the market. It goes hand in hand with inflation, which pushes up the price of labour. But we don’t have as many problems as we hear about from the market, we are managing to overcome this situation thanks to the strength of the Orea brand.
How many open positions do you have?
It’s dozens every month.
Why did you stop the planned construction of a new hotel in Mariánské Lázně?
We are still planning the Broadway project in Mariánské Lázně, there are more reasons for the delay, but it is mainly the financing of the reconstruction. We are using this time to redesign the final product and service, we want the project to be something that is missing in the city.
We are still planning the construction, we would like to start it next year at the latest, especially in order not to disturb the spa season, because it is a reconstruction in the very centre of the town.
You can start building the moment you have it financed. However, banks are refusing to provide funds because of the covide, as it is still unclear what will happen.
Hotel projects in general?
I’d say it’s not just hotels.
In addition to construction, you want to expand the Orea network and by operating hotels owned by other owners. Are you looking for opportunities in the Czech Republic or abroad?
We know the Czech market very well, there are certainly a lot of opportunities that we would like to take advantage of and we are discussing how to include hotels in our network in different ways, through lease or management contract. We are also looking abroad, but our primary focus is now on the Czech Republic.
Are there any specific projects on the table yet?
We have signed a cooperation with the Dlouhé Stráně hotel near Jeseníky, we have other hotels in Prague to sign, I don’t want to talk about them yet. There are quite a few opportunities on the market.