Czech Republic Tourism Report Q4 2009

Tourism Overview Following a pick-up in growth of foreign tourist arrivals to the Czech Republic in 2007, increasing by a relatively favourable 4% year-on-year (y-o-y) to almost 6.7mn, BMI estimates that foreign arrivals increased at an annual rate of just 1% last year. Moreover, after a poor showing in the last two quarters of 2008, data for Q109 show considerable deterioration in the hospitality sector for foreign tourism.

Hospitality The number of overnight stays (foreign and domestic) totalled 7.3mn in Q109, which was 8.7% lower yo- y. Of these overnight stays, foreign tourism nights were down a massive 18.6% compared with the same period in 2008, while domestic residents, by contrast, recorded a modest 2.3% y-o-y increase. A total of about 2.3mn guests was recorded at collective accommodation establishments in Q109, down 8.4% on Q108. Although domestic guests showed a slight annual increase of 1%, the number of foreign guests fell 17.1% y-o-y. Spa accommodation establishments recorded a fall in overnight stays of 9.5% yo- y, of which foreign tourism nights were down 16.5% y-o-y. Concerning key source markets in the first quarter, the number of German guests fell almost 16% y-o-y, while overnight stays by German tourists declined by an even larger 18.6% y-o-y. Guest arrivals from the UK declined 32.4% y-o-y in Q109 (after a fall of 23% y-o-y in Q408), while nights by UK arrivals fell by over 34% y-o-y (down 26% y-o-y in Q408). The number of guests and overnight stays by Russian tourists were lower by 13% and 13.3% y-oy, respectively.

Forecast Scenario In 2009, we foresee a relatively large annual decline of 9% in the number of foreign tourist arrivals. A more marked decline in the number of European tourists, falling around 11% y-o-y, is forecast, with German and UK tourists in particular expected to record significant falls. Although slight recovery in the growth of aggregate tourist arrivals is anticipated in 2010, BMI anticipates a relatively strong rebound in 2011, with annual growth in arrivals of 5%. Although short-term weakness of the Czech koruna in relation to the euro should help underpin the tourism sector, our view of longer-term strength of the koruna is likely to dampen growth in arrivals from the eurozone over the forecast period.

Prague Ruzyne International Airport Recent traffic data from the country's main airport confirm the extent of the downturn in tourism. After a sharp slowdown in growth of total passenger traffic at Prague Ruzyne International Airport in 2008 (an increase of 1.6% y-o-y following 7.4% annual growth in 2007), figures for the first five months of 2009 show steep falls in traffic, down over 14% compared with the corresponding period of the previous year.