CBRE Analysis: Hotel market experiences dynamic recovery. Prague expected to return to pre-pandemic levels this year

International overnight stays in Prague have reached 95% of 2019 levels, while hotel investment in the CEE region has increased by 12% year on year. 

The hotel market in Prague and across Central and Eastern Europe (CEE) is undergoing a dynamic recovery that exceeds previous expert forecasts. This resurgence is fuelled by a robust revival in tourism, driven by renewed domestic demand, the return of international visitors, and evolving traveller preferences. Prague remains the most visited city in the region, while investor confidence continues to grow, pushing the hotel sector close to its pre-pandemic performance. These are the key findings of the latest analysis by CBRE, the world’s leading commercial real estate services firm.

“In the first quarter of this year, Europe saw a 2% year-on-year increase in international tourist arrivals, with the CEE region performing even better with 8% growth. A notable trend influencing the region is the growing popularity of off-season travel. Tourists are increasingly opting for less crowded periods, which offer better pricing and greater flexibility. This shift is helping to balance visitor numbers throughout the year and contributes to greater industry stability. Combined with strong weekend and holiday demand, we anticipate that Prague will surpass its pre-pandemic 2019 results by the end of this year,” says Jakub Stanislav, Head of Investment Properties at CBRE.

The return of tourists to the CEE and SEE (Southeastern Europe) regions varies depending on country of origin. Arrivals from Western Europe, including key source markets such as Germany, Austria, and Italy, have largely recovered, along with those from the UK and France. A notable surge has also been observed in arrivals from the United States, as long-haul travel resumes and American tourists return to popular destinations, including Prague. Another emerging trend is the increasing number of visitors from the Gulf countries, who are showing growing interest in luxury and wellness-oriented stays. Data from 2024 highlights the strongest rebound among travellers from the United States (+18%), Austria (+17%), and Spain (+14%), while a decline was noted among visitors from Northeast Asia (-43%) and the broader Asia-Pacific region (-33%).

Hotel Sector Demonstrates Positive Growth

Key performance indicators for the hotel sector are trending upward in most CEE capitals: average occupancy rates increased by 6 percentage points year on year in 2023 and remain strong this year, ranging from 76% in Warsaw to 82% in Prague. The average daily rate (ADR) has risen by 25% compared to 2019, and revenue per available room (RevPAR) is up 12%.

“The hotel sector is showing remarkable resilience and strong growth potential. We are witnessing not only a return in demand but also a qualitative shift – travellers are spending more on experiences, local products, and premium services. Their average daily spend has increased significantly, contributing to overall tourism revenues,” says Jakub Stanislav.

Premium Hotel Segment Gains Momentum

The CEE and SEE regions offer more than 450,000 hotel rooms, with a growing share of the premium and luxury segment. Four-star hotels now account for 45–50% of total supply, while five-star properties represent approximately 10–15%, predominantly in capital cities and resort destinations. Three-star accommodations still dominate in smaller towns and rural areas but are gradually losing ground to higher categories. While standard rooms remain the core of hotel offerings, there is a marked increase in demand for suites, family rooms, and long-stay units, which investors are increasingly catering to.

“The CEE and SEE regions are witnessing stable expansion both in the quantity and quality of hotel accommodations, with a strong focus on four- and five-star developments. Currently, around 300 hotel projects are in various stages of planning. New developments are increasingly emphasising sustainability, the conversion of historic buildings, and mixed-use projects that integrate hospitality with retail, residential, and co-working spaces,” adds Jakub Stanislav.

Hotel Investment on the Rise, Czech Republic Leading the Region

Since 2023, hotel investment activity has been on the rebound. “Last year, total hotel investment volume in the CEE region increased by 12% year-on-year, and this positive trend continues. In the first quarter of 2025 alone, hotel transactions reached €417 million, already representing 63% of the total volume for the previous year. The Czech market played a dominant role, significantly outperforming Poland and Hungary. A major contributor was the sale of the Hilton Prague Hotel, which we facilitated as the largest transaction in the region’s history,” says Jakub Stanislav.

Despite certain challenges such as inflation, labour shortages, and geopolitical uncertainties, the outlook for the hotel market in Prague and the broader CEE and SEE regions remains optimistic.

“In recent years, the region has made substantial investments in digitalisation, sustainability, and the expansion of tourism services. Prague and other cities are therefore well positioned to capitalise on the current momentum,” concludes Jakub Stanislav.