Following weakness in the hospitality sector in Q208, recent data for Q308 year-on-year (y-o-y) add tothe gloomy picture. Although figures on foreign tourism were weak (and especially poor for German andUK arrivals - key source markets), domestic tourism recorded marked declines in the third quarter of2008. Foreign tourism nights in spa resorts, however, showed a reasonable increase.
Hospitality
The number of overnight stays totalled 14.3mn in Q308, which was 5.9% lower y-o-y. Of these overnightstays, foreign tourism nights were down by 1.1% y-o-y, while domestic residents recorded a large fall of9.5% y-o-y. The average length of overnight stays for all guests also decreased from 3.4 to 3.3 nights(foreign guests from 3.1 to 3.0; domestic guests from 3.6 to 3.5 nights). During the same period, a total of4.4mn guests were recorded at collective accommodation establishments, down 3.3% on Q307, with atotal of 2.2mn foreign and 2.2mn domestic guests (up 0.4% y-o-y and down 6.6% y-o-y respectively). Spaaccommodation establishments recorded 2.1mn overnight stays, down 1.6% y-o-y, although foreigntourism nights were up 3.3% y-o-y to 0.8mn nights. With regard to source markets, the majority oftourists came from Germany but overnight stays by German tourists declined 6.5% y-o-y, while nights byUK arrivals fell a considerable 14% y-o-y. The highest growth in the number of overnight stays wasrecorded in arrivals from Russia (up 25.4% y-o-y) and Poland (up 12.2% y-o-y).
Forecast Scenario
Our forecast scenario remains largely unchanged this quarter, with foreign visitor arrivals to the CzechRepublic expected to show only marginal growth in 2008. This year, however, we foresee negativegrowth, with slight recovery taking place only in 2010. This is based primarily on economic conditions inmajor source markets, with the economic outlook for the eurozone continuing to deteriorate. In 2009, weforecast a contraction of 1.6% in the eurozone. A slow recovery is expected in 2010 though, with realGDP growth of 0.7%. BMI maintains only a modest outlook for foreign visitor arrivals over theremainder of the forecast period to 2013, which is influenced strongly by our view of the strength of theCzech koruna in relation to the euro.
Prague Ruzyne International Airport
If further evidence of a slowdown in the tourism sector were needed, latest figures show a relatively sharpweakening in the growth of passenger traffic at Prague Ruzyne International Airport. In the firsteleven months of 2008, the airport recorded an increase in passenger numbers of about 2.8% comparedwith the corresponding period of 2007 (but with a noticeable fall of some 15% y-o-y in November). Thisfollows 7.4% y-o-y growth for the whole of 2007. Indeed, the outturn for growth in total passengernumbers in 2008 will be much weaker than the airport anticipated.
Czech Airlines
Latest results for the first three quarters of 2008 show Czech Airlines (CSA) generated a profit of almostUS$22.1mn (before tax) - more than doubling profit compared with the same period in 2007. This is anexcellent result considering that the industry is burdened by high fuel prices and a sharp economicdownturn. Passenger traffic in the first nine months of 2008 was over 4.4mn, a favourable increase of4.9% y-o-y (and relatively strong compared with other European carriers).
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