Recovery and Trends

Reflecting on the pandemic's onset, Frederic notes, "Surprisingly, many European markets have already reached or exceeded 2019 levels." Despite ongoing challenges in Central and Eastern European (CEE) markets, strides are being made. According to Borivoj, "Europe remains the focus for most travelers due to shorter distances," highlighting the trend of prioritizing closer travel destinations.

Local Insights: Prague

Prague, known for its popularity pre-COVID, faced challenges with reduced conference demand and MICE activities. Frederic shares optimism, stating, "There's a notable increase in Average Daily Rates (ADR) despite compressed occupancy," indicating a gradual recovery with returning conference demand.

ESG Practices in Hotel Investments

Discussing the rise of Environmental, Social, and Governance (ESG) practices, Borivoj emphasizes, "ESG practices are becoming part of brand standards." The implementation of sustainability measures, driven by higher energy costs, is increasingly attractive to hotel owners. Frederic adds, "Operators are incorporating ESG items into brand standards, making them more attractive to investors."

Financial Dynamics

Contrary to perceptions, Frederic reveals, "Debt financing is available, but at higher costs." Loan-to-value ratios hover around 50%, and all-in rates range from 5.5% to 6.5%, providing insights that investors can factor into their models. Despite higher costs, the accessibility of financing presents opportunities for the investment community.

ESG Impact on Financing

On the impact of ESG on financing, Borivoj notes, "Some banks offer lower interest rates for ESG-compliant properties." Green financing is available, but owners must meet specific criteria. Frederic adds, "It's not necessarily cheaper, but more available, and strings are attached."

Sustainability Practices in CEE Cities

While no single leader emerges, Borivoj highlights cities like Ljubljana, Prague, Krakow, Tallinn, and Budapest as exemplifying commendable sustainability practices. ESG improvements are visible, contributing to a collective effort towards sustainability.

Conclusion

As the conversation concludes, Frederic and Borivoj emphasize the podcast's purpose. The insights shared offer a comprehensive overview of the Eastern European hotel market, providing a valuable resource for investors and industry enthusiasts.