With the return of tourists, short-term rentals are back in play
At this time last year, Prague and other major Czech cities were half-empty. However, the easing of Covid restrictions around the world revived tourism, and foreign visitors found their way back to the Czech Republic. Historic landmarks and monuments are once again bustling with unprecedented activity, much to the delight of those whose income depends on tourists. Short-term rentals are back in play too.
Their owners have had two difficult years. While accommodation capacity in cities popular with tourists was often insufficient before 2019, the coronavirus crisis meant there was simply no demand for accommodation in private flats. Hotels that remained open reduced their prices, and tourists travelling to the Czech Republic often preferred traditional accommodation establishments. As a result, some flats intended for short-term rental disappeared from the market.
“Short-term rentals were particularly problematic for owners who had financed their properties with a mortgage. Suddenly there was no income and therefore no way to keep up with the repayments. We converted many flats under our management to mid-term rentals with shorter notice periods. These were intended primarily for business travellers. Property owners therefore did not lose their income and were able to retain their flats. However, the situation has now returned to normal, and I can confirm that tourists are once again very interested in private accommodation,” says David Novotný of the real estate company Bohemian Estates, which also manages flats for short-term rental.
The situation with rental flats is generally complicated. On the one hand, mortgages are expensive, which is increasing interest in rented housing among Czech citizens. Nor can refugees from Ukraine be ignored. Generally speaking, demand for long-term rental housing exceeds supply, and this is also reflected in the short-term rental market. But can the owners of these flats afford to offer accommodation at the same prices as before 2019?
“It must be said that operating a short-term rental now requires far more time than it did in the past. It is a business activity for which the appropriate authorisation is required and from which at least income tax must be paid. This must naturally be reflected in the price. On the other hand, most hotels are still nowhere near their pre-coronavirus nightly rates, which puts pressure on flat owners to keep prices lower in order to remain competitive. In addition, if a landlord advertises a flat on one of the platforms brokering short-term rentals, commission must also be taken into account,” adds Novotný.
However, Bohemian Estates offers a short-term rental flat management service under which it signs a lease agreement with the owner and thereby acts as the landlord. The owner is relieved of all responsibilities and simply receives the rental income. “Thanks to professional presentation and internal databases, we can generate an average of 5% more income for flat owners. The time saving is also significant. Managing a flat, administration, repairs and communication with tourists takes dozens of hours each month,” concludes David Novotný of Bohemian Estates.