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Tourism is one of Prague’s key industries. Swiss developer and hotelier, Juerg Zwahlen, gave us an interview related to the current situation.

 

Until eight months ago Juerg Zwahlen had ‘luxury’ problems. That time, in the middle of the hectic reconstruction phase from hostel to a four star hotel of Prague MOSAIC HOUSE , he needed to find technical and discover suitable solutions for lighting, surface materials, design, wellbeing factors of guests or consider whether the house fragrance should be a ‘traditional ‘hotel fragrance or rather natural bamboo scent. However, the lockdown changed everything: the design hotel MOSAIC HOUSE opened on May 25th, but ever since the whole hotel industry has been widely affected and the hotelier has to currently get through under rather catastrophic circumstances.
We meet Juerg, who in his red trainers, hoodie and jeans does not really match to our image of a traditional hotelier, for an interview in Prague where he lives with his family for 23 years.

 

“It was immediately clear to me how devastating the economical consequences of the lockdown will be, I had my three sleepless night that time.”

 

Magazine: How did you experience the lockdown?
JZ: We were in the middle of the reconstruction phase and despite the messages delivered by the media, it was all very abstract. When the lockdown then started it was immediately crystal-clear to me how devastating the economic consequences of the lockdown will be, I had my three sleepless night that time. Since then I sleep well again and channel my energy to using the current situation in the best possible way.

 

Magazine: What was the result of the three sleepless nights?
JZ: We decided to finalize the reconstruction of the hotel, adhering to the local hygiene regulations, and open the new hotel as soon as we would be allowed to, which was then May 25th. As we are a newly opened hotel, we did not really have many options: we wanted to use the current bad year to build up a reputation. To dismiss our employees straight away without trying, was not an option for us.

 

Magazine: How was the mood at the opening?
JZ: We were relieved that we could ‘set the ball rolling’ but that was with 25 employees and one guest… The mood was somehow eerie und we could not even think of celebrating the opening anyhow.
Now, we hope for being able to organize the Opening party in October.

I know no one from hospitality industry who does not fight for survival of the crisis.


Magazine: How is the mood in the industry in Prague?
JZ: Terrible. I know no one from hospitality industry who does not fight for survival of the crisis.

 

Magazine: Were you prepared for such a big crisis?
JZ: We were well prepared. After ten booming years everyone had to reckon with recession: in the financially good years we have made provisions for the future. We wanted to use them in anti-cyclical investments and growth in the next economic recession. But we did not expect the ‘Black Swan” virus and we were caught on the wrong foot. Since March we live on our provisions which is actually good, it is as it is part of responsible entrepreneurship but in winter or in the new lockdown, we also will be reaching our limits.


Magazine: What kind of concrete measure does your company take to cope with the challenges?
JZ: We do everything, what is humanly possible, to cut as big a piece as possible from the small existing market. That is why we need to think selfish and entrepreneurially: we are in a tough competition. Despite of this, we need to act responsible and not to enhance the crisis from our side. We invest long-term and anti-cyclically, e.g. by participating in two new IT-projects. One of them is a new software that is helping us to create a more accurate market analysis and the other is a new server. All properties are being upgraded while we are trying to build up a good reputation and train our employees further. We also try to take our chances and hire some top professionals who are now available. We would also like to renovate our fourth hotel but this project does not proceed without a building permission, we are waiting for it now already two years.


Magazine: What is the situation with state aids?
JZ: Loans do not help the industry as the indebtedness of many will be soon too high. It would have profited if the state aid for airlines was dependent on e.g. minimum number of flights to various destinations and on regulation of short-term cancellations. More expensive but regular flights that are limited to 50% seat capacity would be reasonable and would allow travelers to plan better.
I do not expect much from the state or the city: clear framework for operations and rules that are equal to all and valid for a certain time period. This way we could plan and consequently, also focus on our business better. It was my wish already before the crisis and corona had no effect on this.
If it is in the interest of the state to maintain tourism in the same form and volume as before the crisis then it is necessary for the state to support this industry fairly, meaning to relieve the burden in a fair manner or to support the industry in a suitable way.


Magazine: Did you already have to lay off employees?
JZ: Fortunately, we did not have to fire anyone yet on operational grounds. This I see as a part of the entrepreneurship: people who have helped you to gain profits the past 9 years must not be discharged immediately when the times are getting worse. We hope having been able to establish some loyalty in the company and that our employees will remember this when the job market is in a good shape again. This is our form of creating staff retention. However, we cannot promise to keep full staff if the crisis is prolonged.


Magazine: How do you see the future of your industry?
JZ: This year is out of window. 2021 will be a year of deep recession. From 2022 onwards we hope the situation to normalize. Nowadays, much, what I disagree with is written: Business trips will be necessary also in the future, people will continue to have the desire to see new cities. City tourism will suffer but it will recover.


Magazine: Do you also see a chance in this crisis?
JZ: We see already now that a market shakeout is taking place in Prague. The number of beds could reduce dramatically in the winter. The housing market will be directed to its original task of long- term rental agreements which might result in new chances: surviving businesses can become long-term winners in the market, but the price will be high; many will be left behind.
Living in Prague, I see the crisis also providing a unique opportunity to get rid of the recent over-tourism and its excessive outbreaks. This also was one of the reasons why we wanted to change our hostel to a hotel: in old Mosaic House we had 400 beds with the average length of stay of 1.4 nights. Now we have 180 beds but the length of stay in hotels is longer. This is better for our company, our neighbors and the city Prague.
Fundamentally, I do not believe that Homo Sapiens will change his behavior. The correct direction can be found by regulations but I do not see this happening. The regulation needs a vision and can be only reached by using various measures simultaneously, e.g. making landing charges of planes more expensive, changing the pricing of city taxes so that the price is the highest for the first two nights, third night is for free, followed by subsidized taxes from the fourth night onwards (negative tax financed from the short-term expenses). Many levers can be used but all of them need to be used simultaneously. We are trying to find measures that we can use within our own small scope.


Magazine: MOSAIC HOUSE is a sustainable hotel. Does the situation affect your sustainability strategy?
JZ: Absolutely not. We are convinced that the market for environment-conscious travelers will be increasing in the future. We invested in environmentally friendly technologies and measures from conviction. By the way, we are happy about these investments now: the fix costs of a green building are much lower and this could prove out to make a positive differnece in the crisis.


Magazine: What is your personal lesson learnt in the COVID-crisis?
JZ: “Always expect the unexpected” and building up provisions for the future in good days. In addition to these: diversify somehow, the risks need to be distributed. If we only had hotels, we would have much bigger problems now. And last but not least; some humbleness does not harm neither our industry nor any other industries.

 

 

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