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Vol 2, No 14
10 April 2000
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Golden Lane in Prague
Golden Lane indeed
Caring for the Goose
Andreas Beckmann

Anyone who has shuffled across Charles bridge at midday in summer knows that Prague is an incredibly popular tourist destination. The popularity has reaped the Czech Republic rich rewards over the past decade. Earnings from tourism have risen steadily since 1989, topping USD 3.7 billion in 1998, or six percent of the country's gross domestic product (GDP). The tidy sum does not begin to reflect the sector's true significance for the Czech economy. Next to Skoda cars and beer, tourism is one of the country's leading exports, accounting for 12.8 percent of all foreign currency earnings, and employers, providing jobs for an estimated ten percent of the labor force.

Income from tourism has almost quadrupled over the past six years, more than balancing the outflow of capital that has accompanied the increasing number of Czechs spending their vacations abroad. The positive balance from tourism (USD 1.8 billion USD in 1998), in fact, kept the current accounts balanced in the first half of the 1990s. As industrial exports nosedived after the Velvet Revolution, it was tourism that picked up the slack with new jobs and income.

No longer popular?

Reality may now be catching up with the Czech Republic. Prague hoteliers and glass merchants are trading worried glances, and even government officials are concerned about the drop in visitors over the past couple of years. The number of foreign visitors rose rapidly in the first seven years after the Velvet Revolution, from 26.9 million in 1989 to 109.4 million in 1996 (statistically speaking, a "visitor" is someone who stays at least one night in the country). Since then, the numbers have tapered, slumping to 107.9 million in 1997, and 102.8 million in the following year (the last full year for which statistics are available).

Experts warn that, in contrast to the drop in 1997, which was mostly due to the massive flooding that submerged large parts of the country, the recent downturn may signal a greater trend. The country's poor tourism infrastructure, bad service and inept promotion are starting to show through.

The afterglow of the Velvet Revolution lasted longer abroad than it did in the Czech lands. People came to the Czech Republic for its fabled capitol city and a taste of "Eastern Europe" (conveniently located for American backpackers along the Berlin-Vienna train line and within easy reach of German and Italian school groups), and not for good food or great service. Ten years later, Prague and the Czech Republic have lost much of their initial aura and are no longer uncharted territory. Poor beds, bad board and worse manners now do make a difference for the tourist looking at Prague versus other destinations.

Outside Prague

Why all the talk about Prague? Tourism in the Czech Republic is overwhelmingly focused on the Golden City - 70 percent of all foreign visitors stay in the capitol. But the capitol's success in attracting visitors is overwhelming the city. The panorama from Charles Bridge is still breathtakingly beautiful - but not so much amidst the hordes of tourists at mid-day. Real life is gradually being edged out by boutiques and pizza joints.

The concentration on Prague is ironic, given all the treasures that the rest of the country has to offer. A handful of places (Česky Krumlov, Telc, Kutna Hora, and Karlovy Vary) have established themselves in tourist guides as the standard places to go outside of Prague. But the average visitor is oblivious of the castles, chateaux, monasteries and churches that speckle the Czech countryside, the hundreds and thousands of wine cellars that litter southern Moravia or the picturesque towns of southern Bohemia. Who has heard of the splendid baroque chateau at Vranov nad Dyji or the beautiful Poddyji National Park that is tucked in the folds of the Dyje river valley nearby? What about the almost pristine nature of the Šumava in southern Bohemia or the unique karst landscape of the Palava in southern Moravia?

While wealthy Prague is choking on tourists, it is areas outside of the capitol that could most benefit from hosting visitors. Tourism can be particularly effective for regional development, as it is relatively labor-intensive and involves mostly small to medium-sized enterprises employing ten to twenty-five employees that can respond flexibly to market demands. It also generates a wide number of valuable indirect benefits for local communities, including opportunities for recreation and culture, investments in infrastructure and even a strengthened sense of local identity and pride.

Reaping these benefits has been frustrated so far by the poor tourist infrastructure and poor promotion of most areas outside of Prague. With regard to food and accommodation, the problem is not so much one of quantity - the number of beds and eateries outside of Prague is generally sufficient - but of quality, as most pensions, hotels and restaurants simply do not meet basic Western standards. Also missing are many of the additional services, such as bicycle rentals, that fill out a good tourist offering. Until recently, most regions have had to rely more or less on themselves to "strut their stuff" to potential foreign visitors. Most have done badly, and the overall result has been cacophany rather than clear communication.

Poor care

For much of the past decade, tourism development in the Czech Republic has been more or less on auto-drive. Under the mantra of so-called market liberalism, the government pursued a hands-off policy during the five years that former Prime Minister Vaclav Klaus was in power (1992-1997). The steady increase in visitors and revenues did not give any reason to reconsider this approach.

The first suggestion that a more hands-on approach to tourism might be needed came at the same time that the government realized that its laissez-faire approach was dividing the country into the haves and have-nots.
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The Ministry for Local and Regional Development was established in late 1996 to address the growing imbalance between well off areas like Prague and many more backwaters like Ostrava or northern Bohemia. Responsibility for overseeing and developing tourism was transferred to the new ministry from the Ministry for Trade and Industry.

Despite this nod to tourism as an instrument for regional development, the government's commitment has remained limited. In contrast to other countries with sizable tourist industries, which regularly plow several percentage points of their tourist earnings into further development of the sector, Czech investment in tourism development over the past decade has been miniscule. In 1997, for example, an estimated 0.6 percent of earnings from tourism was reinvested in the sector.

The results of such anaemic investment are not suprising. Within the Ministry for Local and Regional Development, only a handful of staff - most of them in support functions - oversee and coordinate the development of one of the most significant sectors of the Czech economy. This is completely insufficient to organise the complex coordination of tourist service providers, carriers, local and regional authorities, state agencies, nonprofit groups and other actors involved in tourism in the country.

Most of the department's budget is consumed by the Czech Tourism Authority (Česká centrala cestovního ruchu - CCCR), whose 70-odd employees and representatives around the world are charged with promoting the country at home and abroad. So far, CCCR has been little match for its task. Without adequate funding, the tourist authority is unable to retain its most capable employees. The organization's unattractive web pages and stuffy brochures seem designed to keep potential visitors at bay rather than entice them to the country.

CCCR has launched a new initiative specifically designed to promote the different regions around the Czech Republic. This is probably a good idea, but ineffective given the weak promotion for the country as a whole. Marketing regions is useless for Americans, Germans, or Japanese, who have trouble locating the Czech Republic on a map, let alone know what it contains. What are the first associations brought up by the Czech lands? Probably an eclectic mix, something like: Havel, Prague, beer, racism and Karel Gott - certainly not a clear message.


In tourism, as in many other areas (for example, effective use of EU structural funds), Ireland has become an example for the Czech Republic of how to do things right. Over the space of little more than a decade, Ireland has managed to turn its greatest disadvantage into an advantage, and the very remoteness of the island at the edge of Europe has become the chief selling point for Europeans from the more densely settled parts of the continent. In the popular imagination, Ireland has suddenly become untouched, wild and mysterious - a far cry from the poverty and despair that previously distinguished the island.

The brilliant marketing was well-backed by a comprehensive program to develop the country's tourist services that was actively supported by the state and financed in part by EU funds. The Irish Ministry of Tourism and Recreation worked in close cooperation with Borde Failte, the Irish Tourist Board, the state-supported training agency, local and regional authorities and tourist service providers at all levels to build a strong system of tourist services, from farm stays to bed-and-breakfasts, and from hiking trails to equestrian centers.

As a result, income from tourism in Ireland has swelled - at a time of rapid economic growth - from 3.8 percent to 6.3 percent of GDP. The percentages are not too much different from those of the Czech Republic over the same period - though Ireland never had the bonanza enjoyed by the Czech Republic with the fall of the wall and bargain exchange rates.

Tourism has been particularly important in developing the traditionally poverty-stricken West Coast of Ireland. In the rural Ballyhoura mountains in the southwest of the island, for example, the Ballyhoura Centre regional development agency has developed a strong network of tourist services by working closely with the local population and providing loans from a variety of sources for converting abandoned farmhouses into bed and breakfasts.


Granted, the Czechs are not as friendly and outgoing as the Irish, and the land-locked republic lacks a coast to spruce up its vistas. Nevertheless, with a location smack in the middle of Europe, jampacked with cultural treasures and still very affordable, the Czech Republic has a lot going for it compared to the emerald isle. Ireland's remarkable success stands as an example for what it is possible to achieve.

The Czech authorities are beginning to wake up and take notice. Tourism has been written into almost every regional development plan in the country, and the Ministry for Local and Regional Development has drafted a national plan for developing tourism that draws attention to some basic problems and makes a number of proposals for reform, including establishing a tourism development fund, passage of a more favorable tax legislation and closer coordination among ministries involved in the sector.

The Czech government has already torpedoed the development fund and support for accommodations providers that the plan proposes. This seems short-sighted. With foresight and prudent development, tourism could yield tremendous direct and indirect benefits for the development of many regions throughout the country.

Golden Lane crushAchieving such benefits requires support. For example, for small- and medium-sized tourist service providers, including small loans to rural families to convert rooms or houses into bed and breakfasts, or training courses on the basics of running a small business. The Irish tourist service training authority (CERT) has developed an effective video course for rural homeowners that takes them through the steps of providing tourist services, from hospitality to accounting. Something as basic as this would be even more needed in the Czech Republic.

A number of sources of support for these kinds of activities already exist: tourist schools already provide some training; rural development funds such as the Program for Rural Renewal or now the SAPARD EU pre-accession fund can support development of tourist services; many microregions and local communities are already involved in developing investments in their areas. What is lacking most, however, is an overall vision and coordination for all of these activities. Microregions may put their stock in developing environmentally friendly tourism, but the tourism schools keep plugging out hotel managers rather than respond to the need for more flexible training programs for small-scale service providers.

There is every reason to think that the goose of tourism in the Czech Republic can continue laying many more golden eggs. But it will finally need some care and careful attention - something it has not had much of over the past decade.

Andreas Beckmann, 7 April 2000

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