Airbnb prices surge across Prague as city grapples with booking platform

More and more tourists to Prague are using accommodation platform Airbnb to find a place to stay on a short-term basis, and prices of Airbnb properties in the Czech capital are going up significantly. The City of Prague is trying to find ways to regulate the growth of Airbnb lettings in the city to minimize neighborhood disruption and limit prices.

According to data from short-term rental data analytics firm AirDNA, the average daily rate for accommodation in Prague via Airbnb has increased by roughly one-quarter over the past two years. In April 2022, the average price of renting a medium-sized apartment per night was CZK 2,500. However, this figure is now at CZK 3,200.

"Thanks to the high demand in the season, we could even afford to raise the price by about 25 percent," Zuzana Benešová, founder of short-term rental company Seven Keys – which manages 85 apartments in the center of Prague through Airbnb – told Czech media outlet Seznam Zprávy.

With 7.4 million tourists visiting Prague in 2023 – a 24 percent year–on–year increase – a likely rise in tourist numbers this year will push up demand and, almost definitely, prices.

A newly released study from the Prague Institute of Planning and Development (IPR) also confirms the growing trend of apartments in the capital being used – sometimes illegally – for short-term rentals via Airbnb. It found that people are letting out around 8,000 apartments in the city on Airbnb – 1,000 more than in mid-2021. Around eight in 10 lie in the center and average year-round occupancy rates stand at between 70 to 80 percent. 

"Based on the already confirmed bookings for spring and summer, we expect this season to reach its peak since the coronavirus pandemic," Benešová adds.

The City of Prague's grievances stem from Airbnb inflating rental prices for locals and blurring the lines regarding the legality of renting rooms via the platform. It also is not happy about the neighborhood-related disruption that Airbnb brings.

According to the country’s Building Act, an apartment owner can only rent out rooms in the short term if the building is designated to provide accommodation facilities. If it is not, the apartment owner must seek permission from the building owner—this is often not done.

A legal case from last year saw a significant ruling: a Prague district court prevented the building owner from letting out rooms on a short-term basis on accommodation provider Airbnb due to noise and disturbance complaints from other residents in the building. The apartment owner did not have the necessary legal grounds to sublet his apartment to other guests.

IPR confirms that the City of Prague is liaising with the Ministry of Regional Development on a bill that would allow cities to self-regulate apartment rentals on short-term booking platforms such as Airbnb. “If all goes well, the amendment could be approved by the Chamber of Deputies this year," IPR quotes Deputy Mayor of Prague for Territorial and Strategic Development Petr Hlaváček as saying this week. 

The amendment requires short-term accommodation providers to register and secure a unique identification number. They must display this number on each listing on accommodation platforms. Additionally, the platforms are responsible for regularly sending information about these registration numbers to the Ministry of Regional Development. The resultant tighter regulation would lead to fewer apartments being rented out and would also lessen the likelihood of tax evasion.

Ministry spokesperson Veronika Hešíková confirmed that the government will conduct all registration and information-sharing procedures electronically through remote access. This decision responds to a regulation proposed by the European Commission on short-term accommodation platforms.

With Airbnb prices in Prague increasing and the number of rooms rented via the popular platform rising, tourists can expect to pay more for their short-term stay this summer. This also affects locals – in terms of rental inflation as well as disturbances – and the City of Prague has a job on its hands in its attempts to regulate the issue.