Tourists Spend in the Czech Republic Three Times More Since 1993

The Czech Republic is still an attractive area for tourists from abroad. According to the analysis provided by the Czech Statistical Bureau, which was devoted to the macroeconomic aspects of tourism in the Czech Republic, tourists still spend more money in the Czech Republic than Czech tourists do abroad. 

All economic analyses of tourism are basically about three things: how much is spent by foreigners in the analyzed country, how much tourists from the analyzed country spend abroad, and, last but not least, which number of these two is higher.

Let’s start with the tourism in the Czech Republic. Tourists’ expenditures in the Czech Republic increased three times between 1993 and 2013 – from 45.4 billion CZK to 138.9 billion CZK. The growth period is observed mainly between 1993 and 1998 and then between 2002 and 2007. In the former period, expenditures of tourists in the Czech Republic increased by an average of 22.4 % per year. However, it should be noted that those are nominal expenditures – the price level measured by the consumer price index (CPI = inflation) also grew, namely by 8.3 % per annum. So we can say that real spending also grew, but at a slower pace.

After four years of stagnation caused by, among other things, appreciation of CZK and economic crisis related to bubble, tourism revenues returned to a growth of more than 8 % annually. Development of tourism in billions CZK (blue line) and as an annual change in percentage (red columns) are shown in the following figure.

Fig 1 – Revenues from tourism in the Czech Republic (1993-2013)

1Source: Czech Statistical Bureau

Even 25 years after the fall of communism, there still are some Czechs who advocate the communistic regime and doubt the increasing wealth of Czechs generated by the market economy. However, many of them have surely participated in the increase of tourism expenditures. The rising wealth is nicely reflected in growing tourist expenditures abroad. Between 1993-2013, those expenditures increased from 15.4 billion CZK to 92.4 billion CZK. The dramatic growth is reported mainly between 1993 and 1995, when the rising disposable incomes of Czech households satisfied huge preferences to travel abroad, especially to the Western and Southern Europe, which was not possible for the most of citizens before 1989. After this satisfaction of the high demand for foreign trips, a drop of Czech tourism expenditures is observed. The economic strengthening and higher level of savings turn the development into the growth trend after year 2000, which is noticeable from the Figure 2 – the blue line represents expenditures in billions CZK, red columns represent annual change (percentage).

Fig 2 – Expenditures on tourism by residents of the Czech Republic (1993-2013) 2Source: Czech Statistical Bureau

The promised third view on the tourism in the Czech Republic compares revenues the Czech economy gets from spending by foreign tourists, and spending by Czech tourists traveling abroad. Which number is higher? The answer is obvious – the spending of foreigners in the Czech Republic. Throughout the whole period the tourism of the Czech Republic generates the positive balance (i.e. foreigners spend more money in the Czech Republic than Czechs spend abroad). It was most noticeable in the year 2006, when the net balance from tourism was plus 70.7 billion CZK. In subsequent years, however, the stagnation of income from tourism in the Czech Republic and the increasing appetite of Czechs to travel mean the net balance going down. In 2013, it was amounted to 46.5 billion CZK (the lowest result since 2003).

How important is tourism for the Czech economy? The Figure 3 shows it using expenditures of tourists in the Czech Republic (blue line), expenditures of Czech tourists abroad (red line) and the net balance (black line); all measured to GDP. The revenue from tourism in the Czech Republic is ranging between three and four percent of GDP in the past years.

Fig 3 – Income, expenditure and net balance from tourism as a percentage of GDP (1993-2013) 3

Source: Czech Statistical Bureau