Karlovy Vary without Russians: Traditional spa in crisis

The Bohemian Karlovy Vary is one of the most famous spa towns in the world. After years of the pandemic, the next crisis is hitting the health resort hard – because of its dependence on Russian guests and investors.

Karlsbad on May 8th: Emperor Charles IV moves in with his wife and entourage. The procession in historical costumes traditionally opens the season in the city that bears the name of the emperor. “The whole city was full of people,” says Mayor Petra Pfeffer-Ferklova. “Not only those who live here, but also many visitors came, and everything actually worked out really well.”

According to legend, it was Emperor Karl who is said to have discovered the first hot spring here while hunting. In the market colonnade, the spring named after him, like all other eleven springs, reliably supplies the mineral-rich, healing water at a temperature of 65 degrees. And the large whirlpool fountain in the Vridelni Colonade shoots up spectacularly again after the pipe system has been renewed. But Karlovy Vary’s financial sources are in danger of drying up.

Revenue has fallen by almost 60 percent, says Mayor Pfeffer-Ferklova. The city can see from the tourist tax how much tourism has declined: “What was 70 million, for example, is now almost 20 million.”

Only twelve guests with 180 beds

The two years of the pandemic have made it through here with state aid and special cultural events aimed at Czech audiences. Other spa towns such as Mariánské Lázně and Františkovy Lázně can breathe easy, but Karlovy Vary cannot. “Now the Ukraine crisis has come,” said Pfeffer-Ferklova. And that meant for Karlsbad that the Russians stayed away.

Wealthy guests from Russia who come to the spa for three weeks and leave some money in the shops of the luxury segment – that was the target group that Karlovy Vary focused on. Now they can no longer travel because European airspace is blocked and because they can no longer get tourist visas for the Czech Republic. “And that’s the problem,” says the mayor. “We have specialized in this market for almost 30 years. We have worked very little with other markets.”

Jan Kronika describes what this means for the hotels. He is chairman of the local hotel association and runs the “Tchaikovsky” himself. The house belongs to a Czech joint-stock company. “We have 180 beds and currently have twelve guests,” says Kronika. “In February and March it was 20 to 30. We have two buildings, the palace upstairs and the old hotel down here. The palace has been closed for two years.”

Shops are empty

During the pandemic, foreign travel agencies stopped paying. They therefore made financial advance payments, got into debt, but were then only able to generate the running costs between the Covid waves. There are no more financial cushions. “Now it’s even worse. Before the pandemic, we had guests from the Czech Republic, Austria, Germany and Russia. Now the German guests we used to have don’t even come,” said the hotel director. “They canceled because of the war and are waiting to see what happens.”

Even if the guests were to return in large numbers tomorrow, the problems would not be solved. Jan Kronika was only able to keep 19 of his 86 employees. “This is the second big fight,” he says. “Because the employees, also from other hotels, have gone into other industries, in the health sector or in the care sector. They have often found better jobs. Nobody wants to return to the spa industry. One day that will be a big problem.”

In the cityscape of Karlovy Vary it can already be seen that the guests from Russia are staying away. Many shops have been abandoned. Jiri Broz, who has been a real estate agent in Karlovy Vary for many years, once tried to grasp the extent of the shop deaths. “I went about a month ago and walked the whole spa area, about two and a half kilometers. I counted about 40 empty shops,” he says.

Thousands of Russian owners

Jiri Broz knows another side of the Karlovy Vary crisis. Many Russian investors bought hotels, houses and apartments here in the 1990s – sometimes at inflated prices. He points to the other side of the Tepla: “One can say that everything to the right of the savings bank is Russian capital – the hotel, the residential buildings, everything is in Russian hands.”

The agent estimates that of the 20,000 apartments in Karlovy Vary, a few thousand are owned by Russians, preferably in the picturesque city center. They usually came for three weeks; the rest of the time the apartments stood empty. Since the pandemic, they have not been able to come at all: because the borders were temporarily completely closed because they were vaccinated with the unrecognized Sputnik vaccine. And now because of the Ukraine war. And so spa hotels and apartment buildings owned by Russian investors are empty.

“Just walk around here in the evening after dark and see how many windows are lit,” says Broz. “There are not many.” If the Russian owners wanted to sell, they could only do so with large discounts. But from a purely technical point of view, such a sale can no longer be processed because of the financial sanctions. You also meet owner associations with a high proportion of Russian owners.

“If for some reason these Russians stop regularly paying their monthly share for services, repairs – if the money stops coming in, then there is a big problem,” said the real estate agent.

“We live from day to day”

Karlovy Vary’s future depends on how long the war in Ukraine and sanctions against Russia last. And whether it will be able to gain a foothold in other markets quickly enough. The city could be interesting for Arab guests, Mayor Pfeffer-Ferklova says: “Then all of our neighbours. Because you have to reckon with it: Many don’t want to come by plane just yet. Because they don’t know what’s going to happen from one day to the next. “

The new status as a UNESCO World Heritage Site in conjunction with other prominent European spas could also help Karlovy Vary. But it takes a while before such a reorientation of marketing takes hold. For the time being, this does not change anything about the acute crisis in the city, its spa facilities and hotels. You’ll see in about six months “who survived and who didn’t,” says Pfeffer-Ferklova.

Hotel director Kronika can only hope that the Russian clientele will be replaced by guests from Western countries in time: “We live here day by day. We haven’t had to close here yet. There is still a certain clientele, even if they is small. We are all excited to see what the summer season will bring.”