Is the Hungarian hotel boom over?


The Budapest office of Colliers International has released its first half-year 2012 hotel market report.

In the first half of 2012, hotels registered a 4% increase in guests and a 6% increase in guest nights compared to the same period last year. 4-star hotels continued to perform well (15% increase in guest numbers), while the three- and five-star units tended to stagnate. It is true that the long-term increase in the number of guests in the four-star category is also due to the significant increase in supply. Room occupancy growth has restarted since 2010, but is still below 2007 levels. The stagnant performance of the five-star is likely to have been due to the loss of business travelers due to MALÉV downtime and the positive impact of last year’s EU Presidency.

Total gross sales increased by 7%, which may be due to the weaker HUF / EUR exchange rate than last year.

New Arab owners

Hungary did not experience hotel transactions even before the crisis in the real estate market. Customers at Intercontinental, Gresham and LeMeridien were both Arab owners.

Developments in the countryside and in Budapest

In the countryside, hotels mostly renovated or expanded, mostly with few rooms, were handed over. Among the bigger ones, ETO Park Hotel opened recently, and next year’s Sheraton is expected in Kecskemét.

In Budapest, Mellow Mood is releasing three more hotels, including the five-star Buddha Bar Klotild Palace and the four-star Estilo Fashion Hotel, and the Mirage Fashion Hotel on Heroes’ Square. A new handover of the downtown four-star Zenit Hotel, with 97 rooms, and the opening of the Park Inn by Radisson Váci Road are expected in the fall. The long-standing opening of the Rácz Hotel is still questionable, although the matter seems to have finally been resolved.

More foreign guest nights

The number of foreign overnight stays in hotels increased by 10%, while the number of domestic overnight stays increased by one percent. Room occupancy was 42.8%, up 0.2 percentage points from the same period last year. In Budapest, the number of guest nights increased by 8%, while it stagnated at Lake Balaton.

The average room rates for January – June were $ 33,000, $ 14,200 and $ 9,400 for five, four and three star hotels. This represents an increase in all three categories, the highest being 10% in the five-star category. The gross rental income of hotels increased by more than 9% overall.

The SZÉP card can increase domestic guest traffic

The signs so far for the first half of the year are encouraging, mainly thanks to foreign visitors. Domestic tourism is strengthening in the summer months anyway, so maybe even after stagnation so far, it could start to increase, thanks to the use of the already issued SZÉP cards. Existing hotel developments are slowly coming to an end, and without EU funding, new developments may not start well even with EU funding. Supply growth is slowing down (not to mention the difficult closing hotels), thus opening the door to better utilization of the current supply.