International tourism in Budapest may expand much more dynamically after this year's low
The coronavirus seized international tourism across Europe in about the same way in April, but the pace of recovery could be very different. In previous years, the proportion of domestic and foreign guests at home was approximately 50-50 percent, in 2020 the market may be based solely on domestic guests, which may be less favorable for the capital than for rural tourism. From 2021, the number of foreign visitors will increase again: according to the forecast, Budapest will receive as many foreign tourists in two or three years as in 2019, while normalization in the larger and more mature Western European markets may take up to 4-5 years - revealed from CBRE Hungary's analysis of the hotel industry.
Hungary and Budapest could have soared
The year 2020 started strongly from the point of view of tourism, as compared to the same period of 2019, the sales revenue per rentable room (RevPAR) in Hungary was 28 percent higher in January and 23 percent higher in February. The daily average price of rooms in Budapest also increased by 1.6 percent in the first 4 months of the year compared to last year: from 75.80 euros to 77.04 euros. Hungary's growth at the beginning of the year was also the highest compared to the CEE countries, and the March closure affected it even more, as RevPAR traffic fell to only 67 percent at that time, but the April restrictions hit everyone in the region to the same extent. The month of the curfew showed a 95% drop in revenue per room for rent (RevPAR) in Budapest. In the region, Prague and St. Petersburg were hit the hardest, with a 97% decline compared to 2019.
This year we are on holiday in Hungary, foreign guest traffic has been growing steadily for years, foreigners generated about half of the guest traffic in commercial accommodation establishments, and the amount of their travel-related expenses reached HUF 2.3 thousand billion in 2019. This revenue will fall significantly this year. This year, due to the virus, the Hungarian Formula 1 race will be held online without physically present spectators, and the Sziget festival, which usually attracts many foreigners, will not be held, and many foreigners will not travel this year for security or financial reasons, so only Hungarian domestic tourism remains as a consumer base, which may even give a lasting momentum to some tourist destinations beyond the capital.
Recovery can be quick
“As Hungary performed exceptionally well in 2019, Budapest is ranked high among international travel destinations, so the recovery will be even faster than in other Central European capitals. We expect that Budapest will be the second most dynamically growing foreign tourist demand growth in Europe after Athens. While it can take up to five years for classic Western European destinations to regain tourist traffic before the pandemic, this can happen in Budapest within two to three years, and in 2024 up to 15-20% more tourists may arrive than last year. In the period ahead, despite lower demand, we do not expect a significant drop in prices, as market participants have learned a lot from the previous crisis, when Budapest became the cheapest destination in Europe for many years, which hurt the whole industry, ”added Laurent Lassier, Head of Hotel, CBRE Hungary.
