Hungarian tourism collapses in April

Hungarian tourism collapses in April
Budapest's favourite tourist hotspot, the Buda Castle, deserted.
By Tamas Szilagyi in Budapest June 7, 2020

The number of guest nights at commercial accommodation in Hungary fell 97% y/y to 69,000 in April, while the country was under lockdown, according to figures from the Central Statistics Office (KSH) on June 5.  

Hungary's tourism suffered an immediate blow after border restrictions were introduced from mid-March. In the previous month, hotels with at least three stars registered a 65% annualised decline in overnight stays to below 700,000. 

The sector closed a record year in 2019 as the number of overnight stays at hotels with at least three stars exceeded 31.3mn and hotel revenue surged to new highs. Tourism generated a €4bn surplus last year, roughly half of the country's surplus in trade of services for the year.

Tourism accounts for 10% of the GDP and it employs roughly 200,000 directly. Accommodation capacity grew 25% from 2010 to reach 380,000 last year.

The coronavirus (COVID-19) epidemic will set the sector back and it will be years until it can recover, according to industry insiders. The central bank's forecast calculates that a one-month shutdown of the sector will result in a 0.4-0.5pp drop in GDP. 

The government has announced measures to help troubled sectors. It ordered a loan moratorium until the end of the year and offered tax waiver for small businesses in troubled sectors. 

Companies can make use of wages subsidy schemes and there is also a HUF2 trillion corporate financing programme available with interest subsidies and state guarantees to the tune of HUF500bn. 

The government has earmarked HUF60bn for hotel development for this year. In the first day, the non-profit agency in charge of the Kisfaludy2030 programme received 8,800 applications to the tune of HUF27bn, or half of the entire funding. The scheme is aimed at accommodation providers operating with a maximum of eight rooms to make upgrades to their properties. 

As in other countries, the government has launched ad campaigns to boost domestic tourism and help smaller, rural regions.

In April the number of guest nights spent by foreign visitors plummeted 98.7% to 17,000, while the number spent by domestic travellers declined 95% to 52,000. Smaller boarding houses recorded half of all overnight stays during the period.

Of the 1,300 commercial accommodation establishments, half did not receive guests. Revenue of commercial accommodations also plunged 97.3% to HUF 1bn during the period. 

In the first four months, guest nights were down 43.2% y/y to 4.22mn.  Guest nights were split equally between Hungarians and foreigners. Commercial accommodations reported HUF83bn revenue, down 38.5% y/y.

Analysts expect a recover in May as the country gradually lifted lockdowns. Smaller hotels reported strong booking during the Pentecost holiday. 

 

Data

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