Report
Budapest Hotel Market Overview 2022
In 2022, the Central and Eastern European (CEE) region, including Budapest, experienced significant economic challenges due to geopolitical tensions and lingering impacts of the pandemic.
Soaring inflation, a sharp rise in energy prices, and a labour shortage were major issues. Producer/input costs in the EU surged by 37% in May 2022, a record high. The EUR/HUF exchange rate hit an all-time high of 427 HUF/EUR, significantly impacting operational costs.
Our outlook is carefully optimistic, as against all odds, we believe Budapest will continue to be a magnet for city breakers and sport enthusiasts in 2023 as well, as the city is preparing to host the 19th edition of the World Athletics Championship.
Hotel Market Performance
- Occupancy and ADR: By October 2022, Budapest’s occupancy (OCC) was 59.4%, down 19.4% from 2019. However, the Average Daily Rate (ADR) increased by 13.9% to €105, resulting in a RevPAR (Revenue per Available Room) of €62.4, down 14.1% from 2019. Budapest outperformed several regional competitors in ADR growth, showcasing a strategic shift in pricing.
- Recovery Trends: Despite a slower recovery in occupancy, ADR growth indicates a resilient market adjusting to new economic realities. The return of seasonality trends similar to 2019 and an unexpected surge in demand due to the Ukraine conflict contributed to the market’s dynamics.
Tourism and Airport Traffic
- Passenger Traffic: Budapest International Airport saw a 160% increase in passenger traffic over 2021, aiming for 12 million passengers by the end of 2022, though still below the 2019 peak of 16 million. Full recovery to 2019 levels is anticipated by the end of 2023.
- Source Markets: Traditional markets like the United States, Germany, and the United Kingdom remained strong, while Asian markets’ contributions decreased, replaced temporarily by countries like Israel and Ukraine.
Future Outlook
- 2023 Projections
: Optimism for 2023 is bolstered by upcoming events like the World Athletics Championship. However, rising costs of labour and energy pose significant challenges. The balance of supply and demand is expected to stabilize due to limited financing and postponed hotel development projects.
- New Developments: A notable number of luxury hotels are set to open, including Radisson Collection, W, St. Regis, and others, adding 1,200 upper-upscale and luxury rooms over the next 3-5 years.
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