Losses in the hotel sector estimated at 70% in 2020 and passenger traffic in Budapest at around five million passengers instead of 16.2 million in 2019.. In a few figures, here's what the covid-19 pandemic is doing for the Hungarian travel industry. In this respect, the country is hardly any different from its European neighbours. And yet it is, Budapest also has a political dimension which is probably accentuating the agony of the Hungarian travel sector.
Relations between the European Union and Hungary are at an all-time low. For more than a decade, the European institution has served as an outlet for Viktor Orban, the ultra-nationalist prime minister, who accuses the Union of all evils. The Hungarian government seems to be using the epidemic to cut itself off a little more politically from the EU.
A hint of nationalism behind the border closures?
After an initial lockdown of the country from mid-March to mid-June, Budapest has done it again with the introduction of a new quarantine system on September 1st. In theory, all foreigners are banned from Hungarian territory. The exceptions are travellers from border areas and in transit - authorised for less than 24 hours - as well as certain groups of officially invited businessmen.
For the time being, the health results of containment are rather mediocre. The number of infections has increased sixfold since 1 Septemberaccording to official statistics. While the country had 6,257 covid-19 positive cases on September 1, this figure had risen to 34,046 by October 8. That's an increase of 932 people in 24 hours, despite the virtual absence of foreigners...
Against this backdrop, it is unlikely that the country will open up again to the rest of the continent in the coming weeks. Back in July, the European Commission estimated that Hungary's GDP would shrink by 7 % this year. This foreshadows a catastrophic third and fourth quarter for the travel industry, especially the hotel and air transport sectors. The economic impact will be terrible, as the sector accounts for 13 % of Hungary's GDP, with a high level of international activity.
No respite for the hotel industry
A new report by Horwath HTL Hungary, conducted in cooperation with the Hotel and Restaurant Association, highlights the lingering doubts among Hungarian hoteliers about a speedy recovery. In 2019, the hotel industry recorded 23.47 million overnight stays, of which 54.7 % were by foreign travellers. Dependence on international markets was even greater in Budapest, where foreign visitors generated 89% of all overnight stays last year.
The closure of Hungary's borders in March put a sudden brake on the development of tourism in the country. After growth in overnight stays of 9.9% on an annual average at the start of the year, the number of overnight stays in the country fell by 66% in March. The fall continued with -99% in April and -97% in May.
However, the summer did not bring a strong recovery, except for domestic tourism. The Hungarian Central Statistical Office announced a controlled fall in domestic overnight stays in August (-2.1%), but a sharp decline in international overnight stays (-71.3%). The destination Budapest continues to be the hardest hit, with a fall in international overnight stays of 85%.
Hoteliers therefore remain gloomy about the outlook for their industry. According to Horwath HTL, 65% of Budapest hotels estimate that revenue losses will exceed 70% this year.. To try to mitigate these losses, 35% of hotels have improved or developed their service offering. 30% lowered their rates and 10% offered other services such as room hire for co-working.
Locking down the borders in September the definitive closure of 28% of hotel establishments in Budapest, while 39% of them are considering an possible resumption next March.
According to Horwath HTL Hungary, five- and four-star hotels are continuing to operate, but with reduced capacity. The closures concern budget and mid-range hotels. However, almost 46% of hoteliers in the Hungarian capital do not expect their business to be effectively normalised before 2023..
Wizz Air reduces its offer from 73 to 12 routes
The same applies to the airline industry. According to the Hungarian Central Statistical Office, Air traffic down 97% in the second quarter. April was the worst month for Budapest airport, with just 9,900 passengers, compared with 1.34 million in 2019. According to airport authority estimates, September should record a similar figure to April. The airport now handles just 120 aircraft movements a day, a fall of 70%. The airport expects traffic to remain 80% to 90% below 2019 levels by the end of the year. with no change to border management.
La low-cost airline Wizz Airthe country's leading carrier with a third of its seat capacity, is the most affected by the lock-up. In September, the carrier reduced its network from 73 to 12 destinations. Wizz Air now operates only two flights a week from Budapest to Paris-Orly, Brussels and Basel/Mulhouse. The company also serves Milan, Athens, Dortmund, Berlin, London-Luton, Eindhoven, Stockholm, Malta and Larnaca. From his side, Air France will continue to offer ten weekly flights between Paris CDG and Budapest this winter.
All that remains now is to hope that the Hungarian government finds a compromise between health needs and economic recovery. " This is absolutely vital for Budapest's economic activity." Horwath HTL believes.
