Europe -  Budapest, Hungary

Budapest is the capital of Hungary and the eighth-largest city in the EU. The city traditionally had a strong industrial focus, but has since become a major centre for banking, finance, real estate and accountancy. The city is home to almost 400,000 companies, including the first foreign office of the China Investment Promotion Agency (CIPA) and the European Institute of Innovation and Technology (EIT). Major multinational firms with headquarters in the city include the Fortune 500 company Mol Hungarian Oil & Gas, OTB Bank Group, Magyar Telekom and many others.

Budapest is also a cultural and historic centre, which makes it very leisure oriented, with well-known monuments such as St Stephen’s Basilica, the Hungarian Parliament Building, Buda Castle, the Chain Bridge and the Opera House. As such, the city has gained international recognition as a ‘must-see’ destination in Europe, which translated into a phenomenal RevPAR growth of close to 15% in 2017, with rate levels reaching new peaks (nominal prices). The city has experienced a significant growth in passenger numbers in the last three years, fuelled by the expanding number of low-cost carriers, outperforming regional competitors such as Vienna, Prague, Bratislava and Warsaw, in growth terms. 2017 was further boosted by the World Aquatics Championships and the Junior Swimming Championships, attracting some 485,000 spectators. Going forward, challenges similar to those of other CEE countries remain, including the shortage of qualified personnel. In Hungary, hoteliers are experiencing skyrocketing payroll expenses, but the pressure remains as emigration continues to dent the labour pool. This is likely to remain a serious drawback for hotels in Budapest, to balance the personnel needs associated with strong demand growth while protecting profit levels.

Hotel supply has not increased as much as the rising flow of visitors in the few last years. However, the industry has a positive outlook as upcoming major events and the government’s new national tourism strategy are expected to attract even more visitors, motivating investors to increase hotel capacity. In response to the expected growth in tourism as a result of these events, a 6% increase in new rooms is expected by 2020, demonstrating hotel investors’ interest and trust in the sector’s growth.

2017 picked up from 2016 with six hotel transactions, including Erste Group’s sale of five AccorHotels properties to Orbis for €64 million (€60,000 per room) and Sofitel Budapest Chain Bridge Hotel for €75 million (€210,000 per key) wherein Starwood Capital Group has entered, through a controlled affiliate, a sale-and-management-back transaction with Orbis Hotel Group.

Change In Value For Market: (€Euro)

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Budapest RevPAR Change (€Euro)

Budapest RevPAR (€Euro)

For more information, please contact:

Sophie Perret, MRICS, MBA
[email protected]
  • +44 20 7878 7722 (w)
Simon Hulten
[email protected]
  • +44 020 7878-7775 (w)