A number of hotel projects are at various stages in the preparation and construct in process in Budapest and across Hungary, although pipelines are difficult to estimate, and schedules have a tendency to slip back and projects to be postponed. ln recent years, the sector has been attracting developers and investors from the traditionally more mainstream property fields, and an increasing number of international hotel operators have been entering or expanding in the country.
Leisure tourism appears to be making a faster comeback; though still not yet at the 2019 levels, Hungary is only 15% down in terms of guest nights compared to the last pre-pandemic year, according to Peter Takacs.
“It is interesting to note that, even in these challenging times, there have been 17 new hotels handed over to their owners and their guests. Six new hotels opened in Budapest, the others in secondary cities, “he points out.
“Two new hotels in Tokaj show that hotel investors and operators are eager to become present in turbo-charged regions, and this will make the local supply more colorful. Budapest’s Verno house opening is not a new building or a new development, per se, but another sign of a “change flags” in CBD properties,” he says.
A good sign
“We would not have thought that 10 plus new hotels would open in regional cities and resorts two years after the pandemic, so altogether, it is a good sign; I just hope they will have the necessary demand to fill the rooms,” Takács added.
Takács Péter sees the obstacles facing developers as increasing construction costs, reduced access to bank financing and high inflation.
“Well located new hotels in Budapest will enjoy the returning traveler demand whereas expensively built regional hotel that rely too much on local / domestic leisure travel and have a high operating cost (with extensive spa and wellness facilities) could suffer,” he worries.
“The hotel industry in Hungary is experiencing a rebound in demand as international tourists are back, seeking quality accommodation.
The upturn in demand tells me that we can expect positive trends in the hotel industry in the coming years, especially in Budapest. We have some hotel developments in the pipeline, including a dual-branded hotel under the Ibis and Tribe brands at the Liberty multifunctional building in Budapest, expected to be completed in 2023. Importantly, this will be the first Tribe Hotel in Hungary.”
“Well-located hotels with proven performance track record are still a good investment. Yields are difficult to gauge because of the lack of reference transactions. In addition, fixed rental lease agreements have, in some cases, been turned into more flexible management or hybrid agreements between owners and operators. But there has been a general upward move in yields that follows a regional and European trend, somewhere in the 100 basis point range,” comments Takács.
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