Turnover of Hungarian hotels fell 8-10pc over the past several months from the same period a year earlier, chief secretary of the Hungarian Hotel Alliance Istvan Kovacs said at a general meeting of the organisation in Sarvar (W Hungary) on Thursday.
“The number of bookings has fallen across Europe — and in Hungary too — since August, and the trend continued in September and October,” Mr Kovacs said. He added that it is difficult to give a general number for occupancy in Hungary because of big regional differences.
Mr Kovacs said the general meeting would try to work out a strategy to support the hotel industry over the next year and a half.
Here’s an idea for the general meeting Kovacsur… Do the Hungarian thing and raise the prices to compensate (the same way they do taxes); give visitors a truly Hungarian experience – rip ‘em off so they feel it and go home, and brag about it to their friends.
And the more people stay away, the more that people coming should pay…
Hey it works for Papa Doc Gyurcsany’s government surely it’ll work for Intercontinental.
DDT- You were making a great point until your last sentence. Do you think that anyone in that ‘trash heap’ government (the whole, not just MSzP) has plans to change things otherwise?
Why did hotel bookings fall? The answer is simple. It is all thanks to Budapest airport keeping their landing fees so high.
Ryanair cancelled flights to Budapest, airplanes packed with tourists turned away due to fuel costs and thus were no longer willing to put up with the cost of landing fees as well – no longer profitable for them to continue flying to Budapest.
The Hungarian government should have prevented this from happening. Landing fees should take into consideration the cost of fuel. Subsidised by the government when prices are so high.
@Richard. Good point; add in less disposible income among tourists / global downturn; and other destinations offering more attractive deals…
Part of HU’s macro-economics (e.g. high tax wedge) makes it difficult to reduce prices (quickly if at all) and instead must rely on currency depreciation to make the country competitive. Ironically, those in charge want to get into the EURO where this escape valve would cease to exist.
Rolrox
“where this escape valve would cease to exist.”
Depreciation against the Euro or Swiss Franc leads to massive financial pain to holders of EUR or CHF debt. I know many who are already suffering. This valve is no longer an escape valve. Another thing the Hungarian government should have prevented from happening.
@ Richard: I completely disagree.
Landing fees are not the cause of the lower hotel turnover. It is a Europe wide problem, as stated in the article.
The government should definitely not subsidise landing fees at Ferihegy. That’s just a recipe for the airport to raise the landing fees and for the airport to demand more taxpayers money.
If I recall correctly, Ryanair has cancelled flights everywhere. Ryanair put out a press release saying that they are cancelling flights to Budapest due to the high airport fees, and that Budapest’s were higher than similar airports. But they sent out this press release with just a different airport name for all the airports in the region.
More likely factors are those mentioned by rolrox.
As for the forint and euro debate: it is a two-edged sword. Of course a low forint would help Hungary’s tourism and exports and hurt those who borrowed money in another currency.
@Adrian. I agree, devaluation shouldn’t be an option given the overall impact. What I meant is that there is an in-built, systemic escape valve. I made the point in relation to the multiplier that causes high prices (and therefore price distortion) in the first place. I believe this is due to the gov’t policy re the tax wedge. Consider, for every 100 HUF that an employer pays (for an employee); that employee has 37 HUF buying power; and of that 37 HUF, only 30 HUF goes to any company actually selling a product. Effectively, on every 30 HUF spent, the gov’t receives a matching 233% (70 HUF). In a simple system (assume just 2 companies trade with one another) so as to illustrate the point. Both companies have to inflate their prices in order to make enough to cover costs and make their margin.
With respect to tourists, the higher prices would not be disguised if HU operates in EUR – but in HUF, the gov’t can globally make the overall prices appear “less” by letting the currency devalue. Strangely, the country allowed the opposite, and that has suckered a lot of people into FX mortgages. To now try to maintain the “higher” value will draw more of the national revenue into support of the currency (away from the current commitments). And that leaves me wondering if 233% is but a low point.