The hotel and hospitality sector is once again regarded as an attractive development and investment option. Hungary, and particularly Budapest, is seen as a popular tourist destination, with guest nights in the capital set to return to and exceed pre-pandemic levels.
Despite hotel development’s perceived complexities and reliance on short-term stays compared to the more established market sectors, the hospitality sector is successfully attracting players from more traditional commercial property sectors.
Investors are concluding long-term leases and franchise partnerships with leading branded international hotel operators, who provide the expertise needed for the day-to-day operation of the assets, while the owners can concentrate on asset management.
Several hotel projects have been put on hold due to the complexities of development, concerns over financing and rising construction and operational costs; however, Horwath HTL estimates around 22 new hotels with 3,000 plus rooms could open in Budapest in the next three to five years. Budapest hotel supply had reached 224 properties as of the turn of the year. There was a total capacity of 23,000 rooms and more than 50,000 beds.
“Following last year’s significant boom in hotel openings, the Budapest market is expected to stabilize this year. The projected supply increase includes up to six new hotels with 544 rooms, but due to investment delays, we expect about half of this to materialize,” comments Attila Radvánszki, senior director at Horwath HTL Hungary.