Accommodation prices may rise in Hungary due to new charge

Restaurants, confectioneries, bars and other catering units have already introduced a so-called compulsory service charge, which could reach 10-15 % of the price of the customer’s order. Now that system can be extended to the accommodation sector as well, meaning a general and significant upsurge in prices.

Tamás Flesch, the head of the Hungarian Hotel and Restaurant Association (HH&RA), talked about that initiative in the podcast of G7, a Hungarian economic news media outlet. Mr Flesch added they had already lobbied earlier for the modification, but now they moved one step ahead in their mission.

He said the sector is in dire need of a price rise because of the high operation costs. He stressed that even though tourism reached pre-pandemic levels in Hungary, its profitability still falls way below the earlier figures. Furthermore, labour shortage hits the sector hard. If their will goes through, accommodation service providers will be able to raise the wages of their employees in proportion to the number of tourists. Moreover, that plus income would bear a lower tax burden for them.

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The so-called hotel service charge would be lower than in the catering sector. Mr Flesch said they expect a 2-4% extra fee, which would be added to their employees’ wages as an incentive.

Budapest makes a great autumn or winter destination

Mr Flesch said that Budapest’s tourism has been increasing thanks to several popular events such as the Sziget Festival or the World Athletics Championships. However, expenses are also high. Therefore, Mr. Flesch talked about a 15-20% price rise in the euro concerning the sector. That is much higher than the accommodation service charge he mentioned earlier. He reassured though that it would not affect Hungarians as much as foreigners since 90% of Budapest’s tourism comes from abroad.

Among the challenges that set back Hungary’s efforts to increase tourism, Mr Flesch firstly cited the lack of direct flights between European cities and Budapest. Furthermore, shopping tourism is also virtually non-existent in Budapest. To jumpstart that, it would require a luxury street where tourists can drink coffee and buy a bag for thousands of euros. He believes that would increase the rank of the city.

Airbnb reached pre-COVID levels (14 thousand), and the quality of such accommodations is high. However, those accommodations receive energy for a lower price than the hotels, thanks to the government’s utility protection scheme. This also poses an issue for hotel owners.

We analysed how this scheme helped Orbán win several consecutive general elections in THIS article.

Following the mass events of the summer, it will be worth visiting Budapest even in autumn and winter, for instance, for its marvellous Christmas fairs. HERE is an article about Europe’s best Advent festivities.