Expert: Budapest hotels can only survive by raising prices
According to Tamás Flesch, President of the Association of Hungarian Hotels and Restaurants, hotels in the Hungarian capital can only survive by raising prices. He encourages all hotels to trust themselves and raise their prices in order to pull through this difficult time.
You have to believe in Budapest and in the product – Tamás Flesch encourages hotels in the capital to increase their prices. The average room rates in euros have not yet reached the 2019 level, he says there is still at least 10-15 percent reserve in the city, writes turizmus.com.
“In the current cost structure, the only way to survive is to raise prices and thus ensure stability”, the expert says. At the same time, he is warning hotels against taking advantage of the weak forint exchange rate to lower their euro prices in order to focus on short-term goals. A price cut could be fatal,” Tamás Flesch told the newspaper.
Budapest is worth just as much as other European cities
The expert at the head of the Continental Group, who manages several hotels, pointed out that the current situation is in many ways different from the 2008 crisis. Whereas in 2008, both supplier prices and wages could be kept down, hotels currently have no control over unrealistically high costs. “Our only chance is to believe that Budapest can do the same as other big cities,” he stressed.
There is no reason to be alarmed that our prices have come close to those of Vienna, as this is due to a change in the guest mix, he said. Like the Hungarian capital, the Austrian capital is still lacking a large part of MICE (meetings, incentives, conferences, and exhibitions) capacity, and since the pandemic, demand from the US and Asia has not returned to its original volume.
“We have the same clientele in the two capitals, which is why we are close in terms of prices,” he explained. Flesch added that Budapest is worth just as much as Vienna in the eyes of foreign tourists, so you should ask for the same price in the winter season.
The weak forint is bad for hotels in the long run
The exchange rate issue should be left out of the price formation process, as a price decline based on a weak forint only provides momentary efficiency, but does not ensure long-term stability and will stall average price growth for years. Tamás Flesch therefore cautions market players against a price-cutting spiral, all the more so as the capital’s hotel market has so far failed to reach the average price in euros for 2019.
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Source: turizmus.com
It’s all well and good for the AHH&R to look to raising its prices, but those previously looking to stay in 4* – 5* accomodation, will be looking to downgrade to 3* (myself included) or simply give Bp a miss to find cheaper options in other nearby capitals.
… I know a lot of people in the Hospitality Industry, and it’s very TOUGH right now, and navigating through this situation must be done very very carefully, it must end with a win-win situation.
” I know it’s tough ” comments have Merit.
The parallels of alignment similarities to the Real Estate – Property Market in Budapest, Hungary must be FORMOST in people’s minds when discussing subjects such as this article FOCUSES on.
Its ALL in the OVERSUPPLY factor – in the Real Estate/Property Market and Hotel and “other” accommodation categories.
Sellers – continue to SMOTHER buyers – in the Real Estate / Property Markets – a profession that is in a CARNAGE trend.
Hotels & “other” – places of accommodation – we know Hotels that have been “forced” to close, which disappoints but they had their reasons.
WHAT absolutely ASTOUNDS me – is WE build and construct ON.
Post February 2020 – the “changed” Hungary we live – the MASSIVE changed still changing “vulnerable” World we are living in, the MASSIVE somewhat ” perilous” state of the Hungarian Economy, and a WAR at our boarder of Russia on the Ukraine.
Do Hungary remain as a Member of the European Family of Countries?
Have the Orban Government – made that UNTENABLE – to remain a member country of the European Union?
The Hungarian Government driven by an attitude amongst others that is of Flagrantly – violating the Laws of the European Union, that sees Hungary, in the position, that it has “self-manifested” through the – CREEDS – of the Fidesz – Orban led Government of Hungary.
Foreign Investment – has DRIED up in Hungary.
WHY has the “Brand” name of Hungary – become “out of favour”?
Is it because – FORGET the Economic & Financial cataclysmic times we ALL are living in Hungary and the GLOBAL over-all Economic picture/landscape, is it, the announcement GLOBALLY from Brussels – the European Union, clearly “vetting” their spleen – annoyance & disappointment, that Hungary no longer is GOVERNED under Laws of DEMOCRACY – but likened to a “dictator” styled and agender GOVERNMENT under Victor Orban – the Fidesz Political Party?
Who is GOING to Invest in Hungary?
Who is going to Lend Money to Hungary?
Russia & China – the “closeness” – Hungary’s closes FRIENDS – horrendous situations one at War the other “fighting” a spreading Novel Virus and the Economys of both these CLOSES of Friends to Hungary – in a declining economic GDP 7 “other” trend pattern.
What is going to STABILIZE the depleting/disappearing into an Abyss – Hungarian Economy?
Gross Domestic Product of Hungary – pre-February 2020 – was representing and growing as it had done over a decade – 9.6% of Income into the Hungarian Economy.
Hungary will still have the HIGHEST Vat level of charge in Europe at 27%.
Tourism – accommodation choices – and WE build on.
Walk with me in my District V – we BUILD on.
We will continue to SADLY hear of cases – the collapsing of Hotels and “other” places of accommodation, restaurants, through HIGH operating COSTS – inflation currently in Hungary running and rising at plus factually 29% – and “strong” market predictions that Interest Rates could “push” 18% to 20% by December 2022.
“Bums on Seats” – to eat savour the delights of our Hungarian cuisine and LOVEABLE friendship/hospitality.
“People asleep in our Beds” in our various places of accommodation.
Words easy at times BUT in this CASE – WHO is going to Come and WINTER is upon us?
“When the YOKE is BROKEN,
the BURDEN is Removed.”
The Yoke – the BURDEN.
You don’t need to be a Rhodes Scholar to know who these words refer/
It is TIME – that sometimes our best is simply not good enough.
We as people – as citizens of Hungary – 9.6 million of us, have to DO what is RIGHT.
History – does not belong to us – we belong to it.