Budapest’s hotel sector becomes one of the fastest growing in Eastern Europe, says HVS report

Published on : Monday, January 18, 2016

HVSA rise in the number of people visiting the Hungarian capital of Budapest has helped the city’s hotel sector become one of the fastest growing in Eastern Europe, according to a new report by global hotel consultancy HVS London.


Hotels in Budapest recorded strong growth in 2014 with room occupancy up 5% and average rates up 8% in local currency, helped by a 13.5% hike in arrivals over the past three years.


Performance figures for 2015 look set to be even stronger, with some hotels reporting a 30% average rate growth, with occupancy up 10-15 percentage points in the year-to-October 2015.


“With continual increases in visitation to Budapest and demand for hotel nights rising, hotel performance has been consistently improving since 2012,” commented report co-author Constance Biria, consulting & valuation analyst, HVS London.


“The recent boost in hotel performance has also translated into an increase in values per room. The current outlook for Budapest predicts further improvement in performance, increased investment and a further rise in room values,” she added.


According to the HVS European Hotel Valuation Index* hotels in Budapest had an average room value of €149,404 at the end of 2014. This represents a 7.5% increase on 2013 making it one of the top 10 strongest markets in Europe and one of the fastest growing in Eastern Europe.


Transactions in Budapest’s hotel sector are still relatively scarce, however, with only four transactions recorded since 2012, largely due to the political conditions in 2012 and the global financial crisis. Likewise, despite the fact Budapest is one of the largest cities in Europe and visitation is rising, hotel developments are relatively slow, with only three currently in the pipeline.


“Many of Budapest’s 241 hotels are also due major renovations,” added report co-author Arlett Hoff, director, HVS London.


“The completion of these upgrades will help boost average rates and the appeal of the market to investors as will the completion of major improvements to its transport infrastructure.”

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