Return of Foreign Visitors Boosting Tourism

Tourism indicators in Hungary are currently bi-directional, with the number of domestic tourists decreasing while the number of foreign visitors is gradually increasing. However, the problem for domestic operators is that they cannot raise prices at the same rate as their costs are rising, according to an article in Világgazdaság.

Skyrocketing energy prices and inflation had led to fears of a downward spiral in tourism and the closure of some domestic hotels in 2022, leading many to predict mass closures. Since then, however, the hotels in question have reopened, and fears of mass closures have proved unfounded.

In March, the number of operating tourism units was only 11.5 percent lower than a year earlier, Gergely Suppan, senior analyst at Magyar Bankholding, pointed out to Világgazdaság. Moreover, a month ago there were 12.3 percent fewer units in operation, so the gap is gradually narrowing. At the same time, the monthly data show that companies are already starting to expand their workforce.

However, there is a trend towards more foreign visitors than domestic ones. According to data from the Central Statistics Office, the number of domestic overnight stays fell by 9.6 percent, while the number of foreign overnight stays rose by 15 percent compared to the same period last year. The decrease in domestic tourists is mainly due to inflation, as higher costs have made travel more expensive.

However, companies in the tourism sector, especially caterers and hotels, are trying to move prices carefully, as price increases are a hot topic these days.

At the same time, cost increases are a daily occurrence, and companies have still not been able to pass on these increases in their prices, which would justify the need to support the tourism sector. This would be necessary, not least because the suspension of the tourism development levy, which left operators with 4% of the net revenue in question, expired at the end of March.

The return of foreign visitors is expected to boost tourism. Already data for March showed that air passenger traffic was up 33.9 percent year-on-year. Furthermore, despite a decline in the number of hotel guest nights, domestic hotels nationwide generated gross revenues of 40.4 billion forints (EUR 108.4 million) in March, up 33.3 percent year-on-year and 26.1 percent higher than the pre-Covid crisis year in March 2019.

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