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Five new hotel openings this year in Budapest
Date: 16th January 2012
Fewer and fewer hotels are built in Budapest, this year there are five expected openings. Predictably run-down hotel renovation and quality improvement of services will be on the agenda in the future. According to Mellow Mood, a determining company on the market, there is demand for special projects and new developments in the capital.
Five new hotel openings are expected this year, the four-and five-star hotels will increase the capital’s hotel room supply with an additional five hundred rooms – according to the analysis of Colliers International’s in Hungary.
Examining this year's handovers makes it clear that most developments have been running for years now, and the current openings are typically smaller units, mostly offering below 100 rooms. The two greater ones will be the 136 roomed Park Inn category hotel of Radisson Chain and the Buddha-Bar Hotel Budapest Klotild Palace with its 102 rooms.
The decline visible in regards of the new developments is a part of a lately evolving trend, but this year’s volume rather reflects the normal state - said Akos Balla to Vilaggazdasag economical journal, director of valuation, consulting and market research division. The specialist names two reasons for cutting back on the investments. According to the first one, there are very few "reckless" developers on the market, who dare to cut into such especially risky, hardly plannable investments. Another explanation is, that the loss of real estate loans is to be blamed for the limited number of hotel constructions.
Colliers expects a positive inpact of the „SZEP” card, effecting the domestic hospitality industry, and at the same time the high euro exchange rates might also predict in an upward camber, since this will enable the country become cheaper for foreigners, because room rates of those hotels counting on the foreign guests are considered inexpensive in Euro. It means that this market holds serious promises, but this does not necessarily means the need of further developments.
However some movement is still expected, in the forthcoming years, specifically because of necessity: renovations of formerly built lower category hotels - typically 2 to 3 stars - is expected as soon as funding becomes available again, but this process seems to be slower than expected.
According to the specialist, forthoughful owners should take care of those buildings, which are deteriorated, or are no longer "trendy", and in any case they require refreshment.
Speaking about the possible sales and purchases, Akos Balla said, that only a small number of significant transactions took place last year on the open market and there is only a faint chance for them this year also. In recent years, however, if a property changed hands, it almost always got into the property of the creditor bank. These properties - either as part of a portfolio - again, sooner or later could appear on the market, but for the current owner it would only rationalize - former funding - when their ability to produce yields would stabilize. Regarding countryside hotel developments, Ákos Balla declared that they envisioned a limited number of cities, typically Kecskemet, Győr or Debrecen could even be an option, but a greater investment in these cities will bound by the market several years.
According to the CEOs of Mellow Mood Hotels (three of the new openings this year are operated by them) there is driving demand in the Hungarian capital for new developments and projects. The hotel group strives to strengthen their presence in the city centre by creating and operating hotels within their Fashion Hotels brand, featuring a unique style, recognized and approved by both the industry the international travellers.
Due to the opinion of the experts, the sector's performance of last year can be rated as good, and they believe that the contribution of the Hungarian National Tourist Office and the new leadership plays a leading role in this success. " The number of guests staying at the Mellow Mood Hotels properties were rising in 2011, and due to the new openings, we expect further progressses, especially if the market will be able to keep the current average room rates or will be able to increase them slightly" - said the company's two Managing Directors, Sameer Hamdan and Zuhair Awad.