Budapest, April 22. 2009

All the players of the real estate market pay great attention to the movements of the exchange rate of the Hungarian Forint (HUF) versus other currencies. In the third of the sequence of four analyses, experts of international real estate agency Colliers International Ákos Balla, Head of Valuation examined the way the hotel market reacts to current challenges, mainly the changes of the EUR/HUF rate.

The crisis drastically decreased the number of business travels with a significant negative effect mainly on conference hotels, according to Balla. With cost effectiveness promoted at all measures, companies now prefer single-day business journeys and telephone conferences. Therefore, a significant market segment of two-star hotels has emerged (offering room rates of EUR 15-30).

At the same time, the depreciation of the Forint created great opportunities for domestic tourism since only a few people are willing to pay 20% extra for holidays in foreign countries. This might turn travelers’ attention towards Hungarian destinations (and hotels). Maintaining the tax-free status of the holiday vouchers would bear especially high importance to keep demand for domestic tourism. At the moment, Hungary is also becoming more attractive for foreign tourists due to the higher value of their currencies compared to  the weak Forint, therefore Hungary is definitely more affordable for them.

Well-positioned hotels and hotel developments without a high loan stock are expected to handle the current market situation relatively well. At the same time, conference hotels, low occupancy Budapest hotels, or hotel chains that are paying high license fees are the most affected by the unfavorable turn of Euro exchange rate.

„The entire market has to pay more attention to market research and valuation, which both already play more significant role in preparing decisions. Therefore, under current market conditions I expect the appreciation of real estate agencies specialized in providing professional consultancy” – summarized Ákos Balla.

Source: Colliers International