lh x cw market report A4_23.03.02 v34 interactive72

DEMAND – YEAR OF REVEALING RECOVERY, WHAT’S NEXT? In early 2022, the European hospitality industry continued to grapple with COVID-19 restrictions that impacted travel and tourism industries. However, as of March 2022, Hungary lifted all travel-related restrictions, which allowed tourism to flow freely into the country once again. Following the lifting of restrictions, the surge in leisure visitors, incl. returning leisure groups, was observed. Yet, despite an increasing number of visitors for business and conference purposes pre-pandemic, it wasn’t until Q4 2022 that

Budapest started seeing an uptick in visitors coming for business and conference purposes. In comparison to 2021, the demand in overnight stays was 88,1% higher than in 2022, according to the Hungarian Central Statistical Office (KSH). Unfortunately, the demand cannot be compared to 2019 levels due to a methodological change in 2022 at the KSH. According to Oxford Economics, the demand in 2022 was at 70,8% compared to 2019.

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Demand Index

Supply Index

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SUPPLY & DEMAND INDEX Cushman & Wakefield Research

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2022 2023 2024 2025

Disclaimer : the demand index forecasted by Oxford Economics shows an abnormality between years 2022 and 2023. Both years show similar demand levels, which is out of line compared to neighbouring markets and might be questioned based on the current market evolvements. Hence, the demand levels might return and surpass 2019 levels by 2024.

From July 2022, KSH adopted to publish the demand for private accommodations. Since then, the private accommodation sector accounted for ca. 16% of the total overnight stays in Budapest. This seems in line with the estimated 20% to 25% share in 2019, considering less units being active at present. Moving forward, while recession and growing cost of living will challenge the recovery in hotel performance, there is still a strong desire to travel, underpinned by enduring pent-up demand. Luxury and economy segments are likely to be less affected by economic factors, especially in markets driven by leisure and

domestic demand or those benefiting from favourable exchange rates.

Furthermore, the lifting of the zero COVID-19 tolerance policy and the improving connectivity between both continents, China and the Asian markets in general (3,9% and 17,5%, incl. China, demand share for Budapest in 2019, respectively) are expected to make a return to the European and Budapest market during 2023, contributing to an even stronger recovery. Absent markets such as Ukraine and Russia, due to unfortunate reasons, made a 2,1% and 4,2% demand share for Budapest in 2019.

Hospitality

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