The Hungarian hotel market is holding up despite the country’s economic and financial challenges

The hotel market in Hungary has remained comparatively stable despite the economic and financial challenges the country is currently facing according to Jones Lang LaSalle Hotels latest Hungarian Hotel Intelligence report.

At year-to-date June 2012 hoteliers in Budapest reported RevPAR* levels similar to those of 2011.

Angus Wade, Executive Vice President at Jones Lang LaSalle Hotels commented,"Tourism demand remained steady despite the collapse of the national airline Malev and was further supported by a favourable exchange rate and buoyant demand from key source markets, particularly neighbouring countries in Central and Eastern Europe. However, operating conditions remain challenging due to a considerable oversupply in hotel stock and average daily rates have therefore remained well below the peak achieved in 2007."

Wade concluded: "The country's economic and financial problems and challenging hotel operating conditions have made investors much more cautious about investing in the Hungarian hotel real estate market. The market remains relatively illiquid with transaction activity mostly observed in the upscale segment. In the last 12 months a total of three 5-star hotels were sold including the Le Méridien Budapest, the Four Seasons Gresham Palace and the InterContinental Budapest. For the remainder of the year we only expect limited interest for Hungarian hotel assets. However, the market could see further acquisitions from high-net-worth-individuals, particularly from the Middle East. These investors are not exposed to the same extent to the debt/financing difficulties experienced by other ownership categories, and may be attracted by market leading hotels in Budapest"

*Revenue-Per-Available Room