Hungary Tourism Report Q1 2009

Latest data continue to confirm our view of a weak outlook for foreign visitors in 2008, with arrivals totalling just under 16.9mn in H108, a decline of 2% on the corresponding period of 2007. Of the top four source markets, arrivals from Romania and Slovakia were up around 1% and 5% year-on-year (y-o-y) respectively, while arrivals from both Austria and Germany declined by almost 5% y-o-y. Overall, arrivals from Europe were down 2% compared with the same period in 2007, although arrivals from the EU were up a slight 1% y-o-y (with strong growth in arrivals from the Czech Republic and Poland).

Forecast Scenario In line with recent data for foreign visitor arrivals and downward revisions, this quarter, to forecasts for economic growth in the eurozone (which accounted for 58% of all visitors in 2007), BMI has adjusted down its outlook for foreign arrivals to Hungary in 2008 and 2009. As a result, we expect a modest fall in the number of arrivals in both years, with mild recovery occurring from 2010. Growth in international tourism receipts (in US dollar terms) is also forecast to slow in the short term, as the outlook for visitor arrivals weakens and the Hungarian forint depreciates against the US dollar.

Hospitality Further weakness is evident in the hospitality sector in 2008. The most recent data are for the period January to August 2008 and show the total number of nights spent in all accommodation establishments were down nearly 1% compared with the corresponding period of 2007 to some 14.4mn. Tourist nights by international visitors, which amounted to about 7.1mn, declined by 0.6% y-o-y, while nights by domestic residents fell 1.2% y-o-y. Concerning key source markets, the number of nights by German and Austrian tourists declined over the eight-month period by 9.4% and 3% y-o-y respectively. Interestingly, tourist nights accounted for by the UK were up a relatively favourable 10% y-o-y. Two other major source markets, Italy and the US, however, both recorded negative growth in tourist nights (down around 11% and 7% y-o-y and respectively).

Malév Hungarian Airlines Financial results for 2007 show the national flag carrier Malév Hungarian Airlines recorded a profit of HUF703mn (US$4.1mn), compared with a loss of HUF10.5bn (US$55mn) in the previous year. The improved results partly reflect a fall in operating costs. The airline carried over 3.1mn passengers on scheduled flights in 2007, an increase of 5.3% y-o-y. Western European routes accounted for 54% of total passenger traffic, with significant growth on several routes, including Gothenburg, Paris and London- Gatwick. The airline recorded its strongest growth in passenger numbers (up 7% y-o-y) on routes in Eastern Europe.

Wizz Air From April 2009, Hungarian low-cost carrier Wizz Air will add a new aircraft to its Budapest base. The additional capacity will be deployed for increasing frequencies on the current network, opening new routes to Madrid and Naples, and re-launching routes to Barcelona and Oslo Torp. As a result, Wizz Air will increase its capacity in Hungary by 30% in 2009 compared with 2008. In October 2008, the airline also announced that it would add three new aircraft and double its capacity in Romania in the coming months. The first new aircraft will be operated from Timisoara (Wizz Air’s 10th base) from February 2009 – brought forward due to strong demand.