A new approach is needed across the board to stay afloat, industry insiders say.

The unexpected two-thirds majority victory of the Tisza Party at the April 12 election was not only a political landslide; it also had a critical economic impact. Markets placed enormous trust in Péter Magyar’s agenda, not least because he was quick to announce that Hungary would introduce the euro at its earliest convenience. That prospect, and the pro-European stance of the new government, turbocharged the Hungarian forint.

Yet even veteran economists were caught by surprise by the forint’s stunning strengthening, as it gained up to 15% against the euro within a matter of weeks. Parents with kids at Western universities certainly cheered the news, and National Bank of Hungary (MNB) Governor Mihály Varga surely acknowledged the development with a sigh of relief, given that import-driven inflation had received a helping hand.

But many have been shaken as a result. In particular, the speed at which the process unfolded reshaped the economic reality of those exposed to exchange rates. Alongside exporters, the hotel segment began to feel the heat right away.

“The answer in one phrase is: very much,” György Tatár, CEO of Hotelpremio Group, tells the Budapest Business Journal when asked about the impact of the stronger forint on the hotel industry. He notes that Budapest hotels had largely planned their budgets based on an exchange rate of around HUF 390-400 per euro, with some operators even calculating at HUF 404.

“With the exchange rate now in the HUF 350-360 range, this is a difference that cannot realistically be made up during the year,” he says, adding that even exceptional events like the UEFA Champions League held in Budapest could only provide limited relief.

Some hotels were able to sell individual rooms at several times their normal rates during the event period. Still, Tatár stresses that this lasted only a few days and did not materially affect annual profitability.

‘Brutally Tragic’

The immediate effect of the strength of the forint, which hit a 5-year high, is described as “brutally tragic” by Tatár.

“A Budapest hotel receives more than 80% of its revenues in euros, while the majority of its expenses arise in forints,” he explains. According to the CEO, the argument that a stronger domestic currency helps hotels by lowering import costs is largely irrelevant in practice. “It would be completely true if there were significant foreign-currency-based purchases related to hotel operations, but there simply aren’t any,” he says.

One obvious response would be to raise room rates, but Tatár warns that pricing power has limits. Hotels cannot simply pass the full impact of exchange-rate changes on to guests without risking competitiveness.

As he points out, pricing is a sensitive instrument, and Budapest does not compete only internally. A coordinated city-wide price increase has previously been discussed, but Tatár believes this is unrealistic.

“Hotels [in Hungary] are not only competing with each other but rather with other CEE destinations,” he says, highlighting Prague, Vienna, Bratislava and Slovenia as regional rivals.

What’s the Value Proposition?

The challenge is particularly important because Hungary’s previous value proposition, being an affordable destination, is weakening. A stronger forint makes Budapest more expensive for foreign visitors while simultaneously making rival foreign destinations cheaper for Hungarians.

“Vacations in Croatia became 15% cheaper pretty much overnight, and even the Canaries are a viable option now,” Tatár adds. “You need to find a super-compelling explanation why a Hungarian family should not make use of that opportunity.” Bookings in countryside locations are already down.

For now, there is no short-term masterplan to counter the effects of the forint’s muscle-flexing. However, if the Hungarian currency remains strong, plans need to be adapted for 2027. Today’s biggest losers might well be local travel agencies with foreign-visitor clientele, as their margins could be largely eliminated due to their longer sales cycles. “Up to half of them might go bankrupt,” Tatár warns.

Ironically, part of the cause of the forint’s strengthening, the discussion about Hungary’s euro adoption, has received a positive response from many hotel operators, according to Tatár. A common currency would remove exchange-rate uncertainty and improve predictability for businesses.

“The hotels I have spoken with welcome this development,” he said. No wonder: it would cross a permanent risk off the sector’s long list of troubles. And that’s a start.

Shopping Opportunities Could Hold the Key to Success

Against the backdrop of euro adoption, the only way out for the hotel industry would be to move up the value chain, György Tatár, of Hotelpremio Group, believes. But as long as Budapest is more of a low-cost airline hub and long-haul flights remain rare, it’s just daydreaming. Better services and higher-quality accommodation, gastronomy and attractions are all needed to make it happen.

“The answer is quality,” he says. “Budapest should not be an inexpensive destination, but a quality destination.”

He highlights shopping infrastructure as an often overlooked element of tourism competitiveness. Compared with cities such as Vienna and Prague, Budapest lacks a strong premium shopping offering to attract higher-spending visitors.

“Shopping is an essential part of premium destinations, yet we rarely talk about it,” he says.

He also points to the need for more international attractions and a large-scale conference center capable of hosting thousands of delegates. The MICE (meetings, incentives, conferences and exhibitions) segment is particularly valuable because business travelers typically spend significantly more than leisure tourists and can help offset seasonal peaks around the F1 Grand Prix and the Christmas Markets.

This article was first published in the Budapest Business Journal print issue of July 3, 2026.