Destination Budapest Back on the Bucket List

Tourism

Arne Klehn, Multi-property General Manager, Budapest Marriott Hotel and Millennium Court, Marriott Executive Apartments.

Ever more foreigners are not only putting Budapest on their bucket lists but also crossing it off after a happy visit just to put it back on for a return. The analysts say the appeal of Hungary’s capital is also improving among high-end travelers.

The lockdowns seem like a distant bad dream, and the presence of tourists on Budapest’s streets is a reminder of pre-pandemic times. Although not yet back at pre-COVID numbers, the latest statistics confirm the trend: in 2022, the number of guest nights in the country was up nearly 40% from 2021, while revenue in the hotel segment grew by a factor of one and a half.

The upwards trajectory has left its positive mark on the operation of the Budapest Marriott Hotel, which claims to have been the first international hotel in the Hungarian capital.

As multi-property general manager Arne Klehn explains to the Budapest Business Journal, various factors contributed, such as expanded tourism offerings, city-wide events like the 2022 Fina World Aquatics Championships, as well as the returning Formula 1 Grand Prix.

Apart from that, enhanced marketing campaigns by the Hungarian Tourism Agency and the development of new tourist attractions gave further impetus to growth. The fact that the Hungarian forint lost value to the euro and the dollar also helped usher foreigners in the direction of Hungary. Overall, spending has jumped significantly, with Q1 2023 figures growing by one-third year-on-year.

Business travel has been reshaped by the rules of the pandemic that pushed companies towards virtual meeting spaces. However, this shouldn’t be generalized, as evidenced by Marriott’s figures. Given that the hotel says about 45% of the total rooms sold were associated with this segment, it seems to have kept a solid base in the corporate field. Yet, that doesn’t mean nothing has changed.

The exterior of the Budapest Marriott Hotel.

Changing Face

“Former volume-producing companies, which once played a major role in the market, have experienced a significant decrease in production,” Klehn explains. “This decline has prompted new players in the industry.”

One key factor is the Hungarian Investment Promotion Agency, which has done award-winning work in attracting foreign investors and promoting Budapest as an ideal destination for business. Additionally, the film sector is of significant importance to Budapest’s overall economy. The city has become a prominent film production location, attracting domestic and international filmmakers.

Prominent industry experts have emphasized the necessity of positioning Budapest as a luxury destination, and investors seem to agree that the city has untapped potential in this regard. Marriott International alone has scheduled significant openings from among its brands this year, such as W Hotels, the Sheraton, and the Autograph Collection. Other projects planned to be up and running in the next couple of years foretell that more than 1,000 new five-star rooms will be available soon.

Klehn sees luxury lying beyond material possessions, instead looking for intangible qualities like the quality of time and well-being and a generally more balanced and fulfilling lifestyle. Today’s luxury travelers expect their vacations or travel to be unique and experiential.

Luxury Options

“Budapest has been one of the destinations with limited growth over the past decades, and we believe that by combining all the planned openings and presently open hotels, we will provide our guests and members with a wide range of options for experiencing this magnificent destination,” he adds.

An upgraded hotel with breathtaking views, the Budapest Marriott is well-known for hosting high-profile events throughout the year.

“We greatly value our partnerships with local chambers and businesses, as they allow us to showcase our expertise and serve our guests with passion and dedication, and we look forward to hosting these events in the future,” Klehn notes.

All these positive trends suggest Budapest can prevail against its regional rivals. The average room rate may be just one benchmark, but in that category, the Hungarian capital is already ahead of Warsaw, Bratislava and Prague. According to a recent Christies report, the overall CEE region continues to be seen as a growth engine in the European Union, Klehn recalls.

He believes the strategy to bring major sports events such as the upcoming World Athletics Championship this year from August 19-27 and the Chess Olympiad in 2024 (September 10-23), among other reoccurring highlights, pays off in attracting more tourists.

“One opportunity would be to further invest in more long-haul direct flight connections towards U.S. destinations and to expand airport activities generally,” the GM concludes.

Labor Shortage not an Issue

Achieving steeply growing visitor numbers hasn’t come without challenges for the hospitality sector. For one, government support programs and subsidies do not apply to the specific circumstances of multinational hotel chains. On the other hand, the impact of the energy crisis didn’t pass overnight, forcing Marriott to continue looking for energy efficiency opportunities to mitigate the financial burden.

But what about the labor shortage, a critical issue that strains all sectors, particularly tourism? It seems Budapest Marriott might be an exception that proves the rule.

“We are not as concerned about staffing as we were in prior years; we have a team of dedicated employees who make our workplace a friendly and inclusive atmosphere,” multi-property GM Arne Klehn says.

A vital ingredient of the secret sauce, he believes, is that the chain appreciates the idea of “belonging” and has made it a part of its company culture. It also supports the advancement of apprenticeship programs, fostering the growth and development of aspiring professionals. And to tap into global talent, it seeks to streamline work visa processes, particularly for individuals from outside the European Union.

This article was first published in the Budapest Business Journal print issue of June 30, 2023.

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