MTÜ Head: ‘If There are Guests, There is Everything’
Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ) talks to the Budapest Business Journal about the devastating impact of COVID-19 on the industry, the steps it has taken, and his hopes for the future.
BBJ: How has the coronavirus epidemic affected the tourism sector?
Zoltán Guller: The tourism sector in Hungary has been doing excellently, setting new records every year since 2010. Last year saw the best performance yet. In the first two months of this year the effect of the coronavirus has not yet been felt. Based on the data we were expecting a promising year; it looked that 2020 was going to be the best year in the history of tourism in Hungary, which held true until the middle of March, when the coronavirus broke out in Hungary.
Once it appeared, the Hungarian tourism and hospitality sector practically ceased to exist in as much as 60 days. A large number of hotels and spas were temporarily closed, visits to most attractions were suspended, and travel arrangement services basically stopped. Most of the restaurants were also forced to impose downtime; those that remained open reorganized their operations as consumption on the spot was not viable at the time.
Air traffic also stopped, the borders were closed. In fact, this period in our lives was about survival. We have unprecedented, challenging months behind us as the sector, which accounts for 13% of GDP and provides a livelihood for 400,000 people, got in a critical situation overnight, with a virtual nullifying of turnover and, with that, revenue. Tourism is typically a field of small- and medium-sized enterprises, with around 175,000 businesses operating in the sector accounting for a tenth of the national economy, so the livelihoods of many families have been jeopardized by the spread of the virus in Europe.
BBJ: How have travel habits changed as a result of the epidemic?
ZG: The epidemic is affecting the sector in very many ways: trends, travel habits are changing, the whole of tourism is being transformed. It is quite obvious that when we are traveling, we are considering completely different aspects than before. Based on the surveys of the Hungarian Tourism Agency, domestic guests’ willingness to travel is constantly improving, people [do] want to go on holiday, more and more people are getting away from it, and there is more demand for active leisure time everywhere.
When making decisions on travel, the role of safety has increased and has been given more priority. Not only in this sector, of course, but in many areas of life; this period has brought about changes in mindset. What is clear already is that businesses had to adapt quickly and take an innovative approach to this situation. Many have switched to contactless payment, contactless check-in. Many new ideas have found their place in the market. We can say that if we only look at digital developments, in a few months we have jumped 10 years ahead in time.
BBJ: What do you expect from this season now compared to last year and your expectations prior to the epidemic?
ZG: Thanks to the operation of the National Tourist Information Center (NTAK), we can get an instant snapshot of how the sector is doing. It has managed to weather those two critical months thanks to government measures, and a cautious reopening began in early May. Today, in rural Hungary, compared to the same period last year, we see almost a similar number of domestic tourists. In some settlements, Hungarians spend even more than a year earlier.
Looking at the country as a whole, occupancy data reached the figures of January-February prior to the declaration of the emergency. It is fair to add, though, that this is usually the lowest period in tourism. It is important to emphasize that, in the course of a few weeks, Hungarian tourists alone set the average occupancy rate of the country’s accommodation at almost 30%, which I think is worth mentioning in any case.
What’s even more important is that the number of guests, guest nights and spending is also increasing every day. As of July 1, flights have been resumed in large numbers. First, it is domestic travel that is going to gradually rebuild, then foreign guests will start to return slowly. We trust that the domestic market will save tourism this year. Based on the data available, we have every chance to believe so.
BBJ: What steps have been taken so far to help the sector? What else are you planning?
ZG: Since the outbreak of the epidemic, the Hungarian Tourism Agency has been discussing possible solutions with trade organizations and listening to their recommendations; we have prepared a proposal with a consultancy that included the necessary and sufficient measures to keep businesses alive. The Hungarian government was one of the first to announce an action plan to support tourism and hospitality with tax and contribution reductions, tax exemptions, preferential credit facilities, a credit moratorium, an increased and low-tax SZÉP-card framework, the abolition of public land use fees and the introduction of kurzarbeit [short-time working, a less extreme version of furlough schemes].
The first steps in crisis management were aimed at keeping businesses alive, bridging a difficult financial situation and retaining jobs. Now that we can count on a large number of domestic tourists, and foreigners whose number is growing constantly, the process is clear; the number of guests and guest nights is increasing day by day, and the spending by tourists is also increasing. In the recently launched Economic Protection Operational Council (Gazdaságvédelmi Operatív Törzs), under the leadership of the Minister of Finance, we are now working on reducing tax as well as administrative burdens.
BBJ: When will the sector recover from the virus?
ZG: Tourism is a very fortunate sector as it may have been hit quickly by the crisis, but it is also recovering from it quickly. From NTAK, we can see that the number of bookings is growing dynamically, so there is a chance that the revenues of the summer season will not only reach but also exceed last year’s results. I believe that a quick and effective response is the key to success. In order to relaunch tourism, instead of initiating austerity measures, the government helped it recover from the crisis by cutting taxes and continuing developments, thus helping businesses through this difficult period. After all, in tourism, if there are guests, then there is everything.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.