Full Hotel Recovery Likely to Take 2-3 Years
The Budapest Business Journal talks with Péter Takács of VLK Cresa about the state of hotel development in Hungary. A partner at the commercial real estate advisory firm, he gained some of his professional experience in the successful opening and running of international five-star hotels.
BBJ: Do you see any likelihood of troubled hotel projects hitting the market in large numbers?
Péter Takács: Not yet, not in large numbers. What has helped massively is the loan moratorium. As long as owners don’t have to pay anything to the bank, they are more likely to be understanding of the operators. The best scenario would see international tourist travel returning at the same time as the moratorium is gradually withdrawn, but the real world is rarely ideal, so in the second part of next year, we may begin to see more properties hitting the market. Hotels in Downtown Budapest with a good location, an established brand, and a well-maintained building will be fine. But those in secondary locations, in the suburbs or non-central, especially if they operate in a market that is slower to return, such as conferences, could be among the first.
BBJ: What is the investor appetite for the hotel market in Budapest. Are there still buyers looking for good products?
PT: Investors are actively looking, but there is a significant differential in pricing expectations between them and owners. What is going on now is more like window shopping; investors are looking around, making the occasional aggressive offer, but most owners, especially downtown, don’t need to sell. A couple of deals are expected to take place this year – we are certainly working on some – but not in any significant volume. Next year will be different.
BBJ: How do you see the market developing over the next couple of years?
PT: It is still a desirable asset class. One thing we keep hearing is that investors increasingly want flexibility among their key criteria. They want a well-designed building so that, if another pandemic or some other disaster comes along in the next 50 years, it can be converted into residential units or offices. The sector will return to profitability, but it is going to take two to three years.
This article was first published in the Budapest Business Journal print issue of October 22, 2021.
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