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Editorial: In Praise of the Tourist Dollar (June 28, 2024)

Analysis

Photo by Shift Drive / Shutterstock.com

It is worth remembering, the next time you are forced to jump out of the way of a tourist riding a scooter, a bike with balloon wheels, or a Segway seemingly without regard for anyone else around them, that tourism matters. That tourist may not know much about the highway code (or driving with concern and care for pedestrians), but the dollar, euro, yen or renminbi in their pocket counts for something.

According to the OECD “Tourism Trends and Policies 2022” report, tourism has long been a driver of the Hungarian economy. In 2019, tourism directly contributed 6.8% to the total gross value added and 9.5% of the national workforce at some 421,036 jobs. The impact of COVID-19 was, of course, significant, with estimates suggesting tourism GVA fell to HUF 2.194 trillion or 5.4% of the national economy in 2020. International tourism receipts fell to HUF 1.738 tln in 2021 (down 41.6% compared to 2019). Domestic travel began to rebound in 2021, and foreign tourism from 2022, accelerating through 2023.

According to the statista.com website (a stato-nerd’s dream, if ever there was one), tourism revenue is projected to reach USD 1.603 billion this year, with an estimated annual growth rate of 3.21% between 2024 and 2028. This is expected to result in a projected market volume of USD 1.819 bln by 2028.

No less a source than Hungary’s Central Statistical Office says the tourism sector generated 6% of the country’s GDP in 2022. Including multipliers, which factor in spillover effects, the tourism sector’s contribution to GDP reached 8.8%. The value added of the tourism sector came to 6.2% of the total for the national economy and reached 9.1% when including multipliers in 2022. The commercial accommodation sector alone accounted for 1.9% of value-added, up from 1.6% in 2021. In absolute terms, the output of the tourism sector reached HUF 8.478 trillion, climbing 37% from 2021. Employment in the tourism sector rose 3.8% to 398,000 in 2022, accounting for around 10% of all workers.

Black swan events aside, those numbers are only likely to climb. Budapest Airport thinks it will return to and surpass its pre-COVID passenger numbers this year. Several people involved in the tourism industry we spoke to in preparation for the Special Report inside this issue pointed to the state’s acquisition of Ferenc Liszt International as being a potentially significant milestone, both in terms of raising profile and boosting infrastructure. The hope is the state might finally push through the long-awaited direct rail connection between the city and the airport.

As I say, tourism matters. It also feeds into a Hungarian tradition of hospitality that dates back to La Belle Époque, when Hungary became part of the Grand Tour and survives today despite the best attempts of the communist era to kill it at source. With a flood of luxury hotels opening in the capital (many of them restoring palaces dating from that same Belle Époque) and even spreading into the countryside, Budapest may even begin to shake off its reputation as a stag and hen party destination for hoards of drunken Brits. Well, you can but hope.

Robin Marshall

Editor-in-chief

This editorial was first published in the Budapest Business Journal print issue of June 28, 2024.

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