Editorial: Tourist Market Falling Victim to Russo-Ukraine War
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The first day back in the office after the long Easter weekend brought some sobering news about what appears to be the first effects of the Russo-Ukrainian war on tourism here. The findings were based on a report by Hungary’s leading business daily Világgazdaság [Global Economy], and featured in our Hungary A.M. newsletter on April 19.
In case you missed it or don’t subscribe to Hungary A.M. (and if not, let me give it a hearty recommendation as a great way to keep up with the water cooler conversations of your staff), you’ll find an outline on page four, but let me give you a little more detail here. The subject, it seems, might be more complex than at first sight.
The first thing that becomes clear is that the North American market seems increasingly concerned by a war which, while undoubtedly in our neighborhood, is really quite far distant. Air Canada announced it would resume its nine-hour Montreal-Budapest flight from May to February. The connection was one of 34 returning in its summer 2022 schedule, with the Canadian flag carrier saying the resumption of services dropped during the COVID-19 pandemic was a sign the “recovery is well underway.” Sadly, it didn’t last long, and Világgazdaság says Air Canada quietly canceled the route again in the days following the start of the war.
Many Canadians and Americans are reportedly either postponing trips or preferring to travel to the United Kingdom and France instead, both of which have seen an uptick in North American bookings and are presumably deemed to be at a safe distance from the front lines. While that news is disappointing, it probably isn’t that surprising. North America is a long way from Hungary and lacks a detailed perspective, but the war is in a neighboring country, and we are one of several countries playing host to a growing number of refugees. Stranger than that, though, is the reaction of German tourists, with Világgazdaság writing that several experts from Budapest and its surroundings have reported that bookings in Hungarian hotels and restaurants from several prominent German groups have been canceled, with the armed conflict cited as the reason.
If the Germans are staying away now, that does not bode well for the high season, when it was already certain the packs of wealthy tourists from Russia and Ukraine were unlikely to show up. For years, German, Russian and Ukrainian accents have filled the air at destinations like Lake Balaton or Hévíz. That they will be harder to spot in 2022 will not be welcome news for a sector that thought it was finally getting back on its feet as COVID restrictions waned and the world seemed more willing to live with the pandemic and travel once more.
That might also have implications for the hotel investor market, at least in the short term. Since the pandemic first reared its ugly head and brought the world to a near tourist halt, the hospitality sector had at least been able to console itself with the knowledge that the underlying fundamentals remained sound. Budapest is an “A-list” destination with its architecture, history, vibrant nightlife and booming culinary scene. That remains true, but a third year of restricted trade, whatever the cause, might prove the end for some businesses. There are all sorts of humanitarian reasons to hope the war will come to a swift conclusion and that peace will be restored. Increasingly, there are also economic imperatives at play.
This editorial was first published in the Budapest Business Journal print issue of April 22, 2022.
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