Developers, investors and hotel operators therefore see strong potential for hotel development against a background of positive tourism supply and demand indicators: CBRE have estimated a pipeline of 23 hotels with 3,200 rooms in Budapest due to be delivered by 2022.
However, due to the complex development process and labor issues, delivery dates are very difficult to estimate and completions are slipping back.
Commercial property developers such as Wing and Horizon Development and Redwood Real Estate Holding have ongoing hotel projects, while DVM is working on the construction of a project for a regional hotel developer. Further, major hotel brands such as Hilton, Hyatt, Marriott and Accor Hotels have planned hotel projects.
“Although we experience significant shifts in completion dates throughout the capital and regional cities, development activity remains strong across the country, with an expected delivery of circa 2,000 rooms in 16 individual hotel schemes until the end of 2019,” says Gábor Borbély, director of business development at CBRE Hungary.
“Budapest accounts for 75% of the overall pipeline volume scheduled for the year, remaining the most targeted region within Hungary,” he adds.
When it comes to performance indicators, the occupancy rate rose to 78% according to CBRE. Further, Budapest had an ADR (average daily rate, price per hotel room) of EUR 135 for 2018; this puts the city in a strong position compared to its Central European competitors, with EUR 110 for Prague and EUR 111 for Warsaw.
“Budapest remains an extremely affordable city. We see this as positive for both leisure and business demand in the city,” the consultancy explains.
Hungary’s Central Statistical Office has traced an estimated Budapest stock of 202 hotels with close to 20,000 rooms as of 2018. Of this, the four-star level constitutes the largest segment. As of the turn of the year, another 23 hotels were at the planning stage or under construction.
Horizon Development is redeveloping a listed 1870s building in the historical center of Budapest into a 150-room luxury hotel in partnership with KKH Capital & Property Europe SL. Attila Kovács, managing partner of Horizon Development, says the project sees his company transferring the skills learned from the development of such projects as Eiffel Palace to the hotel sector.
Hungary’s Accent Hotel Management has delivered the 4-5 star, 214-room Hilton Garden Inn Budapest Center in District VI. Accent Hotel Management has agreed a franchise agreement with Hilton Hotels, and the complex is located 100 meters from the Hungarian State Opera.
The Hungary-based, Jordanian-owned hospitality developer, Mellow Mood is due to officially open the long-awaited, 110-guest room and 18 suite Párisi Udvar Hotel in the historic center of Budapest. A franchise agreement has been concluded with Hyatt Unbound Collection.
Another top-end hotel historical reconstruction by the Turkish Özyer Group, Matild Palace is scheduled to deliver the first Marriott The Luxury Collection branded hotel in Budapest. The 130-room and suite project, located in the historical District VI, is a redevelopment of a classic Central European building dating from the 19th century.
In the mid-range segment of the hotel market, Germany’s Deutsche Hospitality is developing in conjunction with the B&L Group the 300-room and six conference room, 3-star InterCity Hotel Budapest, its first CEE InterCity Hotel, at the Keleti Railway Station.
The company has the policy of developing the brand at what it sees as key train stations and airport locations, and the Budapest project is scheduled to complete in 2020. A contract with DVM Group has been agreed for the design and construction management of the development.
Also at the medium level of the Budapest market, a group of Hungarian developers has delivered the 3-4-four star, 6,500 sqm Meininger Hotel Budapest in Csarnok tér, directly opposite to the Nagycsarnok (Great Market Hall) food market. The hotel is being operated by Meininger based on a 20-year lease. The 184 rooms and 750 beds project has introduced the hotel/hostel concept to Budapest.
Wing has agreed a forward development contract to develop a hotel in Boráros tér in District IX for the French hotel chain, B&B Hotels. This is a reconversion of a former office building with a view overlooking the Danube. Wing delivered the 145-room Ibis Styles Budapest Airport Hotel in 2017, which is the only hotel with direct access at Budapest Ferenc Liszt International Airport, and the company has also developed a hotel project in Székesfehérvár.
The Hungarian developer, Redwood Real Estate Holding has agreed a management contract with Hard Rock International for the operation of the 140-key (including suites) Hard Rock Hotel Budapest in Nagymező utca in District VI, due to be completed in the fourth quarter of the year.
The 4-5 star “life-style” hotel located in a party hub in Budapest reflects the growing sophistication of the hotel market and the need for different models of hotel development. The hotel and leisure complex, designed by the Hungarian Studio 100 Architects, will include a Hard Rock Café restaurant with a seating capacity of up to 120.
“Hotel operation is a completely different skill to office operation and therefore we are developing the project and upon completion by the end of the year the hotel will be operated by Hard Rock International,” comments Bálint Erdei, founder & CEO of Redwood Holding.
Hungary registered more than 40 million guest nights for 2018, representing an increase of around 6% on the previous year. Overall there was a growth rate of about 3% in tourist visits across the CEE region last year.