Sizeable Investments in Tourism
Sizeable Investments in Tourism
Since the beginning of 1999, a fundamental, long-awaited change took place in the domain of investments in Hungarian tourism. For many decades now, the entire sector suffered from the lack of resources and the corresponding bleak investment options. If there were new developments at all, they did not match the otherwise dynamically expanding needs of the business. At the end of the 1970s and at the beginning of the 1980s, there were some hotel investments mainly in Budapest and to a lesser degree in some country towns financed by Austrian loans, but apart from these exceptions, no notable, internationally significant development was made in Hungarian tourism.
The investment work group summoned by the Deputy State Secretariat of the Ministry of Economics in 1999 reported that more than twenty, individually worth some $10 million tourism-related – mainly hotel-building – investments were under way in the country since the beginning/first half of 1999 with a total value of cca. $600 million. According to the investors’ planning, all of these were to be completed, up and running before the beginning of 2000. This development effort would bring more than 3,500 new world class level hotel rooms to the domestic market in the next two years. The development concepts define a roughly 1,000 room/more than 50% capacity increase (2,500 room/almost 40% increase) in the 5-star (4-star) category. Besides the priority attached to capacity increase, one cannot overlook the employment-creating effects of these developments, because according to the calculations, they will be able to provide jobs for more than 4,000 job seekers over the next 18-24 months. In addition to investments in hotel-building, a dynamic development and rehabilitation process also started, to create conference centers, launch internationally competitive thermal bath, fitness and wellness projects, and stimulate investments and development in castle tourism, waterway tourism and at world heritage locations. The investors are, especially for major value hotel-building investments, mainly foreign companies, but it is satisfying to point out that the activity of the strengthening Hungarian capital, working in close co-operation with the foreign partners in many of the projects, is also remarkable. The $600 million in total investments (that is expected to increase in the coming years on the basis of the currently known development concepts) is just the double of last major foreign investment injection, namely that of the Austrian hotel-building loan two decades earlier. At present the Hungarian hotel investment market is characterized by such prominent brand names of hotel chains – the list is of course not exhaustive – as Four Seasons, Hilton, Accor, Holiday Inn, Mercure, Méridien, Novotel and others. It is promising that among the investors one can find North American, Far Eastern, German, French, Italian, Israeli and other big companies, that is, the domestic investment market is well-balanced in this relational respect. It is well-known, that the international hotel investment-development companies are in the first place closely connected, and they also keep an eye on each other’s activities and development concepts, so it is likely that the ‘big’ names mentioned above will encourage the others to increase their efforts in Hungary.
