Hilton Garden Inn, W and InterCity Hotel are among the brands to announce plans to debut in Budapest.
The market has seen a steady increase in domestic and overseas travellers, drawn to a market which is hailed for its unique, boutique hotels and spas.
At Hilton, the company has signed a franchise agreement with Accent Hotel Management to open Hilton Garden Inn Budapest City Centre, with the property becoming Hilton’s third hotel in the city and due to open in 2018.
Deutsche Hospitality has chosen Budapest to open its first hotel in eastern Europe, under its InterCity Hotel brand. The property is owned by B&L Group which is also currently working with IntercityHotel GmbH to develop three new hotels in Hamburg-Barmbek, Dortmund and Hildesheim. This is the first occasion on which B&L has joined forces with IntercityHotel overseas.
Joachim Marusczyk, managing director, IntercityHotel, said: “Budapest is a city with a great past and lots of potential. We are delighted that our brand will soon be able to offer a centrally positioned and modern hotel in such an attractive metropolis.”
Marriott International has announced an agreement with QPR Properties, part of Constellation Hotels Holding, to debut the W Hotels brand in Hungary with the opening of the 162-room W Budapest in 2020.
Anthony Ingham, global brand leader, W Hotels Worldwide, said: “Budapest has secured a spot as epicentre of European travel with the convergence of creative communities combined with a thriving economy, making this city the perfect fit for the innovative edge of W Hotels.
“This vibrant city remixes historic tradition with a modern twist – the perfect backdrop to offer guests and locals alike a dynamic scene that shakes up the traditional and embraces the avant-garde.”
Andras Dallos, director, Colliers International, Hungary, Valuation and Advisory Services, told us: “The Budapest market is flourishing – the past five years have passed with amazing and consistent growth, they had a tough time until 2012 then there was a turnaround.
“The market has been very much under-appreciated and there had been no conscious effort at a state level to promote it, then a number of media outlets started talking about Budapest as a destination and there was a snowball effect. It’s good value for money, it’s architecturally beautiful, it’s replacing Prague as a go-to destination. The state is promoting Budapest as a spa destination, with a lot of investment being made in those amenities. It also helps that it is dirt cheap if you compare it to Vienna and Prague.
“Budapest was not on the list of investors before 2014, it was mostly adventurous investors looking for high yields. Last year was stunning in terms of volumes in terms of general real estate, but this has not trickled down into hotels. Prior to 2014 investors lost a lot of money in the crash.
“We are seeing a lot of developers looking to build hotels rather than buy existing ones. The current stock and the current owners are not compelled to sell. We’re in the middle of the upswing at the moment and they want to overprice, so people are buying up old, dilapidated, but beautiful buildings as well as converting offices.
“The banks have been open to financing projects in the past year and a half, prior to that they were thinking that this was one puddle they didn’t want to step into twice. The state banks are now keen to finance hotels as they see it as a way of financing the development of Hungary and they are offering pretty generous terms.
“The commercial banks are pretty comfortable with a branded international operator, but some of the best hotels, some of those who do well on TripAdvisor, are in the boutique segment, being run by the Hungarians, who are doing a very fine job of it and making unique products which the guests appreciate, more than what the brands are offering.”
HA Perspective [by Katherine Doggrell]: As the brands pile into a city building a reputation as a boutique, spa destination, it’s hard to see what could possibly go wrong. Dallos told us: “We are in the middle of the upswing and we are likely to see growth tone down in around three years and it will flatten out.”
Dallos said that, with 4% to 6% annual growth expected over the coming years, ADR was likely to be hit, meaning that, for guests, an already competitive market was likely to stay so. The government is still enthusiastically promoting the country, and Budapest, as a business as well as a leisure destination.
As Dallos said, the city’s hotels are riding high, with TripAdvisor naming the Library Hotel Collection’s music-themed Aria as the best hotel in the world last month. The boutique, independent hotel typifies what’s on offer in the city, laying down the gauntlet to the brands, which may find that they are surplus to requirements.