CB Richard Ellis: Hotel market report (CEE)

Occupancy of Budapest hotels fell to 55,7% in summer 2009 and VAT concession in tourism was the only good news in the Hungarian market. – claims the latest hotel market report of CB Richard Ellis (CBRE).

Budapest performance
Hotel occupancy and Average Daily Rate (ADR) in Budapest have followed the traditional seasonality pattern with an occupancy peak in May and an ADR peak in June. Nevertheless, both are clearly below previous years' performance. Occupancy and ADR figures for July 2009 are lower than July 2008, with occupancy at 55.7% (-17.5% y-o-y) and ADR at €75.76 (-1.8% y-o-y).

The relatively small decrease in ADR during the month of July can partially be attributed to the peak leisure season and the recent strengthening of the forint. In forint, ADR increased in July by 15.47% to (20,712 HUF) compared with July 2008. One positive note for the hotels in the past seven months was the VAT concession.

Budapest vs. Prague and Vienna
Budapest's occupancy trend continues to trail behind Prague and Vienna for the first seven months in 2009. Budapest was unable to increase occupancy from June–July, while Prague and Vienna did. In July 2009, Prague's ADR slumped below €68 compared with €75.76 in Budapest. The city's ADR was last above Prague's in August 2008.

CEE city comparison YTD May 2009
Among the cities covered by this MarketView, Vienna shows the smallest y-o-y decrease in YTD Occupancy followed by Warsaw and Prague. Bratislava has experienced the most severe decrease in occupancy so far this year. Occupancy is down 27.5% on last year.

Occupancy decreases across the region continue to be driven by the drop in arrival numbers and subdued business travel. Q3 hotel performance will provide some indication whether the bottom of the downturn has been reached or not, as a traditional period of increasing meeting and conference business.

Development pipeline Budapest
Projects in the early planning stage which are encountering difficulties in obtaining financing continue to be delayed, with some being shelved and others offered to the market.

Budapest's hotel stock has increased over the past month with the opening of the 54-bedroom Actor Business Hotel (4th district) and the 160-bedroom Expo Congress Hotel (10th district). The President Hotel (110 bedrooms) is expected to open in October 2009, in the 5th district. The proposed opening of the First Site Hotel and the Courtyard by Marriott are now not expected before 2010. While the long-awaited opening of the Baglioni Hotel and Rácz Thermal Spa has been delayed until the first half of 2010.

Source: CB Richard Ellis

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