Expert: Budapest hotels can only survive by raising prices
According to Tamás Flesch, President of the Association of Hungarian Hotels and Restaurants, hotels in the Hungarian capital can only survive by raising prices. He encourages all hotels to trust themselves and raise their prices in order to pull through this difficult time.
You have to believe in Budapest and in the product – Tamás Flesch encourages hotels in the capital to increase their prices. The average room rates in euros have not yet reached the 2019 level, he says there is still at least 10-15 percent reserve in the city, writes turizmus.com.
“In the current cost structure, the only way to survive is to raise prices and thus ensure stability”, the expert says. At the same time, he is warning hotels against taking advantage of the weak forint exchange rate to lower their euro prices in order to focus on short-term goals. A price cut could be fatal,” Tamás Flesch told the newspaper.
Budapest is worth just as much as other European cities
The expert at the head of the Continental Group, who manages several hotels, pointed out that the current situation is in many ways different from the 2008 crisis. Whereas in 2008, both supplier prices and wages could be kept down, hotels currently have no control over unrealistically high costs. “Our only chance is to believe that Budapest can do the same as other big cities,” he stressed.
There is no reason to be alarmed that our prices have come close to those of Vienna, as this is due to a change in the guest mix, he said. Like the Hungarian capital, the Austrian capital is still lacking a large part of MICE (meetings, incentives, conferences, and exhibitions) capacity, and since the pandemic, demand from the US and Asia has not returned to its original volume.
“We have the same clientele in the two capitals, which is why we are close in terms of prices,” he explained. Flesch added that Budapest is worth just as much as Vienna in the eyes of foreign tourists, so you should ask for the same price in the winter season.
The weak forint is bad for hotels in the long run
The exchange rate issue should be left out of the price formation process, as a price decline based on a weak forint only provides momentary efficiency, but does not ensure long-term stability and will stall average price growth for years. Tamás Flesch therefore cautions market players against a price-cutting spiral, all the more so as the capital’s hotel market has so far failed to reach the average price in euros for 2019.
Source: turizmus.com