Tourism already booming in Greece and Croatia, while Hungary still reeling from Covid

At the end of January, the Hungarian Tourism Agency (MTÜ), reported that tourism had an almost record-breaking year in 2022. According to the agency's statement at the time, 14.2 million guests spent nearly 40 million nights in Hungarian accommodations last year, a 40 percent increase from 2021 and close to the record level of 2019. In other words, according to the Tourism Agency, tourism in Hungary is on track to recover from the crisis caused by the coronavirus epidemic.

However, if we look at the number of nights booked by foreign tourists on popular accommodation platforms (Airbnb, Booking.com, Tripadvisor, Expedia Group), the picture is more nuanced. Especially compared to other European countries, where the number of guest nights in 2022 not only reached pre-Covid levels, but surpassed them, and in many places domestic tourism is also on the rise.

Domestic tourism is driving the growth of European tourism

By 2022, European tourism overall largely recovered from the downturn seen during the epidemic. Last year, tourists spent 2.72 billion nights in various accommodations, compared to 2.88 billion in 2019. During the epidemic, the figure was 1.42 billion in 2020 and 1.83 billion in 2021, so the recovery is impressive. In terms of the number of nights spent, the EU average was six per cent below the 2019 level, while the figure for Hungary was 22 per cent, meaning that the decline in tourism in Hungary was well above the EU average.

A similar trend can be seen in traffic figures from accommodation websites: foreign tourists booked almost as many nights (346.2 million) as at the peak of the pre-Covid period in 2019 (352 million), while at the start of the epidemic in 2020, this figure had dropped to 117.2 million. Meanwhile, domestic tourism has seen substantial growth in European countries: in 2019, domestic tourism generated 172.5 million overnight stays, but last year this figure rose to 222.6 million.

This means that, overall, foreign and domestic tourists have already booked more overnight stays on platforms like Airbnb than they did in 2019.

The Czech tourism industry is having a hard time

Here's what this looked like in Hungary: the year before Covid, a total of 8 million nights were booked on accommodation websites by foreigners. By 2020, at the start of the pandemic, this figure fell to 2.1 million. In 2021, the situation improved slightly (2.3 million nights), but even last year, the number of overnight stays reserved on these platforms did not match the 2019 level, with 5.7 million nights recorded. Meanwhile, domestic tourism stagnated, with the number of nights booked by domestic tourists hovering around 1-1.1 million throughout the period in question.

Bálint Rippert, PWC Hungary's expert on the tourism industry said that the decline may be due to the fact that there are still not as many tourists coming from the major foreign markets (the US, China, Russia) as before the pandemic, and this is not only reflected in the number of trips for leisure, but also in the reduced number of business trips. "Russian tourists have essentially disappeared from the market. Those who can afford to travel to Europe – meaning they have money and visas – do not come to Budapest.

While before the war in Ukraine, Wizzair and Aeroflot offered tickets for well under 100,000 forints (currently 266 euros) between Budapest and Moscow or St Petersburg, today Russian tourists can reach European cities via Istanbul, Belgrade or Dubai, and these tickets start at 1,500 euros." The lack of American, Russian and Chinese tourists is also hurting tourism in Hungary because they are the ones who plan longer trips than average and are willing to spend more.

It is important to add that these figures do not include bookings and overnight stays through travel agents, which are also significant. On the other hand, in Hungary, szállás.hu is the market leader among accommodation websites, with a market share of almost 50% in 2017, while Booking.com has a market share of around 30%," Rippert added.

Covid did not set tourism back to such an extent everywhere. Last year in Greece, the number of foreign guests' overnight stays already exceeded the pre-pandemic level: it went from 20.9 million in 2019, rising to 24.8 million in 2022, with domestic tourism also picking up somewhat in the meantime. But Greek tourism bounced back from very far: foreign bookings had fallen to 6.6 million in 2020.

Tourism in Croatia, which is a popular destination among Hungarian tourists as well, also found its footing by 2022, with more than 2 million more nights booked by foreigners on accommodation websites compared to 2019, totalling 26.7 million. In Italy, foreign tourism is still recovering, with last year's 55.8 million nights slightly behind 2019, but including domestic tourism, there were more bookings on accommodation websites last year than three years earlier.

As the epidemic has subsided, domestic tourism has also taken off in France and Poland. In France, domestic bookings increased by nearly 30 million, from 57 million to 84.5 million nights between 2019 and 2022, while in Poland the increase was 3 million, from 10 million to 13 million nights. Foreign tourism has also picked up in both countries, returning to around pre-Covid levels, but the increase in domestic traffic has been more spectacular.

Although the decline seen in Hungary was quite significant, the one seen in the Czech Republic is even more so. Among European countries, the Czech Republic saw the sharpest drop in the number of nights booked on accommodation platforms between 2019 and 2022: a 36.5 percent fall from 7.8 million foreign bookings in 2019 to 4.2 million in 2022. Hungary follows the Czechs with a 26.7 percent drop, while Ireland occupies the bottom position of the imaginary podium with a 23.2 percent decrease.

According to Jennifer Iduh, Head of Research at the European Travel Commission (ETC), Central and Eastern European countries are particularly vulnerable to the effects of the war in Ukraine, for instance due to the lack of Russian tourists. What European countries can be hopeful about is that the number of tourists from Asia and the US is expected to increase in 2023, with more US tourists arriving in Europe even last year than before the epidemic.

Sweden, on the other hand, has been one of the winners of the post-Covid period, with the Scandinavian country recording the biggest increase in overnight stays compared to 2019, with 32.7 percent more tourists booking accommodation last year than three years prior. France came second with a 31.4 percent increase and Belgium is next with 23.4 percent. The reason for this is most likely that data collecting platforms are more popular in these countries than the European average, said Bálint Rippert.

Among Hungary's neighbouring countries, Romania and Croatia saw an increase in the number of overnight stays between 2019 and 2022. Romania is also interesting because before the epidemic, foreign and domestic tourists booked almost the same number of nights (2.2 million and 2 million respectively), but by 2022, domestic bookings exceeded foreign bookings by a few hundred thousand.

Budapest has suffered more from the Covid crisis

It is hard to find a place among European capitals where the number of tourists has increased compared to 2019. According to Eurostat's data, the only place where this has happened was Nicosia in Cyprus, with a 12.5 percent increase in the number of visitors to accommodation websites. In all other European capitals, the opposite trend was observed between 2019 and 2022: Prague and Amsterdam, for example, which traditionally attract many tourists, saw a drop of more than 50 per cent in the number of overnight stays, but Dublin topped the negative trend with a 59.4 percent drop.

The same is true for Budapest, where the decline was bigger than nationally, with 4.3 million nights booked by foreign tourists by summer 2022, which is still 6.6 million less than in 2019. Domestic tourism also fell slightly due to the epidemic (from 265,000 to 256,000 nights), but not as much as foreign tourism. What is more interesting is that domestic tourism has not recovered either, with only 228,000 bookings registered on the platforms surveyed at the end of 2022.

In Budapest, the number of overnight stays per 1,000 inhabitants has fallen by 36% since 2019. This was 830 last year, with the majority of guests being foreigners: domestic tourists spent 15 per cent fewer nights in the Hungarian capital than in 2019, while the number of overnight stays by foreigners was 37 per cent lower than in 2019. Among the Hungarian regions, only Pest county saw an increase in the number of nights spent per 1,000 inhabitants, up by 13 per cent compared to 2019. Admittedly, Pest county had only 30 guest nights per 1,000 inhabitants, while the capital itself had nearly 900.

Other European capitals that are popular tourist destinations have also suffered from Covid: Rome had two million fewer overnight stays (7.1 million) last year compared to 2019, while Lisbon, Paris and Madrid, for example, are 0.5-1.5 million down than in the years prior to Covid.

Balázs Schumicky, president of the Hungarian Association of Apartment Renters, which represents private and other accommodation providers, also finds that tourism in Budapest has not yet fully recovered after Covid, at least as far as Airbnb services are concerned. He believes there are several reasons for this. Firstly, air travel has not yet fully recovered from the epidemic in terms of the number and frequency of flights to Budapest, which may explain the lag in the number of overnight stays.

On the other hand, flights have become more expensive, which may also affect the number of tourists arriving in the capital. Since the outbreak of the war in Ukraine, everyone has been preparing for another economic crisis, which may have led to many trips being cancelled. "One must eat, but coming to Budapest to see the Fishermen's Bastion is not necessarily a priority in a crisis." However, it is also true that the number of guest nights in Budapest is increasing month by month, and tourism from Asia is just starting to pick up again, so there are encouraging signs, Schumicky added.

The slow recovery may be explained by the fact that the number of accommodation units has not yet reached pre-Covid levels, although Airbnb alone saw a 40 percent increase in supply last year. As of March this year, there are around 11-12 thousand accommodation units in Budapest, compared to 14-15 thousand in 2019. Some accommodation providers are only now returning to the market, as during Covid many preferred to rent out their apartments on a long-term basis, but there were also some who decided to leave Airbnb because of the tightening regulations and increased administrative burdens, the president of the Association of Hungarian Apartment Renters explained. It is unclear how the market will evolve in 2023, as the increasing supply and the slowing price increase is likely to lead to a steady decline in occupancy rates, as it is becoming less and less worthwhile to rent a property out via airbnb, and the Russian-Ukrainian war has also made many accommodation providers hesitant.

First figures show that 2023 could be a turning point for tourism in Hungary

According to Balázs Schumicky, the more than two million decrease in overnight stays in Budapest compared to 2019 is also significant, even though the private accommodation market recovered faster from Covid than the hotel market. The two markets – private accommodation and hotels – are on roughly the same trajectory in terms of foreign guests in Budapest, the expert explained. So when seeing that the number of nights booked in private accommodation is still below the pre-crisis level, one should keep in mind that that is a good description of the situation of tourism in Budapest as a whole. In any case, the current statistics of the Hungarian Central Statistical Office (KSH) paint an encouraging picture: the number of foreign guest nights rose by 17 percent so far this year, compared to February 2022, which amounts to 686,000 guest nights.

The expert from PWC Hungary is also optimistic. According to Bálint Rippert, the data and pre-bookings so far show that 2023 could be a new record year for Hungarian tourism. However, for this to happen, the two major sending markets, (the US and China) need to recover and expand, and inflation needs to decline, which would be important for domestic tourism. "Budapest continues to be a popular destination for foreigners and it is important to note that Hungary is hosting the World Athletics Championships this year, so we have everything in place for meeting and even exceeding the 2019 figures," Bálint Rippert concluded.