Looking for new ideas to add zest to your hotel spa? A visit to Hungary is guaranteed to do the trick. With medicinal waters bubbling under 80% of the country, Hungarians, and their various invaders, have been enjoying the benefits of thermal baths for hundreds of years.

The Hungarian government, tourism industry, and private developers are harnessing this natural resource to secure the country's long-term viability as a tourist destination.

Uniquely for a metropolitan capital city with a population of more than two million, Budapest is built on 80 natural springs, which serve numerous thermal pools and outdoor baths.

The most spectacular is the spa under the Gellert hotel, built in 1918. The 13 pools of steaming or icy mineral water have high, ornate tiled ceilings, marble balconies and classical columns. Many compare the experience to taking a bath in a church or museum.

Since a £500,000 renovation this April, spa sales at the Kempinski Hotel Corvinus have tripled. The Asian-inspired massages include a three-hour prenuptial treatment that claims to increase fertility.

Sensibly, general manager Henri Blin says the hotel's spa is not supposed to compete with the city's numerous thermal baths: "We decided to concentrate on cardio-vascular massages. We also believe there will be a significant number of businesspeople who want to relax and enjoy treatments, but won't have time to go to one of the wonderful baths in the city."

Sixteen years on, there's virtually nothing to remind visitors of Soviet rule. Budapest is divided by the river Danube into two distinct areas: Buda, on the west bank offers, a wealth of historical sites, including the Royal Palace, Matthias church, and the art nouveau Gellert hotel. Grittier and more lively, Pest, on the east bank, has the nightlife, clubs and bars.

An increasing number of tourists are ticking Budapest off their must-do lists. In 2004 nearly 2.5 million tourists visited the Hungarian capital - a rise of 17% on the previous year - and the largest rise has been from the UK.

Nearly 176,000 Brits came to Budapest from January to August 2005, almost 50% more than in the same period last year. After Germany, this makes Britain Hungary's second-largest tourism market.

UK tourist numbers are growing because of new cheap flights from the London area, Bristol, Newcastle and Manchester. It is estimated that visitors spend about £350 each per trip.

The boom in discount airlines followed Hungary's entry into the EU in May 2004. A brand-new air terminal opened in September this year, expected to handle an extra 2.5 million passengers a year, all of them travelling with discount airlines - Germanwings, SkyEurope, Wizzair, Sterling, EasyJet, Norwegian Air and Malmo Aviation. The new terminal is a spotless renovation of the city's first-ever airport and a protected building.

About 20% of all UK visitors to Hungary are business travellers. The country is a hot-spot for global IT firms - Siemens, IBM, Philips and Nokia are all major employers, with Microsoft due to open a software development centre shortly. Also, Audi, Suzuki and Volkswagen have big manufacturing plants in Hungary.

International corporations are attracted by Hungary's high-quality education system. Most people under 30 speak good English and labour costs are lower than elsewhere in Europe, though steadily rising. In the hotel business, Blin says, it's easy to find chefs, waiters, and receptionists, and staff turnover at the Kempinski stands at 29%.

Entry into the EU was a catalyst for a recent burst of hotel growth and international investment. Thirty new hotels, mostly at four- and five-star standard, were completed in Budapest between 1990 and 2004, representing a total investment of about £327m. The hotel boom was triggered as experienced investors, many with interests in shopping malls, saw tourism as more profitable, according to consultants Colliers International. In the past five years, Four Seasons, Park Plaza, Accor, Le Meridien, Ramada and Hilton have all established a presence.

The Four Seasons opened last year, the breathtaking result of painstaking renovation of a 19th-century palace. Real-estate developers Gresco Investments and Quinlan Partners bought Gresham Palace and appointed Four Seasons to manage and oversee its reconstruction -which took six years and cost 69m. Atypically, Four Seasons also owns a small share (5%) in the property.

Builders found guns stashed behind window paneling and a bomb on the roof. The rear faade had decayed and the roof's peak had been blown off in the Second World War. Restoration included stained glass windows, the ground floor's 43-foot-high cupola and the entrance's swirling marble mosaic floor. The palace's attic has been converted into a state-of-the-art spa and a cork-floored gym.
PR manager Marta Palfalvi will not disclose occupancy but comments: "It's hard. As the only five-star-plus hotel, we're on our own. We can't take a share from the existing pie. We have to create a new market. We've been very highly covered by the international media."

This has helped attract North Americans, who make up 40% of guests. Next year, a series of special events will celebrate the palace's centenary.

Budapest Hotel Performance

• In 2004 Budapest hotels recorded an average annual occupancy of 68.7%, in comparison with 57.9%
  in 2003.
• There was a marginal increase in average achieved room rate, from £55.80 per night in 2003 to £57.20
  in 2004.
• Revpar increased from £32.30 to £39, an increase of 19.7%. 
• This was a similar revpar increase to that achieved in Prague in 2004. 
• The statistics are based on a pool of more than 5,500 bedrooms.

Future Supply

• Opera Park Plaza (renovation of the former Ballet School) to provide 180 five-star rooms opposite the Opera house, to be completed in 2007.
• Rezidor SAS will open the Regent, a 198-bedroom hotel in 2007.
• Boscolo Group will open a New York Palace 160- to 180-bedroom five-star hotels, to be completed at the end of 2005.
• Rac Furdo (independent hotel) will open 60 four-star rooms in 2006.
• TriGranit Millennium will open 200 rooms in 2007, although we believe this is dependent on the completion of the new congress hall, which we understand is having funding difficulties.

Outlook
There should be a period of stable revpar growth based on the ongoing prominence of Budapest in a European and regional context. This growth will not be at the same levels as in 2004, primarily because future city-centre supply will offset most increases in demand. Planned supply increases in the five-star segment may cause some pressure in occupancy/room rates and may lead to some difficulties in the three- to four-star sector, as the pricing difference between four- and five-star sectors will reduce.

Source: Stewart Coggans, director of CB Richard Ellis Hotels, Central & Eastern Europe, Tel: 00 420 224 814 060, E-mail: stewart.coggans@cbrehotels.com

European City Bednights 2003

• London 115,000,000
• Paris 31,000,000
• Dublin 17,000,000
• Rome 14,500,000
• Madrid 10,000,000
• Prague 8,500,000
• Vienna 8,000,000
• Barcelona 7,000,000
• Amsterdam 6,900,000
• Budapest 4,300,000

Source: European Cities Tourism

Benchmarking Budapest Hotels

Operating figures	2004	2003	Year-on-year growth
Number of hotels in sample	5	5	--
Average number of rooms per hotel	293	292	--
Occupancy	71.7%	63.2%	13.5%
AARR	£75.59	£72.79	3.8%
Average daily rooms yield	£54.16	£45.97	17.8%
Double occupancy	40.0%	37.2%	--
Payroll as % of revenue	--	--	--
Rooms	9.5%	9.6%	--
Food & beverage	32.7%	32.4%	--
Administration and general expenses	7.2%	7.1%	--
Marketing	4.0%	3.8%	--
Total payroll	23.0%	22.5%	--
--	--	--	--
Revenues	Revpar 2004	--	Change 2003-2004
Rooms	£19,823	--	+17.8%
Food	£7,086	--	+12.3%
Beverage	£2,005	--	+12.2%
Other operated departments	£1,061	--	+2.3%
Telephone	£618	--	-4.6%
Rentals & other income	£965	--	-6.8%
Total revenue	£31,288	--	+14.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: PKF Hotel Consultancy Services Hotels in the sample: Hilton, InterContinental, Kempinski, Marriott, Marriott Millennium Court

Further Information

• www.kempinski-budapest.com
• www.kempinski.com
• www.fourseasons.com/budapest
• www.danubiushotels.com
• www.budapestinfo.hu