Hungarian Hotels, Spas in Trouble, They Have To Decide

In recent weeks, several swimming pools and spas have announced that they will suspend certain services and close their pools due to increased energy costs. The decision is a difficult one, as operators have to weigh up whether the loss of revenue from a fall in guest numbers is greater than the increase in overheads. This is a concern for a lot of Hungarian hoteliers, with the difference that competition is much greater, services are more extensive and it is far from just overheads that are strangling them.

AS the business news site napi.hu reports, the three main cost items for domestic hotels – wages, overheads and food inputs – have increased dramatically in recent months. Energy costs, for example, have risen by a factor of 3 to 4 compared to the previous period. This means that before the war in Ukraine, energy costs accounted for 4-5% of total revenues for city hotels and 12-13% for spa and wellness hotels. Since then, these have risen to 13-14% for city hotels and 18-19% for spa and wellness hotels.

There is a risk that hoteliers could face higher figures in the future, István Kovács, presidential adviser of the Hungarian Hotel and Restaurant Association, told the news site.

On the revenue side, hotels have to focus on three indicators: (1) the average price of their rooms; (2) the occupancy rate and (3) Revenue Per Available Room (RevPAR).

A hotel can break even if it achieves higher occupancy rates than in the past, or if it raises its prices significantly. However, it is questionable how well hotels can do this, as double-digit inflation in the UK and many EU countries is expected to have a negative impact on demand as people's disposable income decreases. Not to mention the fact that in the autumn-winter period, there will be less interest in holiday, spa and wellness hotels, especially outside Budapest.