Prospects for Tourism Firms Worsened in December

The Tourism Business Climate Index (TCI) stood at minus 22 points in December last year, indicating that the sector's operators in Hungary continue to perceive their situation as deteriorating.

Compared to November, the index fell by seven points and has deteriorated by 15 points since September, the National Association of Tourism and Hospitality Employers (VIMOSZ) and GKI Economic Research Co. said in their latest survey.

The index measures the expected development of the economic situation in the sector on a scale of minus 100 to plus 100 points on a monthly basis since April last year.

The evolution of the number of persons employed in December stands at minus nine points over the past three months, indicating a slow but steady decline in the demand for labor in the tourism sector. Expectations for the next three months are minus eight points, indicating that firms are continuing to reduce their workforce at a slightly slower pace.

Over the next three months, 11% of accommodation providers expect an annualized increase in the number of overnight stays, while 44% expect stagnation, and 45% expect a decline, compared to 13% last month.

Of those in the hospitality industry, 10% expect an increase in guest numbers, up from 4% last month, while 61% expect stagnation and 29% expect a decline. The latter figure was 19% the previous month.

84% of tourism companies reported an increase in prices and 88% reported an increase in operating costs over the past three months, with an average increase in prices of 17% and an increase in operating costs of 45%. In other words, firms are increasingly unable to pass on cost increases to consumers. This is backed up by the government's proposal to provide non-repayable subsidies to micro, small and medium-sized enterprises in the sector for half of the increase in energy consumption in the first quarter of 2023, according to the researchers.

They said that in December 2022, 55% of tourism companies indicated that they expected to increase the price of their services in the next 3 months, 34% would not change their prices, while 10% indicated a reduction. 47% of tourism companies have recently raised prices and will do so in the near future.