Slight Deterioration in Business Sentiment in Tourism

In April, the TKI tourism business climate index stood at plus two points on a scale between minus 100 and plus 100, indicating that the sector's operators perceive their situation as slightly improving but close to stagnation, the National Association of Tourism and Hospitality Employers (VIMOSZ) said in its latest survey.

After three months of increases, the index fell by two points in April, below its value a year ago.

According to the latest survey, the index rose in accommodation and catering (both sub-sectors for the fourth month in a row), while in other tourism sectors it fell significantly after a two-month surge.

In April this year, the TKI index of enterprises in Central Hungary and Western Transdanubia stood out among the regions, followed by Northern Hungary, Southern Hungary and Central Transdanubia, with close to average scores. Meanwhile, Northern Hungary was the worst performer in the sector.

The evolution of the number of persons employed in the last three months compared to the same period of the previous year stands at minus one point, showing that the demand for labor in the tourism sector has almost stagnated. However, the index has increased by three points compared to the previous month. For the next three months, however, the index is now at plus nine points, indicating that firms are starting to expand their labor pool.

84% of tourism firms have raised prices in the past three months, while 90% reported an increase in operating costs. Price increases averaged 18%, while operating costs increased by 44%. Thus, firms have still not been able to reflect cost increases in their prices. This continues to underline the case for supporting the tourism sector, they said.

In April, nearly half of tourism firms indicated that they expected to increase the price of their services in the next three months, 51% would not change their prices, while just under 2% indicated a reduction. In accommodation services, 53% plan to increase prices with the start of the new season, while 52% in hospitality and 34% in other tourism sectors plan to increase prices.

According to the survey, 67% of accommodation providers expect an increase in the number of overnight stays in the next three months compared to the same period last year, 28% expect stagnation and 4% expect a decrease. Among hospitality operators, 33% expect an increase in guest nights, while 47% expect stagnation and 20% expect a decline.

VIMOSZ, together with the Hungarian Tourism Association Foundation and GKI Economic Research Plc., measures the expected development of the tourism sector on a monthly basis and publishes the Tourism Business Climate Index, providing the market and the public with information on the trends expected in the near future.