How Record-Braking Budapest Tourism Influences the Market?September 15th, 2017
Although the last quarter of this year is ahead of us, tourism in Hungary has been exceptionally high compared to last year. Meanwhile short term rentals has an increasing role on the real estate market.
Foreign visitors spent more than 13% more guest nights in June this year than in the same period last year. For domestic guests, there is also a significant increase: slightly more than 8%. The reason for this is simple: this year, two major mass events (Fina World Championship and Formula One Grand Prix) were hosted by Hungary, most of which Budapest benefited.
There was no need to worry about whether it had the capacity of the domestic hotel industry to accommodate increased demand, but still, the average room occupancy rate of 95% was unprecedented. Over the last few years, it has become clear that the capital is gaining popularity among foreign tourists; therefore more projects have been launched to expand hotel capacities. It is planned to expand the market with 4000 new premises this year and next year.
The Emerging Role of Short Term Rentals
However, not only the number of accommodations is challenging: it is a growing task for short-term housing expenditures to take on the competition with airbnb services. In some cases youthful, modern, captivating styles inspire traditional hotels for development, but not every accommodation has the potential to change. If they fail to compete, they cannot manage the upgrades, unable to pay higher wages, and eventually they get farther from the top spots. In such situation many people turn up against airbnb.
The situation does not differ abroad either. In Spain, for example, traditional accommodation is in a difficult situation: thousands of tourists come to admire the exceptional places, but many prefer airbnb services during their stop instead. The problem is similar in Venice, Ibiza and France, and even across Europe. In Paris, the appearance is so fragmented that some parts of the city are almost empty, and the owners only keep their homes for housing purposes.
Will Stronger Regulations Against Airbnb Finally Arrive?
The indignation spread to the area of taxation too. The gunshot atmosphere was blown when the French claimed that airbnb paid too little tax on its operations: less than 100,000 euros. France, together with Germany, will make a joint proposal for the summit of EU finance ministers on 16 September in Tallin. The European Commission also supports the initiative and will examine the proposal, but it is important to see that the area of taxation falls within the competence of the Member States.
In Budapest there are roughly 8000 short-term dwellings that are difficult to map. The number of downtown apartments has decreased to almost a minimum, and it affected not only rents but also real estate prices: the prices are skyrocketing. According to the domestic hotel association and according to some rumors, even the government is considering introducing harder regulations for airbnb homes: equal taxation, limitation of the number of rented days, responsibility of rental advertising portals, and even regulation of health and safety can be on the agenda.
Thus, both sides of the medal are displayed: while in some cases the presence of a record number of tourists in Budapest and abroad has a positive effect, it also creates worrying phenomena. The solution is still unknown, but it is worth following the up-and-coming airbnb market, its old and new regulations, as well as their combined impact on the letting and sale of real estate.