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BUSINESS JOURNAL BUDAPEST

VOL. 25. NUMBER 1

3

JANUARY 13 – JANUARY 26, 2017

.hu

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Budapest Business

13 – january Journal | january

26, 2017

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its 2017 next raised2017 estimating rate 2016 last December, 2017. average inflationit year’s annual GKI 2.3% rate up from the ry committee 2018, that at 2.4%, 2017 in September. Forof 3%, He said view at a parliamenta 2016 projected December. hearing early economic growth could the bank expects inflation m target. medium-ter the country’s much as 4% in 2017. ed which is its as like the London-bas speed up by the rate The MNB, said such expectations ly now expects While some and unrealistical analysts, alsotarget early in 2018, ZSÓFIA CZIFRA are ungrounded economic site to reach that various as it predicted online optimistic, analysts and instead of mid-year, said the governor’s different As usual, most earlier. portfolio.hu at all groundless. bodies project a few months Economy Ministry is not government the Hungarian output, forecast for The National , industrial rate will National trajectories Construction and foreign GKIprojects the inflation year 2017, with the seeing economy for (NGM) increase this accelerate to 1.6% next 2018. Also domestic consumption are all set to Economy Ministryfor the country.

2017 to 3.1% in investment low basis. last year’s 2016 at before rising from a very the rosiest future ministry, released some higher the year, forecast paired with according to deficit is In its updated last year, it ing budget of All of the above, and infrastructural EU-conform 2.1% and 2.3% the sixthe end of December the faster public spending the fact that 2.4% target, forecast at between t could make Matolcsy emphasizes the original developmen wage agreement GDP, below recently revised predicted by on on year minimum growth impact GDP last material it will depend in but above the announced will have a mic trends possible. However, factors, too, the 1.7%-of-GDP target said the deficit in higher and internal Hungary’s macroecono The NGM years, resulting ministry external The higher growth rate November. in 2017 from the coming does not rise to 2.4% fall to 1.2% site warns. for 2016, the if this year 2.1% ratio would growth. While gradually is only possibleeconomic recession rather conservativefrom where it would projected a bring a global output in Hungary, l revising it down by 2020. this internationa growth rate, of 2.5%, for and agricultural high.

The three leading will review its earlier forecast its figures show agencies like 2016, remains next credit rating year and the optimism. In 2017, rating a combined of Hungary’s debttimes in 2017. First, n will a great deal in Hungary Higher inflatio total of seven Standard & Poor’s economic growthit says, and will index 24, on February review, and then consumer price pick up to 4.1%, to 4.3% in 2018. several Although the publish its territory accelerate will Fitch slow further in August. May 12 liven fell into negative it would gradually do so again it started to in 2020, From there dates are and to 3.7% times in 2016, mainly due to rising its Ratings’ review 10, while Moody’s to 3.8% in 2019 up in the fall, the whole year of says. In preparing and November scheduled its calculated the ministry y oil prices. For the ministry unanimousl 3, July Investors Services projections, s for March tax rate and 2016, projections investigation 20. However, that at 0.4%. However, with a 9% corporate from the prices set inflation revenue 7 and Octoberthat any of the rating food and oil unchanged bank levy from 2017 this year, with global y doesn’t mean actually change rise further extraordinar will expected to higher inflation. As 2020. to country. agencies for the through Bank of Hungary 2017 will see and internal factors – their debt ratings has a stable The National optimistic than raise – both external more Currently Hungary minimum wage (MNB) was regarding 2016 GDP all three institutions, such as the index, internationa l outlook with being a year of its the ministry it at 2.8% in will affect the revised their inflation so, with 2016 could easily be a growth, puttingReport, unchanged analysts have upgrades, 2017 outlooks. latest Inflation ed report released forecasts recently. year of improving London-bas latest from the previous According to earlier. In the AmericaDecember, analysts with Bank of three months price values: How published last forecasts the consumer document, Comparative see the yearend it growth Merrill Lynch, will be 2.6%, the MNB raised and next. For in Hungary than various parties and their year points higher raised index for both this figures for s2016, 3.6% growth, 0.2 percentage forecast. It also for 2017. Source: months 2017, it predicts prediction in its previous country’s economic foreseen threegrowth n. the from the 3% BBJ compilatio below the predicts that puts the 2018 probably be earlier, and growth will and the central bank’s ’s rate at 3.7%.

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The Year Ahead SPECIAL REPORT

Postive Real Estate Indicators to continue The conventional wisdom is that the positive fundamentals of supply and demand will continue to attract developers and investors. But Hungary still lags behind regional peers Poland and Czech Republic.9

Looking Backward and Ahead Top managers, investors and board members all pick geographical instability as the risk with the greatest weight for their businesses. But what are the real risks, and how might we cope? 10

All Smiles on the Economic Front?

SOCIALITE

New Year’s Resolutions Taking a pragmatically Hungarian approach to setting achievable goals for 2017. All while chewing on a piece of pork.20

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FOCUS

Now and Then Retrospective: 1956

MTI/Tamás Kovács

SPECIAL REPORT

AL R SPECI

T EPOR

Minister for National Economy Mihály Varga is happy about the prospects for economic growth this year. But are market analysts as upbeat as he is?  8

2016 was a landmark year for Hungary, marking the 60th anniversary of the 1956 Uprising. In the 1st of a two-part series, we look at the background to, and outbreak of, the Revolution.11

NEWS

Industry Failed to Boost Growth There was some industrial output growth recorded in November, but in truth it represented little more than stagnation. 3

2017. 01. 12. 0:35

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Budapest Business Journal | january 13 – january 26, 2017

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THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall NEWS EDITOR: Christian Keszthelyi EDITORIAL STAFF: Zsófia Czifra, David Holzer,

Levente Hörömpöli-Tóth, Nóra Krokovay, Gary J. Morrell, Claudia Patricolo, Rob Smyth, Ágnes Vinkovits.

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News Services Hungary A.M., Energy Today, Regional Today 1 year, from HUF 179,000+VAT 6 months, from HUF 104,900+VAT 3 months, from HUF 58,900+VAT Book of Lists 2015-2016: HUF 19,120+VAT DigiBOL HUF 39,900+VAT Call +36 1 398-0344 or email circulation@bbj.hu What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

NEW YEAR, New Beginnings, New Look

P

rescient being that you are, dear reader, you will already have noticed not all is as it was with the Budapest Business Journal. A New Year presents a perfect opportunity to freshen things up, even have a bit of a tidy up. Think of it as an early spring clean, if you like.

Design is a highly subjective thing, of course, which is what makes newspaper redesigns such a daunting prospect. Some people will hate it, some will have loved the old look and have seen no need for a change. Others will be quite neutral about it all and, within a few issues will have forgotten it ever looked any other way. There is not much we can say or do about that, other than to state that we like the new design, and we hope you do too.

But it isn’t just about putting on a nice set of new clothes (though we do think this is a pretty snazzy set of threads). One of the things I said when I took over at the BBJ was that the paper has always been full of top quality business information, but the pages were becoming too text heavy. The great info was still there, just harder to spot (insert “can’t see the wood for the trees” metaphor here).

So we have been working with some very talented designers to make it easier to access that data, to make

the pages more lively and colorful and, yes, to give the design a more modern look. We would love to hear your impressions, so please do give us your feedback.

New Years are about resetting and going again.

Hungary will do just that, chasing greater economic growth. Just how well the country might do rather depends on who is answering the question, as you will be able to read for yourself in our Special Report looking at what lies ahead from a market perspective. We also look at prospects for the local real estate scene, with market players keen to press ahead following a much improved 2016 (if only the construction business was as healthy!)

But it is also about personal stock taking and goal setting. Such as the Hungarian team behind YearCompass, which helps you take a more mindful approach to the process, or the slightly more random concept of sweeping New Year’s Resolutions. You will find stories on both of those approaches in our Socialite section.

From here, the year will only gather pace. The government, too has reset. There are new regulations coming into force, especially concerning taxes and accounting. And you will be able to read about that in our next issue.

Fortepan.hu/Frigyes Schoch

MTI/Zoltán Balogh

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

THEN & NOW

BBJ-PARTNERS

The past few days have seen extremely low temperatures in Hungary, creating ice floes on the River Danube, captured in this photo above, on January 10. However, although unusual, ice on the Danube is not unprecedented, as the black and white picture at left, taken in 1903 shows, with the Chain Bridge in the background.

VISIT US ONLINE: WWW.BBJ.HU

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2017. 01. 12. 0:36

1

News

1 News | 3

///macroscope

Industry Failed to Boost Economic Growth

MTI/Tibor Illyés

Hungary’s industry all but stagnated in November, the latest data released by the Central Statistical Office reveals. Although December’s data is yet to be released, it is not very likely that industrial output will have exceeded 1% growth in 2016.

Minister of Foreign Affairs and Trade Péter Szijjártó with Latvian counterpart Edgars Rinkēvičs at a press conference in Budapest late last year. Hungary’s foreign trade figures have certainly given the minister cause to smile.

ZSÓFIA CZIFRA

A

fter two months of decline, industry returned to growth in November, albeit that the 0.6% year-on-year increase practically represents stagnation. On a monthly basis, industrial output was up 0.9% in November from the month before, making it the second month in a row that production was able to rise – in October, it was 2% higher than in September – but still considerably lower than in the fall of 2015.

Again it was the sluggish auto industry that hindered growth and, with no major capacity expansions expected until 2018, full year data might be one of the weakest in the past few years. In the first 11 months of the year, industrial output was 1% up from the January-November period of 2015. When looking at data from that year, it turns out that output in the first 11 months of 2015 was 7.3% higher than a year earlier. December figures, to be published on February 7, will give a clearer picture of whether industrial output for the full year will be above or below 1%; however, taking the performance of the automotive industry into consideration, the latter is more likely.

Not only the vehicle manufacturing is ailing, but other sectors also contributed to the poor November figures.

The relatively weak November data and the performance of the past months was quite unexpected, according to Takarékbank analyst Gergely Suppan. The purchasing manager index, an economic indicator derived from monthly surveys of private sector companies, rose sharply in September, and was outstandingly high in October and November (57 and 56.6 points, respectively), and Germany’s Ifoindex (another business climate indicator) was also high. All this projected a livening in industrial output, so it is very likely that individual factors caused the poor industry figures in November, says Suppan. He

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appearance of significant new capacities in

Exports were 2.7% higher the automotive industry.

Another weak month in Hungary’s in the first 11 months industrial output, was the comment of Gergely Ürmössy, head analyst with Erste of 2016 than was the Bank. The poor figure did not take him by surprise, as it is in harmony with the fullcase in 2015, when the year performance of the sector. As exportrecord highest exports to oriented production represents a large portion within the industry, and Hungary’s date were recorded. The most important export partner (Germany) foreign trade surplus, too, is still ailing, there is little ground for optimism. As for 2017, the analyst expects broke a record in 2016; up a slow recovery, but it will fall significantly the 7-8% pace seen in 2014 and until the end of November, behind 2015. Ürmössy thinks the latest industrial figures back up his previous expectations the surplus was EUR 1.5 for the full-year GDP growth in 2016, which bln higher than in 2015, he puts at around 2.1%.

In spite of the not-so-roaring industrial when the highest foreign performance, the government hasn’t changed its forecast for Hungary’s GDP trade surplus in the growth in 2016, and it remained at 2.1%. history of the Hungarian (Earlier last year, however, the government calculated with 2.5% GDP growth for 2016.) economy was registered.

In the first 11 months of Tax reductions 2016, there was a EUR 9.5 The year was closed with stable public Minister for National Economy bln foreign trade surplus. finances, Mihály Varga said at a press conference predicts that industrial performance will pick up in the coming months, based on domestic and European macro figures, however, he draws attention to the fact that Audi’s planned cutback in production might result in a more moderate growth rate. According to Suppan, growth rate for the full year might be 1.3-1.5%, and he estimates a 3.5-4% increase in 2017, partly due to the low base, but also because of the introduction of new capacities. He expects notable acceleration in 2018, with the

at the beginning of January. Thanks to the government’s tax reductions and its successful fiscal policy, the deficit of the general government budget was kept low in 2016 and the government debt-GDP ratio could also be substantially reduced, Varga emphasized. That said, the central sub-sector of the state budget accumulated a preliminary deficit of HUF 848.3 billion last year, while it was only HUF 389 bln a year ago.

Based on this in December the budget deficit came to HUF 907 bln, which is the biggest ever monthly deficit in Hungary.

Hungarian foreign trade closed a record year in 2016 in every respect, Minister of Foreign Affairs and Trade Péter Szijjártó said at another press conference held in response to last year’s foreign trade data for January to November released by the Central Statistical Office.

Exports were 2.7% higher in the first 11 months of 2016 than was the case in 2015, when the record highest exports to date were recorded. The foreign trade surplus, too, broke a record in 2016; up until the end of November, the surplus was EUR 1.5 bln higher than in 2015, when the highest foreign trade surplus in the history of the Hungarian economy was registered. In the first 11 months of 2016, there was a EUR 9.5 bln foreign trade surplus.

Numbers to watch in the coming weeks The first exciting data to watch is the December consumer price index released by the Central Statistical Office (KSH) on January 13, when it will also publish inflation figures for the full year. Expectations, both from the government and from analysts, is of 0.4 inflation for 2016. On January 16, we’ll find out whether the construction sector was able to recover in November, after output continued declining through the year. KSH will issue its statistics about earnings in the JanuaryNovember period of 2016, and the second estimate of retail trade balance for November will come out on January 25.

2017. 01. 12. 0:36

4 | 1 News

www.bbj.hu

News

///in brief

Youth organization seeks referendum against Olympic bid Momentum Mozgalom, a Hungarian youth organization, has launched a campaign against Budapest’s bid for the 2024 Summer Olympics, entitled NOlimpia, according to its Facebook page. The movement is seeking to hold a referendum with the following question: “Do you agree that the Municipality of Budapest should withdraw its bid from the organization of the 2024 Summer Olympic and Paralympic Games?” The capital’s election committee (FVB) has approved the question above, and the organization expects to start collecting signatures soon. Some 138,000 signatures are required in order to hold a referendum among Budapest citizens. There have been several attempts at a countrywide referendum by opposition political forces to prevent the

capital’s bid for the games, claiming that the country’s economy is not ready for such an event, but none were approved by the National Election Commission. Hungary has lately been pumping more money into Budapest’s bid to host the 2024 Summer Olympics. Currently, the Hungarian capital is competing against Los Angeles and Paris, after Rome and Hamburg withdrew their bids, the latter after a referendum.

Labor shortage may worsen for decades, expert says Despite improving unemployment and employment indicators, Hungary is losing approximately 40,000-50,000 workers annually due to the shrinkage of the working-age population, said Ferenc Rolek, deputy head of business association MGYOSZ (Confederation

Budapest Business Journal | january 13 – january 26, 2017

of Hungarian Employers and Industrialists, also known as Business Hungary), in an interview with allnews state TV station M1, according to reports. Rolek said the labor shortage Hungary is experiencing these days has its roots in issues with the country’s demography.

What is more, Rolek added that he expects the problem to last for decades. According to Hungarian news portal index.hu, Rolek said that skilled manual occupations are less attractive for young people than 20-30 years ago, which he said is understandable. Consequently, he added, young people should be encouraged to enroll in university courses that provide a degree, instead of the government’s current efforts to popularize skilled labor.

Rolek stressed that all sectors are facing labor shortages in the country – a situation that is further exacerbated by Hungarians emigrating to Western European countries. Rolek noted that the most vulnerable firms are those which cannot keep up with the market competition and are not able to generate enough revenue to pay more for their employees, such as SMEs. He added that the signs of this tendency are already present and that these companies are in danger of going under.

Putin to visit Hungary on February 2

Cyber roundup Hungarian firms take up fight against ransomware Companies operating in Hungary have spent almost HUF 500 million on measures to protect against malicious ransomware in the past two years, with half of the investigated companies claiming to have been affected, according to the latest study by computer security specialist G Data, a press statement sent to the Budapest Business Journal shows.

Ransomware is one of the latest types of malware virus, which installs covertly on the victim’s computer and encrypts the user files, demanding a ransom be paid for decryption, generally using the barely traceable bitcoin cryptocurrency. According to the findings of G Data, ransomware viruses demand HUF 180,000 per attack on average from Hungarian users for the decryption of hijacked files. G Data has found that firms are more likely to pay the ransom for files than individuals are. Some 70% of users were reported to have received the key necessary for decryption once the ransom has been paid, while the rest were unable to restore their files. However, even if the key for decryption is sent, on average only 60-70% of the hijacked documents and files can be restored, G Data adds.

The study involved 600 business leaders and 1,000 individuals.

MTel, NKI step up for better cyber security Magyar Telekom and the National Cyber Security Center (NKI) have signed a cooperation agreement under which the two bodies will be making joint steps in order to enhance the cyber security of the population, according to a press statement sent to the Budapest Business Journal. As of January 10, MTel will send an information e-mail to every user who has been attacked, according to the NKI’s information, if the user has shared their e-mail address with the service provider, according to the press statement. Under the agreement, NKI will inform MTel regularly about experienced security breaches, feeding the service provider with the IP addresses involved in the activities.

Russian President Vladimir Putin will visit Hungary’s Prime Minister Viktor Orbán in Budapest on February 2, according to a report by Hungarian daily Blikk. As the paper reports, the two leaders will discuss the expansion of Hungary’s sole nuclear power plant in Paks, as well as covering gas transfers and the possible renegotiation of credit conditions, Hungarian online news portal index.hu reported. Index.hu observes that Putin may also take an interest in Hungary’s attitude – as a member of the European Union – to ongoing EU sanctions against Russia, related to the annexation of Crimea and its support of separatists in eastern Ukraine. Although based on public statements the Hungarian government does not support the sanctions being maintained further, index.hu notes that Hungary did not vote against the most recent biannual extension.

Putin last visited Hungary in February 2015, when he promised to provide cheap energy for Hungary over the long term, and his visit this year has been highly anticipated. Orbán visited Putin in Russia on February 27, 2016, when the two leaders praised ties between the countries.

Photo shows Putin with Orbán during his last visit to Hungary in 2015.

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2017. 01. 12. 0:36

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2

Business

Business

Closing the Loop on the Circular Economy The European Commission’s Circular Economy Package includes revised legislative proposals on waste to stimulate Europe's transition towards a circular economy which will boost global competitiveness, foster sustainable economic growth and generate new jobs.

KEY ELEMENTS OF THE REVISED WASTE PROPOSAL INCLUDE:

A common EU target for recycling

A common EU target for recycling

65% of municipal waste by 2030

A binding landfill target to reduce landfill to max of

75% of packaging waste by 2030

10%

A ban on landfilling of separately collected waste

Promotion of economic instruments to discourage landfilling

of municipal waste by 2030

Simplified and improved definitions + harmonized calculation methods for recycling rates throughout the EU

Concrete measures to promote reuse and stimulate industrial symbiosis –turning one industry's by-product into another industry's raw material

Economic incentives for producers to put greener products on the market and support recovery and recycling schemes

As Martin van Nieuwenhoven, of The ongoing Netherlands-Hungarian the Dutch Ministry of Infrastructure Agrofutúra, a Hungarian and Environment, told the BBJ, even Chamber of Commerce (Dutcham) company offering in the West it is mostly financial conference series about the circular benefits, namely state incentives innovative solutions for and lower material costs, that push The European Commission Circular Economy Package, includes revised legislative proposals on waste to stimulate Europe's transition towards economy aims to spread good redirecting green andand animal companies a circular economy which will boost global competitiveness, foster sustainable economic growth generate new jobs. towards implementing circular economy principals in their examples and create a friendly and by-products into the soil, is everyday operations. Kriza agrees, Key elements of the revised waste proposal include a good example for local effective forum for discussing our suggesting that raw materials should carry heavier tax burdens. At the implementation of the global whole approach towards how we handle same time, he also points out that concept. being cost-sensitive not be A resources common EU target and A common EU target A binding landfill A ban on Promotion Simplified and Economicmight incentives Concrete measures waste. enough. Cultural-geographical for recycling for recycling

65%

75%

of municipal waste by 2030

of packaging waste by 2030

ÁGNES VINKOVITS

A

huge increase of the proportion of recycled municipal waste (up to 65%), accompanied by a reduction in landfill disposal (to a maximum of 10% of municipal waste) are common EU targets, both due to be implemented by 2030. However, to put our habits onto a more sustainable path, deeper changes are necessary in corporate and consumer mindsets, too.

At Dutcham’s December conference on the circular economy in agriculture several inspiring examples were introduced. The city of Leeuwarden, for example, heats most of its buildings, including more than 1,000 homes and even a huge skating rink, through biogas obtained from cow manure from local farmers who otherwise would have to carefully – and costly – dispose of the residue.

Local implementation Agrofutúra, a Hungarian company offering innovative solutions for redirecting green and animal by-products into the soil, is a good

BBJ_2501_bus.indd 5

target to reduce landfill to max of

10%

landfilling of separately collected waste

of municipal waste by 2030

of economic improved definitions for producers to promote re-use attributes, Netherland’s instruments + harmonised to the put greener products and stimulate industrial like wider overview on the finite nature of as a matter of wastemethods management. to discourage calculation on the market symbiosis –turning natural resources, are also essential.

Máté Kriza, head of Hungary’s landfilling for recycling rates and support recovery one industry's by-product green approach has toschemes meet Foundation for a Circular throughout the EU Economy, and recycling into another“A industry's raw materialeconomic rationality,” Kriza said. told the BBJ “it is about much more

example for local implementation of the global concept. As Tibor Petró, head of the company told the Budapest Business Journal, while the Netherlands benefits from recycling cow dung as biogas, in Hungary, a country that lacks manure and suffers from serious soil degradation, it makes much more sense to turn the manure into compost. In time this enriches the soil and enables bigger crop harvests.

Intensive farming destroys six kilos of soil to produce one kilo of food, “an extreme waste we cannot afford here, not even for some energy in exchange”, Petró pointed out.

On a global scale, 75 billion tons of soil disappears annually and the Hungarian Ministry of Agriculture seems to agree that economical sustainability and the reduction of waste must be major aims in Hungary too. At the same time, Deputy State Secretary for Agriculture Dr. Zsolt Feldman suggests a cautious commitment only, saying the “circular economy should not further decrease competitiveness”.

‘Different universe’ It seems that in Hungary, the concept of circular economy is treated mainly

than recycling”, adding that while several EU countries have had comprehensive circular economy strategies for years, here there is still not a single study examining its potential effects on the various sectors or the labor market. The fact that falls under the Ministry of Agriculture – rather than the Ministry for National Economy – also suggests that circular economy is not understood as a complex concept.

However, even from a green point of view, Hungary is not there yet. The costs of unloading the end-products of trash burning was lowered last year, a step experts say heads in a completely different direction from Western trends.

Also, company attitudes are anything but uplifting. According to Kriza, at the previous circular economy conference in May 2016 “it turned out that we live in a different universe”. Apart from a very few local examples, like UTB Envirotec Zrt., which turns sewage sludge into detergents, Bioferet, which makes compost out of food waste, and Zoknicsere (a word that translates to sock exchange), an original initiative turning used socks into isolating materials, Hungarian companies show very little interest in closing the loop.

Dismantle, transform, repair Eco design is another crucial element of the circular economy. Using recyclable materials is only the first step. The product also has to be capable of being dismantled, must be transformable and, most importantly, must be repairable.

From a regulator’s point of view, while it is easy to see the short-term negative impact on GDP if we repair old things instead of selling new ones, there is an increasingly strong argument that, in the interests of our planet, we have few other options in the long-term.

Even without a strong local will, fans of the circular economy model believe the international mindset will infiltrate into Hungary. The EU directives, and the examples of countries like Sweden, which has recently lowered the VAT on repairing products, or companies such as Caterpillar, which buys back its broken-down vehicles to repair and resell, will sooner or later bring a change in Hungarian regulatory policy, company principals and consuming habits, too.

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Company Spar to raise wages under agreement The Hungarian subsidiary of Spar and the Trade Union of Commercial Employees (KASZ) have agreed on raising the wages of approximately 13,000 workers, according to a press statement issued by the food retail chain. Some 4,000 employees will receive the wage raises prescribed by the Hungarian government’s latest amendment, while almost 9,000 employees will see different wage hikes to a greater extent, according to a press statement. Those who currently earn the least will receive the biggest raises, although the wages of those earning the most will also see a significant hike, while a special emphasis has been placed on wage increases for middle managers. Spar raised wages by HUF 4 billion last year, and this year is planning to raise wages by HUF 7 bln.

Only HUF 1.5 bln is covered by the reduction of contributions by the Hungarian government, the press statement noted.

Indiegogo-funded startup book hits the shelves Hungarian entrepreneur Attila Szigeti has recently published his Startup

///news

Studio Playbook – which promises the chance to “learn how to build startups in a way that feels like playing with Lego”, and which was conceived using Indiegogo crowdfunding, according to a press statement sent to the Budapest Business Journal. The book, which the author claims to be the world’s first professional book on startup studios, aspires to give advice to entrepreneurs or innovators via study cases and best practice for avoiding the conventional wisdom that nine out of ten startups fail.

The book also presents the operation of worldwide startup studios, as well as listing the pros and cons of the startup studio model. According to the book, the seven basic steps to build a startup studio are the following: (1) Take a core team and entrepreneurs in residence; (2) add shared infrastructure and in-house funding; (3) generate ideas internally or in some cases, act as a co-founder; (4) build multiple startups in parallel; (5) trash what doesn’t work, reassign team members; (6) spin off what works and get follow-on funding; and (6) grow, exit and repeat. “Attila’s book is a comprehensive and profound look into the strategic nature of studios and entrepreneurship, and a great resource for those looking to

learn more,” said Mike Jones, CEO of Los Angeles-based technology startup studio Science Inc.

Suzuki to upgrade Hungarian plant The Hungarian subsidiary of Japanese carmaker Suzuki is planning to boost its research, development and innovation through a HUF 5.3 billion investment, which will focus on upgrading its current Hungarian facility in Esztergom, the manufacturer announced, according to reports.

The costs of the investment projects will be financed from Suzuki’s own resources (HUF 2.71 bln) and by a European Union grant (HUF 2.59 bln), according to Hungarian news agency MTI. The upgrade will chiefly focus on the plant’s production and logistics system. As part of the upgrade, the plant will also be prepared for the introduction of laser welding techniques, and the development of cost efficient polymers for automotive manufacturing will also be carried out. Suzuki has been awarded the EU funds as a part of a consortium consisting of Bay Zoltan Applied Research Public Nonprofit, PEMÜ Műanyagipari Zrt. and Pázmány Péter Catholic University, which will jointly establish a research and development network, MTI reported. The Hungarian unit of Japanʼs Suzuki had EUR 1.97 bln in sales revenue last year, up 28% compared to 2014, MTI noted.

Invitel Group goes greener, renews entire fleet Hungarian telco Invitel is renewing its entire vehicle fleet, adding models equipped with the latest eco-friendly engines that are expected to result in a 10% decrease in fuel consumption, according to a press statement sent to the Budapest Business Journal. With a commitment to enhance the environmental conditions of the country, and also keeping the complex requirements of sustainability in mind, in the second half of the year, Invitel is changing its fleet of 400 vehicles in its entirety to cars fitted with Euro 6 engines, with a 0.7 liter per 100 km consumption. The change of fleet, Invitel calculates, could save the firm 40,000-60,000 liters of fuel annually. “Invitel is a forerunner in offering solutions that, beyond increasing the competitiveness of businesses, can enhance cost efficiency and corporate social responsibility,” said deputy CEO of Invitel Group Dr. Gergő J. Budai. “Our corporate philosophy is that we are striving to set an example through our own practices for other domestic companies,” he added.

BBJ EXPERT OPINION

Wolters Kluwer Legal Award – A Prize for Hungarian Jurists With the work of lawyers seldom recognized in Hungary, Wolters Kluwer decided to honor legal counsels and corporate lawyers alike, focusing on consistent excellence by both individuals and teams. The awards were presented at a gala dinner held in the Hotel Boscolo on December 15. We asked Tóth Gábor, CEO of Wolters Kluwer, to explain more.

How is the award broken down?

One part of the award was addressed to lawyers and law firms, and the other to corporate lawyers, legal counsels and legal teams. Within these two segments of the profession, we were looking for excellence and innovation in the fields of labor law, competition law and dispute settlement.

How does this award differ from international recognition such as the Chambers & Partners or Legal500 awards?

Winners of the first Wolters Kluwer Legal Awards.

First and foremost, it is tailored for Hungary, for Hungarian lawyers. The Hungarian branch of Wolters Kluwer (and its predecessors) has been working for decades to help the legal profession in Hungary, and it is our wish to reward the best of the best, based on our own principles. The awards mentioned above are designed for the global market, are somewhat difficult to enter and entail a lengthy procedure, and they are traditionally inclined to favor larger firms. On the other hand, we support smaller firms and firms from outside Budapest as well; legal innovation is an activity that is not necessarily dependent on size or money. Moreover, the financial reward of unreasonably overlooked lawyers is just as important for us as the lawyers themselves.

What comes with the award?

Winners can use the title for one year, on their website, in the press or in their corporate stationary. Not only the winners are rewarded; we included the best material submitted in each category on a shortlist, one of whom was given the prize for that category. Early in 2017 we will publish the introductory materials of all the participants – nominees and winners alike – in Hungary’s leading economic magazine and share them with business leaders and decision-makers, including representatives of the legal profession.

What were the criteria for awarding the prizes?

Innovation and a client-oriented approach were the leading criteria; that is how Wolters Kluwer operates, so that is what we were looking for in the legal teams as well. We were not looking for the largest

transaction, the largest case in terms of money or the largest team; rather we were The winners looking for solutions that may be offered even a small a client’s life • by Best legal firm teamto inmake competition law: easier,Szecskay or a unique solution that may serve Attorneys in Law. as an example for the legal profession as a • Best legal team in labor law: Réti, whole.

Antall & Partners Law Firm PwC Legal.

• Best legal team in public procurement law: CHSH Dezső & Partners Law Firm.

• Best legal team in banking, capital market and insurance law: Schoenherr Attorneys at Law. • Best legal team in tax law: Deloitte Legal.

• Best law firm in real estate law: Fazakas and Partners Law Office.

• Best legal team in M&A: DLA Piper Horváth & Partners Law Firm.

• Best legal team in dispute settlement: Dr. Sütő Ágota Law Office.

• Best in-house team in banking and insurance law: the legal team of Budapest Bank.

• Best lawyer in leasing and factoring: Dr. Tamás Böde – MKB Euroleasing.

• Best in-house TMT legal team: NNG Ltd. • Best legal counsel: Dr. Dávid Kozma – Uniqua Insurance Group.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

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WHO’S NEWS

Do you know someone on the move? /// Send information to news@bbj.hu

Nagy és Trócsányi welcomes new partner Dr. Boglárka Szánthó has been promoted from associate to partner at independent law firm Nagy és Trócsányi, as of January 1.

Szánthó is a Hungarian attorney admitted to the Budapest Bar and holds a degree from Eötvös Loránd University in Budapest. She joined Nagy és Trócsányi as a trainee in 2007 and has been with the firm ever since. She has significant experience in complex commercial litigation, domestic and international arbitration cases, and has also gained experience in M&A transactions, corporate and real estate matters. She currently focuses on construction law and represents clients in complex disputes arising out of FIDIC forms of contract. Nagy és Trócsányi was founded in 1991, and is the largest home-grown independent law firm in Hungary, and the only Hungarian law firm operating in New York. This gives it a deep understanding of Hungarian and international business and legal issues, the firm says. Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi, which describes itself as the world’s leading network of independent law firms, with in-depth experience in more than 100 countries worldwide.

Telenor Hungary names new technical deputy CEO György Koller has been named technical deputy CEO at Telenor Hungary, having worked with the Telenor Group for 22 years. Koller spent 17 years with Telenor Hungary as customer service leader, and also in the field of network and product development. He was technical deputy CEO of Telenor’s Pakistan subsidiary from 2011-2014, before moving to Telenor Group to lead its European customer experience IT system development project for two years. “It has been a great joy for me to return to Telenor Hungary, and to see the developments undertaken in the past few years. In 2011, we were working on

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the expansion of 3G coverage, while at this very moment we have covered the whole country with 4G,” Koller said.

“Developments continue, and we are making progress in introducing 4G+ technology to our bases, which I believe will significantly change our view of using phones,” he added.

Iron Mountain Inc. names vice president András Szakonyi has been appointed senior vice president responsible for Eastern and Northern Europe at enterprise information management (EIM) services company Iron Mountain Incorporated. Before joining Iron Mountain Inc. in 2003, he worked for General Electric in Budapest, Cleveland and San Francisco. He has been the chief executive of Iron Mountain since 2007, having been responsible for leading numerous countries, the press statement added. In his new position, he will be responsible for 20 countries in two regions, a staff of 3,500 and USD 160 million in revenue.

professional body. She is currently chair of the board of Minority Supplier Development U.K., and is working towards a postgraduate diploma in business and personal coaching at Chester University. “Jane brings a wealth of experience in various senior leadership roles in the service center domain,” said Kevin A. Murray, CEO for Citi Hungary and Central Europe.

“I am extremely pleased she joined us in Hungary to continue to expand our Citi Service Center capabilities in Budapest. Our CSC Budapest strategic site was established in 2005 to serve Citi franchises in 54 countries across EMEA, and globally in some functions,” said Ellis. “We have grown during the 11 years to become one of the top six service centers in Hungary, with more than 1,600 employees working in more than 25 functions. I am very proud to lead our highly talented, diverse team and very excited about the opportunity to support Citi’s efforts to become a career destination of choice for the best talent in Hungary as we continue to grow our CSC Budapest site,” she added.

HumanField names new director of business development Tibor Krasznai has been appointed director of business development at executive search firm HumanField Tanácsadó Iroda Kft., taking effect from January 1.

Krasznai, a qualified sports manager who was a professional basketball player before launching his business career, has worked with the firm for many years as leader of the executive search business development team, the press statement noted.

HumanField is one of the fastestgrowing executive search companies.

It is the third most significant player on the executive search market, and the leader among domestically owned companies.

ADVERTISEMENT

Citi Hungary welcomes service center site head Jane Ellis has been appointed site head of the Citi Service Center Budapest by the Hungarian subsidiary of Citi. In addition, Ellis was also named region head of Enterprise Supply Chain, and region head of Citi Shared Services in Europe, Middle East & Africa. Ellis joined Citi in 2010 and has held a variety of regional and global leadership roles in various functions within Enterprise Supply Chain and at Operations & Technology. Prior to Citi, Ellis led various operations, supply chain and shared services organizations across Europe and Asia, including SmithKline Beecham, the U.K.’s HM Treasury, Rok and National Grid plc. Ellis holds a Ph.D. in commercial relationships from Bath University. She previously served as president and chair of the Chartered Institute of Purchasing and Supply, the world’s leading procurement

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Special Report The Year Ahead SOURCE Source: BBJ compilation

Growth Accelerates in 2017, Paired with Higher Inflation Takarékbank 2016 2017

Comparative values: How various parties see the yearend figures for 2016, and their predictions for 2017. Source: BBJ compilation.

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Although the consumer price index fell into negative territory several times in 2016, it started to liven up in the fall, mainly due to rising oil prices. For the whole year of 2016, projections unanimously set inflation at 0.4%. However, with global food and oil prices expected to rise further this year, 2017 will see higher inflation. As both external and internal factors – such as the minimum wage raise – will affect the index, international analysts have revised their inflation forecasts recently.

According to London-based analysts with Bank of AmericaMerrill Lynch, the consumer price index in Hungary will be 2.6%, 0.2 percentage points higher than in its previous forecast. It also predicts that the country’s economic growth will probably be below the government’s and the central bank’s

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raised its 2017 inflation forecast last December, estimating next year’s annual average inflation rate at 2.4%, up from the 2.3% rate it projected in September. For 2018, the bank expects inflation of 3%, which is its medium-term target.

The MNB, like the London-based analysts, also now expects the rate to reach that target early in 2018, instead of mid-year, as it predicted a few months earlier.

The National Economy Ministry projects the inflation rate will accelerate to 1.6% next year 2017 before rising to 3.1% in 2018. Also according to the ministry, last year’s EU-conforming budget deficit is forecast at between 2.1% and 2.3% of GDP, below the original 2.4% target, but above the recently revised 1.7%-of-GDP target announced last November. The NGM said the deficit ratio would rise to 2.4% in 2017 from where it would gradually fall to 1.2% by 2020.

The three leading international credit rating agencies will review Hungary’s debt rating a combined total of seven times in 2017. First, on February 24, Standard & Poor’s will publish its review, and then do so again in August. Fitch Ratings’ review dates are May 12 and November 10, while Moody’s Investors Services scheduled its investigations for March 3, July 7 and October 20. However, that doesn’t mean that any of the rating agencies will actually change their debt ratings for the country.

Currently Hungary has a stable outlook with all three institutions, so, with 2016 being a year of upgrades, 2017 could easily be a year of improving outlooks.

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As usual, most analysts and various government bodies project different trajectories for the Hungarian economy for 2017, with the National Economy Ministry (NGM) seeing the rosiest future for the country.

In its updated forecast released at the end of December last year, it emphasizes the fact that the sixyear minimum wage agreement will have a material impact on Hungary’s macroeconomic trends in the coming years, resulting in higher growth. While for 2016, the ministry projected a rather conservative 2.1% growth rate, revising it down from its earlier forecast of 2.5%, for this year and the next its figures show a great deal of optimism. In 2017, economic growth in Hungary will pick up to 4.1%, it says, and will further accelerate to 4.3% in 2018.

From there it would gradually slow to 3.8% in 2019 and to 3.7% in 2020, the ministry says. In preparing its projections, the ministry calculated with a 9% corporate tax rate and unchanged revenue from the extraordinary bank levy from 2017 through to 2020.

The National Bank of Hungary (MNB) was more optimistic than the ministry regarding 2016 GDP growth, putting it at 2.8% in its latest Inflation Report, unchanged from the previous report released three months earlier. In the latest document, published last December, the MNB raised it growth forecasts for both this year and next. For 2017, it predicts 3.6% growth, raised from the 3% foreseen three months earlier, and puts the 2018 growth rate at 3.7%.

MNB Governor György Matolcsy expressed an even more optimistic

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view at a parliamentary committee hearing early December. He said that the country’s economic growth could speed up by as much as 4% in 2017.

While some said such expectations are ungrounded and unrealistically optimistic, online economic site portfolio.hu said the governor’s forecast is not at all groundless.

Construction, industrial output, domestic consumption and foreign investment are all set to increase this year, some from a very low basis.

2016 All of the above, paired with higher public spending and infrastructural development could make the faster GDP growth predicted by Matolcsy possible. However, it will depend on external and internal factors, too, the site warns. The higher growth rate is only possible if this year does not bring a global economic recession and agricultural output in Hungary, like 2016, remains high.

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from the previous 2.5% to 2.9%. J.P. Morgan analysts also expect a 2.9% GDP growth this year, with the inflation rate getting close to the 3% medium-term target of the MNB by SOURCE Source: BBJ compilation the first quarter of 2018. All analysts agree that the MNB has room for monetary loosening, but say that it will deploy non-conventional tools.

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2017: Positive Real Estate Indicators Predicted to Continue

The conventional wisdom is that the positive fundamentals with regard to supply and demand across the various Hungarian market sectors will continue to attract developers as a wider pool of investors snap up both new and older products.

Yields are predicted to compress as investment volumes rise or at least remain on a similar level.

However, Hungary still lags behind both Poland and Czech Republic in development and investment volume, with a 175-200 basis point yield differential to the latter.

GARY J. MORRELL

CBRE expects total real estate investment volume to be EUR 1.61.9 billion. JLL predicts EUR 1.7 bln, reflecting a fifth consecutive year of growth in transaction volume. However, this is well below Czech Republic, a similar sized market, which is expected to break the EUR 3 bln investment volume mark again this year. Cushman & Wakefield anticipate that the investment volume will be similar to 2016, which was above EUR 1.7 bln.

Tim O’Sullivan, head of capital markets at CBRE, sees the office sector as the most popular asset class with about 50% of the market, followed by retail and industrial. “The office market will still lead in terms of the number

Váci Greens, by Atenor.

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Artist’s impression of how the Ericsson HQ, being built by Wing, will look. of deals transacted, but there are some large retail projects expected to trade in 2017, which will boost the retail figures. The lack of available stock in the industrial sector will limit the activity in this sector, however there is now a lot of demand for industrial and logistic stock from investors,” said CBRE. Prime investment yields are estimated to be in the mid-6% level, with high street yields having been transacted at 6% and below. Benjamin PerezEllischewitz, head of capital markets at JLL, argues that prime office yields will compress to 6.5-6.25% in the next 12-18 months, retail could fall to 6.25% (although there is a limited supply of prime assets and liquidity) and logistics will fall to close to 8%. Across all asset classes he anticipates a 25-50 basis point compression in the coming year.

Yields under pressure O’Sullivan puts turn of year office yields at sub-7% compared to shopping centers at 6.25% and industrial at around 8.25%. He thinks the hotel sector will see compression, although there has been no big transaction to prove this. “Yields are under pressure and will decrease as the very prime stock is traded. However, it is hard to know where yields will finish as the supply of very prime stock driving

“The willingness of banks to lend will allow a wider pool of investors to enter the market.

The ability to source bank lending will help drive investor volumes in 2017.” yields is limited and not necessarily available,” commented CBRE. A lack of development has brought the supply and demand curve more in line, which will support rental growth and investor interest. “Most of the current office assets under construction will be at least 50% pre-leased before construction is finished. The current pipeline is sustainable, but I would not like to see a lot more. There were significant industrial deals concluded last year, although there is no new supply in this sector to maintain this volume,” said O’Sullivan.

Cushman & Wakefield sees that further yield compression is possible in 2017, if interest rates and finance rates remain supportive.

There are currently six Budapest office projects under construction and due to deliver this year that would easily meet annual absorption figures of around 150,000 sqm, despite some fears of oversupply that have been expressed.

A further 12 office developments are planned for delivery in 2018-2019. To put this in context this compares to the Poland office market, the dominant CEE office market, where 1.4 million sqm of space is currently under construction.

Wing is set to deliver the 24,000 sqm LEED Gold accredited Ericsson research and design headquarters at the Nobel Prize Winners Research & Development Park, located on the Buda side of the Rákóczi Bridge. The HUF 20 bln project has been financed by a consortium of banks consisting of UniCredit Bank Hungary, UniCredit Bank Austria and K&H Bank. A further second phase of the project of around 20,000 sqm is planned.

Another established Budapest developer, GTC, is expanding its Budapest office portfolio with the development of the 23,000 sqm Renaissance Plaza, close to Arpád híd.

Hungary’s GRT Group is planning the

third 18,500 sqm phase of Office Gardens in the 11th district in the third-quarter.

In the fourth-quarter, the Belgium Atenor Group is set to complete the latest 14,000 sqm of Váci Greens. The company recently sold the 18,500 sqm building “C” at the phased complex to Slovakia’s IAD Investment.

Shopping center pipeline With no developments currently under way, the next shopping center deliveries will not be until at least 2019, given the necessary development period. Two Budapest shopping center projects by Futureal and ECE are in the pipeline, however. Futureal has valid zoning for the 44,000 sqm Etele Plaza adjacent to the planned Budapest One business park on the western edge of the city at the terminus of Metro 4 and the renovated Kelenföld railway station. The scheduled completion date is 2018-2019 according to Futureal; the company says it is now actively talking to potential tenants.

Demand is rising in the logistics sector as vacancy is falling and developers are undertaking speculative development.

The Czech-based logistic park operator and developer CTP is buying up a number of industrial parks.

The profile of investors has changed after the dominance of local investors in the post-crisis period. According to Cushman & Wakefield, Austrian companies like CA Immo (a specialist in office properties in Central European capitals), German based funds and private equity from Asia and the Middle East has appeared for the first time.

“The willingness of banks to lend will allow a wider pool of investors to enter the market. The ability to source bank lending will help drive investor volumes in 2017,” said CBRE. A continued improvement in the markets ultimately relies on wider political and economic stability. Further, pipeline has to continue to remain in line with demand as the investment and development markets are benefiting from low development levels. “Budapest looks strong due to the underinvestment and under-development from the past 6-7 years,” concluded Mike Edwards, head of capital markets at Cushman & Wakefield.

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Special Report

CEU COLUMN

Looking Backward and Ahead

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Budapest Business Journal | january 13 – january 26, 2017

Budapest to Host First CEE Hotel Investment Conference

Maria Findrik Ph.D.

Associate professor of Business Economics, CENTRAL EUROPEAN UNIVERSITY BUSINESS SCHOOL

The surveys filled out by top managers, investors, and influential board members all over the world asking them to identify the greatest challenges to their businesses clearly reflect how our world has moved from predictability and stability to unpredictability and instability. Instability for business people means growing risks, with all their cost implications. Instability in the past meant that we were not able to predict oil prices, the volatility of the exchange rates, the trustworthiness of a supplier or even climate change.

In 2016, surprisingly or not, the factor given heaviest weight in the various surveys – and it is expected to be so again – was what the respondents called

geopolitical instability, which is defined as “geography, economics and demography affecting the politics of the state and relations between nations”.

And yes, there are surely new challenges ahead, the eventual outcomes of which we cannot predict, such as: •

•

•

•

•

how the political transfer of power, first of all in the United States and later in 2017 potentially in several European countries as well, will affect the environment around us; the definite slowdown of international trade and the capital flows that have thus far fueled economic growth worldwide; how the banking system can recover and fulfil its role to feed the economy if the margins on loans remain so low; whether the strong signs of de-globalization we have seen will lead to a certain degree of “islandization” only, or to strong but dangerous corporatism, nationalism, and populism that easily could generate local, national or regional conflicts; and, finally but very much in the news right now, we have just started to think about one of the negative consequences of the digital transformation, namely cyber-attacks and the potential of a cyber war.

Most likely we have to ride the cycle and live in a world full with shocks and conflicts. But what is this cycle all about? Are we going to live in a closed world again, with all the consequences that implies?

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In 2016, surprisingly or not, the factor given heaviest weight in the various surveys – and it is expected to be so again – was what the respondents called geopolitical instability, which is defined as “geography, economics and demography affecting the politics of the state and relations between nations”.

I believe that: • de-globalization is not the same as anti-globalization, at least not in an economic sense: the flow of goods and services, capital, human resources, and knowledge in a digitalized world is not reversible, but it is a given in our interconnected world; • globalization brings both good and bad; the bad overcomes the good (particularly emotionally) when nations/leaders use it to save energy to do their major task and fulfil their responsibilities, namely to create a domestic environment where all the major stakeholders are interested in permanently increasing productivity – otherwise globalization meant just cost cutting, which is far from its real potential.

And yes, looking around today the rate of total productivity growth is definitely slowing down, around 1% on average.

For two centuries Europe – its modern market economy accompanied with social services which on one hand had supported those in need but on the other hand had always appreciated and encouraged the talent, creativity and knowledge – was able to energize its growth based on the human factor. Unfortunately, in the last few decades, Europe has lost its cutting edge role in value creation based on human creativity and productivity (recently in Europe labor productivity is close to zero). No growth of productivity equals no progress.

The good news for us teachers and professors is that productivity-based development requires a talented, skilled labor force and citizens. The reserves are there: more qualified human resources could/should be turned into assets and responsible citizens. It requires not just investment but new thinking.

But do countries with decreasing PISA test results hear the voice of the progress?

This column is part of a continuing series of opinion pieces from experts at the CEU Business School in Budapest. The opinions stated here do not necessarily reflect those of the Budapest Business Journal.

reality is that Budapest has done a lot

The first hotel investment to deserve the attention,” Radvánszki He points to continued conference in the Central insists. infrastructure improvements in the city center and the private-sector and Eastern European funding of quality restaurants, bars and Caucasus region, and entertainment hubs, which have contributed to Budapest becoming a HOTCO, is to take place better overall tourism product. “The city has a multitude of world-class quality in Budapest on January cultural events every day, adding to the 30-31 at the Hotel great value proposition.”

Kempinski Corvinus Strong MICE potential Budapest.

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“The event will bring more capital together than ever before to discuss hotel investment activity in the region and those who are funding such capitalheavy investments,” Marius Gomola, managing director of Horwath HTL in both Hungary and Russia, and senior consultant, Attila Radvánszki, told the Budapest Business Journal. “It is a chance to meet the women and men who make hotel investment their passion.”

The conference website, hotconf. com [sic] adds: “As local economies rebound, CEE has the most potential for hotel development and growth in Europe – HOTCO will be a space where hospitality industry members come together to encourage and cultivate such developments.”

Horwath HTL describes itself as the world’s leading hotel, tourism and leisure consultants, and say the Hungarian capital is the perfect host. “We see a tangible shift towards Hungary and Budapest in particular,” Radvánszki says. “The shift is evident in the continuously growing number of visitors from around the globe. We find that despite the slowdown in Europe’s tourism, Central and Eastern Europe performed rather well, with double-digit increases in countries like Hungary.”

The consultants say they believe that the rediscovery of this region has been long overdue, and note that, while at first the primary driver was an undervalued product, that is changing. “The pricevalue ratio continues to be very favorable despite the slowly increasing prices, which do not seem to discourage visitors, showing the real potential of this destination. Since 2014, the landscape has changed and hotel market indicators started to improve rapidly,” notes Gomola.

Low cost carriers have had a very positive impact on the surge in visitor numbers and a flattening of the traditional seasonality curve, making Budapest a year-round destination, the experts from Horwath HTL say.

“Although Budapest might also appear to have lucked out as a rediscovered destination by international media, the

While the Budapest hotel market is strongly based on leisure tourist demand, Gomola and Radvánszki say they see enormous opportunity in the MICE segment. “Located in the center of Europe, while offering a superb value for money proposition, the completion of the 4,000+ capacity congress center is the impetus that will lead to more sell-

out nights driven by high-priced travel segments,” says Gomola.

With Budapest hosting a number of sporting events in 2017 (FINA World Championship, handball champions’ league, gymnastics European championship, and Judo world championship, among others), and building a highly successful 2016 in terms of visitors, Horwath HTL warns that the hotel supply will be temporarily limited during the summer months, but notes that this will change in the coming years as 2,000-3,000 new hotel rooms are in the pipeline over the next three to four years.

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Then and Now Retrospective: A Special Publication of the Budapest Business Journal

1956

Inside: The Soviet Thaw and De-Stalinization12 The Polish October Revolution13 Genesis of Unrest14 Protests Turn Violent15 Key Areas of Combat16 The Soviet Withdrawal17

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2016 was a landmark year for Hungary, marking the 60th anniversary of the 1956 Uprising. In December, the Budapest Business Journal, among other publishing outlets, was commissioned by the Public Endowment for the Research on Central and Eastern European History and Society to produce a special supplement detailing the events of that time.

Acknowledgements and thanks: We would like to record our gratitude to historian György Gyarmati for his help and expertise in producing this Now and Then Retrospective. This supplement has been financed by the 1956 Memorial Committee, established for the 60th anniversary of the Uprising, in the framework of The Year of the Hungarian Freedom program series.

Words by Levente Hörömpöli-Tóth and Robin Marshall, page layout and design by Norbert Balázs, photos by Fortepan (www.fortepan.hu).

Khrushchev and “De-Stalinization” (February 1956) The Soviet Thaw While the death of the Soviet leader Joseph Vissarionovich Stalin in 1953 paved the way for the rise of his successor, Nikita Khrushchev, it was not until February 25, 1956 when the latter officially denounced Stalin’s terror and abuse of power in a speech at a closed session of the 20th Congress of the Communist Party of the Soviet Union. This was a major milestone of his de-Stalinization campaign, also known as the “Khrushchev thaw”, as a result of which censorship was relaxed, many political prisoners were released and thousands more who had perished during Stalin’s reign had their reputations rehabilitated.

Soviet troops complete the liberation of Hungary from German forces.

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The speech triggered a loosening of the Soviet grip on its Eastern European satellite states, and it seemed that Moscow would tolerate ambitions for more freedom. Reform communists like Hungar y ’s Imre Nagy were encouraged by such developments. However, Khrushchev ’s struggle with his high-ranking Stalinist rivals was far from over and it soon transpired that the whole idea was rather about fine-tuning power and control methods, not letting the empire collapse. That was to be made abundantly clear by the invasion of Hungar y in October 1956.

Febr 27 1949

Feb. 27, 1949 Hungary declared a People’s Republic, lead by Mátyás Rákosi.

Roman Catholic Cardinal József Mindszenty imprisoned.

Széchenyi lánchíd (Chain Bridge). The slogan reads: “Russians go home!”

Joseph Stalin dies, is initially succeeded

by Lavrentiy Beria and then, after a power struggle, Nikita Khrushchev.

March 5, 1953

June 17, 1953 Berlin workers’ revolt suppressed by Soviet tanks.

Khrushchev deno in what is know “Secret Speec 20th Party Co

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The Polish October Revolution (October 1956) The Hungarian uprising was heavily inspired by events in Poland. The hardline Stalinist faction in Poland suffered major blows throughout that year following Khrushchev’s speech in February and the death of the country’s top communist leader, Bolesłav Bierut in March. The Poznań workers’ uprising on June 30 was aimed at demanding more political rights and even though it was put down within two days, it revealed the regime’s vulnerabilities. Tensions were getting out of control by October, and though some hoped the situation might be normalized by

the appointment of Władysław Gomułka, a reform communist, Khrushchev initially boycotted his rise to power since Gomułka wished to keep the Soviet presence in the Polish administration to the minimum.

Moscow was even considering military intervention as last resort.

Gomułka, riding a wave of Polish popularity for his perceived antiKhrushchev stance, was eventually permitted to be elected on October 22, and he even secured greater autonomy for his government. He realized, though, that the power of the Communist party could not be maintained without Russian help. Invoking “Polish state interest”, he argued that only the presence of the Soviet army and – perhaps crucially in terms of his ultimate survival – membership of the Warsaw Pact would guarantee border security vis á vis Germany; infringing such state interest, he maintained, would lead to an intervention, as would very soon happen in Hungary.

Suez Crisis: The West Distracted

In parallel with events in Budapest and elsewhere in Central and Eastern Europe, another large-scale crisis was unfolding, namely at the Suez Canal in Egypt, where Britain and France, working clandestinely with Israel, engaged in military conflict against Egypt. Gamel Abdul Nasser, Egypt’s populist leader, had nationalized the canal, which gravely hurt the interests of the two European powers. Nasser’s further goal was to destroy Israel with arms bought from the Soviet Union. Israel launched an attack on October 29, 1956, allowing Britain and France a pretense to deploy troops acting as peacekeepers; only a truce brokered by the UN helped suspend military action effective from November 7.

The exact nature of the connections between the Suez Crisis and the

Hungarian Revolution remains a matter of much dispute, but it must surely have ser ved as a great distraction since the Western powers were engaged with solving the conflict in the Middle East, while Eastern Europe was in any case deemed part of Soviet sphere of influence, a legacy of the Februar y 1945 Yalta Conference towards the end of World War II. The United States expressed sympathy for the Hungarian cause, but it wasn’t prepared to risk a large-scale militar y conflict. The Soviets, in turn, argued that if the U.K. and France had the right to intervene in Egypt in order to protect their own rights, the West could hardly protest when the Soviets did the same in Hungar y.

Rákóczi út, with Erzsébet (Lenin) körút in the background.

The dismembered head of the Stalin statue at the Rákóczi út - Nagykörút intersection.

Bródy Sándor utca, at the corner with Szentkirályi utca.

chev denounces Stalin hat is known as the cret Speech” at the th Party Congress.

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June 29 1956 Martial Law declared in Poland.

Egyptian President Gamal Nasser nationalizes the Suez Canal.

(On October 29, 1956, in a coordinated action, Israel attacks the Sinai Peninsula, giving British and French troops a pretense to move in to “protect” to canal. A U.N.-brokered ceasefire is declared on Nov. 6, 1956.)

July 26, 1956

The toppled body of the Stalin statue at the Rákóczi út Nagykörút intersection.

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Genesis of Unrest

To Western eyes, at least, the 1956 Uprising is often seen purely as a Budapest event. To a degree this makes sense; many foreigners will only be familiar with the capital, and it is, after all, the seat of power. But as we hope to show on these pages, the Revolution played out across the country. Indeed, if you include the Melbourne Olympic Games and the infamous “blood in the water” water polo match (more on this in our next issue), it had violent ramifications far beyond the borders. But every event has a genesis, and some small credit for the early gathering momentum of opposition to the regime must go to the students of the beautiful southern city

of Szeged. As Sir Bryan Cartledge, the former British Ambassador to Hungary (1980-83) turned historian, notes in his comprehensive work “The Will to Survive: A History of Hungary”, even before 20 October “.…the students at Szeged University voted to break away from DISZ (the Party-sponsored youth organization) and to establish the independent student association MEFESZ [the Association of Hungarian University and College Unions]”. It is unlikely it ever crossed the minds of those students in Szeged that they were taking a potentially revolutionary stand, but their actions certainly formed an important part of a pattern of previously unprecedented dissent.

The Revolution Begins

The junction of Népszínház utca with Csokonai utca, seen from a József körút.

On October 22, 1956, students of the Technical University of Budapest decided to organize a rally for the next day in solidarity with events in Poland, and they drew up a shortlist of 16 demands that included free elections (something the Soviets had actually guaranteed at that same Yalta conference mentioned earlier), the withdrawal of Soviet troops from the country and freedom of speech. On

October 23, by the time the protesting students had reached Budapest’s Bem tér, the crowd had swelled to number hundreds of thousands. A large group of people went on to Parliament where Imre Nagy gave a speech.

In the evening, the Stalin statue was demolished – one of the iconic photographic moments of the early days of the Uprising – whilst many headed to the national radio.

A crowd gathers at Teréz körút 6 (Lenin körút 64) at the corner with Dohnányi Ernő (Szófia) utca, surveying the wreckageof the Horizont Soviet Book and Music shop.

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The Protests Turn Violent: Key Areas of Combat in Budapest

Late in the evening of October 23, the first shots of the Uprising were fired at the national radio building, where protesters had gone wanting their demands to be announced on air. Instead they were shot at from inside. As a result the building was invaded, protesters gained control, and Soviet troops stationed in Hungary were asked by the Communists to restore order.

This is the point where resistance evolved into a full-blown revolution.

Combat was fiercest in Corvin köz and neighboring streets such as Práter utca in District VIII, as it had a strategic location to control Üllői út, along which forces would head towards downtown, and Ferenc körút, where tanks would come from the direction of Petőfi

híd. Lead by Gergely Pongrátz and László Iván Kovács, up to 2,000 revolutionaries fought here and, along with their fellow fighters in Csepel, resisted for the longest in the city. Széna tér and Móricz Zsigmond körtér, both in Buda, witnessed similarly heavy clashes.

The latter körtér base assumed a crucial role as it was to block reinforcing tanks arriving from Transdanubia and headed for the bridges.

Other key strongholds included Baross tér, Újpest, Tűzoltó utca, Újpest, the Buda Castle, Pasarét, and Szabadság-hegy. Heavy firefights took place in the area of Akadémia utca, Astoria, and Ferenciek tere as well. On October 25 a rally on Kossuth tér ended in bloodshed leaving more than 100 dead (see map on page 17.)

The tram stop at Népszínház utca. The road to the left is Csokonai utca.

The exit to Margitsziget from Margit híd.

Andrássy út (Magyar Ifjúság útja) at Oktogon (November 7 tér), looking towards Bajcsy Zsilinszky út.

Rákóczi út 54. The toppling of the Red Star.

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Key Areas of Combat in the Countryside

The violence on Kossuth tér accelerated the spread of protests countrywide. One of the epicenters was Hungary’s second city, Miskolc, where students bringing the news about the Budapest events were imprisoned and the crowd that gathered to demand their release was

shot at. In Mosonmagyaróvár (Western Hungary), the scope of the bloodshed became especially large when people gathering at the military barracks in hopes of convincing the army to join their side were fired at. Armed clashes against the communists took place in

ammunition depot in the Monostor fortress. The Soviet’s Budapest forces received ammo supplies from there and Komárom students had been planning to ambush the convoy, but were talked out of it by the local national council in fear of retaliation against civilians.

Miskolc

Mosonmagyaróvár Komárom Szentendre

places like Szentendre, Vác and Várpalota, among others. In the latter case, Soviet troops crossing the town suffered heavy casualties as well.

Komárom was of significance, as the Soviet army not only had several units stationed there, but also a key

Vác

Várpalota

The Buda side of Margit híd.

Febr 27 1949

József körút at the corner of Blaha Lujza tér, with an overturned tram in front of the HQ of Szabad Nép, the communist party newspaper.

The Pest side of Margit híd.

University students in Szeged vote to break away from the state youth organization DISZ.

Oct. 20, 1956

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Oct. 23, 1956 Students take to the streets in Budapest, march to radio building. Police open fire to break up the crowds.

Imre Nagy becomes Hungarian Prime Minister once again.

Firefights across the city.

Oct. 24, 1956

Oct. 25, 1956 Soviet Tanks deployed on the streets of Budapest.

Unarmed protestors outside Parliament building are shot and killed in large numbers.

Revolution spreads to the countryside.

Nagy says he wants a Soviet withdrawal.

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Major Areas of Fighting in Budapest

Hősök tere.

Corvin köz Széna tér Móricz Zsigmond körtér Baross tér Csepel Újpest Tűzoltó utca

Üllői út 56.

The Soviet Withdrawal

Looking at Szentkirályi utca, from Bródy Sándor utca.

Oct. 28, 1956 New Hungarian government sworn into office. Nagy promises reforms and begins talks with Soviets.

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Cardinal Mindszenty released from prison, Soviet troops withdraw.

Oct. 30, 1956

Nagy declares Hungary is withdrawing from the Warsaw Pact, formed the previous year as a mutual defense organization with the Soviets in command, and will pursue a policy of neutrality.

Nov. 1, 1956

On October 30, Prime Minister Imre Nagy announced the end of the singleparty system, preparations for democratic elections and, again perhaps crucially for what was to follow, an exit from the Warsaw Pact. The Communist party headquarters on Köztársaság tér were besieged and many inside were lynched. The Soviets showed a willingness to remove troops from the country in exchange for Hungary withdrawing her request filed with the UN to put the matter on the agenda. One day later, however, Khrushchev changed his mind and decided to move forward with a full-blown invasion, even as the media was carrying the opposite news, namely that all army units were to leave Hungary.

See part two in our next issue for details of how the Revolution was crushed, the immediate aftermath and the eventual realization of its aims and goals: a sovereign, free and democratic Republic.

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Then and Now Retrospective: 1956

Next Issue: See part two in our next issue for details of how the Revolution was crushed, the immediate aftermath and the eventual realization of its aims and goals: a sovereign, free and democratic republic.

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Socialite Publish an Annual Report on

Just as businesses evaluate their progress by publishing quarterly and annual reports to gauge performance and see areas for further improvement, at the dawn of the new calendar year, an individual can profit from mindfully closing the past 12 months, and welcoming the new by thinking ahead and planning. Non-profit Hungarian initiative YearCompass is just the tool for taking a more conscious approach to your life to find the wellsought professionalprivate life balance.

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Your Personal Self CHRISTIAN KESZTHELYI

In 2012, YearCompass started out as a simple booklet with a few questions for a handful of Hungarian youngsters to pass time on New Year’s Eve as an extracurricular activity. The idea has snowballed ever since, quickly growing into an international movement. The gradually improved booklet is now available in 19 different languages, all translated by enthusiastic volunteers, and was downloaded from the YearCompass website 200,000 times as 2015 turned into 2016.

(Figures for this year are not yet available.)

Though the name seemingly begs for a compass as a logo, the team at YearCompass decided to go with something more meaningful, as related to the booklet: the Buddhist ensō. “We did not only choose the ensō that symbolizes perfect enlightenment, but weʼve specifically chosen the open one that leaves room for movement, development and perfection of all things,” Ádám Freisinger of YearCompass tells the Budapest Business Journal. “Drawing an ensō is a spiritual practice that requires self discipline, in a same way that reflecting on your year and planning your life does.”

Discover Happiness With its questions helping to reminisce about the past year and plan for the new one, the booklet aims to guide one to be

alert about and discover happiness, learn the biggest lessons of the past year, and become more mindful about the new year’s challenges and tasks. The YearCompass team says it believes in the importance of self-awareness and self-recognition, which they say can improve the way of life of individuals and therefore the whole planet.

As much as the booklet is a spark of a sudden leisure idea, it has a scientific basis.

“Many of the questions have roots in the findings of positive psychology,” Freisinger says. “Positive psychology states that positive emotions are connected with being content with the past, being happy in the present and having hope for the future. The booklet aims to help with these.”

Although the tool itself is not unique, based on feedback the Hungarian initiative seems to excel in two factors. “Our tool is very concise, as we have refined it over the years based on feedback, and we have an international volunteer community that

makes the translation the booklet into numerous languages possible,” Freisinger tells the BBJ. While the team of YearCompass, who describe themselves as a “bunch of folks who can tap you on the shoulder when you fall off your path”, is striving to reach the most people possible — “world domination just as usual” as they mockingly say — they do not consider the movement to be a business and are not planning to monetize any part of it. They envisage YearCompass to be a movement spreading rapidly and helping people become “more self-aware, so in turn they could make a world a better place to live on”.

However, as they need funding to keep running the servers and pay the staff behind the freely downloadable booklet, they are currently testing a Collector’s Edition of the booklet that can be purchased. Compared to the self-printed pdf version, this is a “higher-end product with a few surprises”, yet the core questions remain the same as in the free booklet, and the team claims to be committed to this system in the future as well.

Just like businesses benefit from stopping to take stock on a regular basis to visualize performance and internal processes, your individual self can also take advantage of being more mindful about your processes and goals, and based on the feedback the founders have received so far, YearCompass is doing its job well.

WHAT’S CHAMPION EXHIBITION An interactive exhibition featuring the most cutting edge technologies, impressive images taken from unusual perspectives and playful tests and building on the themes of sports, motion and becoming a champion will receive its world premiere in Budapest’s Millenáris on January 13. “The January introduction will be the world premiere of the exhibition, followed by an international tour; however, as the technology is completely a Hungarian development, naturally we wished to introduce it to the Hungarian public first,” said main organizer Illés Gabriella.

The “experience-expo” will introduce the general public to the world of sports with high definition pictures, slow motion recordings and visual solutions applied from unusual perspectives. The system is capable of monitoring the performance of the actively participating public by – playfully – monitoring the capabilities of each visitor, helping parents in choosing

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a sport discipline for their children, or even predicting their chances of becoming a champion.

The Champion January 13 to mid-April, 2017 Millenáris, Pavilion D GREGORIAN AT THE CONGRESS CENTER A unique musical combination of traditional Gregorian music and hard rock, sprinkled with spectacular special effects; that’s the promise Gregorian: Final Chapter Tour 2017, which will be arriving in Budapest in February.

Frank Peterson stumbled upon the mash-up of church chanting and rock music on a visit to the Escorial Royal Monastery, walking in the medieval corridors listening to his Walkman with the chants in the background. The first result of this experiment was Enigma, which came to life in 1990, and of which Peterson is listed as a founders under the pseudonym F. Gregorian. For this

show, featuring eight classically trained Gregorian singers, accompanied by one female singer and a rock band, spectators can expect a fusion of musical styles ranging from Depeche Mode to Pink Floyd to Metallica, all combined with the traditional chants alongside other typical Gregorian features.

Gregorian: Final Chapter Tour 2017 Sunday, February 5, 2017 at 7:30 p.m.

Budapest Congress Center MUSIC TRAIN PULLS IN TO BUDAPEST The Music Train (Zenevonat) comes to Budapest in February for a concert featuring the songs of Locomotiv GT (LGT), one of the most influential Hungarian rock bands, originally formed in 1971, and featuring two of the original members: János Karácsony and János

Solti. They will be joined by two singers from a younger generation, Gábor Heincz (a.k.a. “Biga”) and Mónika Veres (“Nika”), with musical accompaniment provided by the band Abrakazabra. The list of Hungarian hits will feature “A Kicsi, a Nagy, az Artúr és az Indián” (The Little One, the Big One, Arthur and the Indian), “Annyi mindent nem szerettem még” (I haven’t loved so many things yet), “Miénk ez a cirkusz” (This circus is ours), “Mindenki” (Everyone), “Álomarcú lány” (Dream-faced girl), and “Nem adom fel” (I’m not giving it up).

Zenevonat February 12, 2017, 8 p.m.

Budapest Congress Center Tickets for all shows available via ticket-selling portal www.jegy.hu

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Hungarian Resolutions

The New Year’s Eve ritual for many Hungarians involves set dinners that go all night and run to hundreds of courses. But I didn’t want to start 2017 with chronic indigestion. I wanted to find an atmospheric bar in which to greet the New Year.

The beautiful cityscape of atmospheric Eger.

DAVID HOLZER

The chic but cozy bar of the Four Seasons Hotel Gresham Palace Budapest proved to be the perfect choice. My partner and I had an excellent view of the fireworks and a quiet corner in which to write down our New Year’s resolutions.

Hungary has a number of New Year’s traditions that all seem to involve eating a certain kind of food. On my way back from the Gresham, I made sure that the first thing I ate in 2017 was pork. In my case this was a sausage purchased from one of the stalls in the middle of Vörösmarty tér (square). According to one account I read, the reason for eating pork is that pigs symbolize progress because they push themselves forwards by rooting in the ground.

I’m not sure if the tradition of setting New Year’s resolutions is common in Hungary. One of the things I’ve grown to like enormously about the people of this country is their cheerful, bluntly realistic, fatalism. Maybe there’s no reason to make resolutions if you’re convinced things only ever stay the same or get worse.

Perhaps this is better than the English and American practice of making absurdly ambitious resolutions like “I will write a bestselling novel this year”, or “I’ll be the first person to swim the length of the Danube”, or “This year I will become absolutely fluent in Hungarian”.

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So, in the spirit of Hungarian pragmatism, I have made some achievable New Year’s resolutions I hope might also inspire readers of the Budapest Business Journal.

See more of the country I live in Szeged, a reasonably sedate, cultured city on the banks of the river Tisza. Since I arrived in Hungary, I’ve come to know the countryside around the city a little. The landscape is flat, gently rolling at the most, and dotted with sleepy villages, usually centered on the sharp spire of a church.

Apart from regular trips to Budapest, I feel like I’ve barely begun to scratch the surface of Hungary. But I have visited the remarkable town of Eger after a wonderful few days at the Residence Ózon in the Mátra Mountains, not far from Hungary’s highest point.

Eger is one of those strangely atmospheric towns you find all over the world, usually in areas of great beauty with a rich history. Unfortunately for the locals, the impressive, well-preserved set of fortifications that looms over the town ultimately fell into the hands of the Turks in 1596, leading to 91 years of Turkish rule.

The 17th century minaret in the center of Eger is one of only three surviving in Hungary. It’s the northernmost Turkish minaret in Europe and 40 meters high. If you visit

“Like so many tourists, I came to Hungary knowing almost zero about the country, including its cultural history. I knew that Zsa Zsa Gabor – God rest her sparkling soul – was Hungarian but that was about it. This year, I intend to continue my education in Hungarian culture.”

Eger, and I hope you do, be sure to climb the minaret for a fantastic view of the town.

Apart from Eger, I would recommend the 13th century Visegrád castle, which sits high above the winding Danube only about an hour’s drive from Budapest.

While the views from the castle are truly impressive, I was most fascinated by the tableau vivant depicting scenes from the castle’s history.

My resolution for this year is to really explore Hungary. I’m also determined to make it to Transylvania.

Learn more about Hungarian culture Like so many tourists, I came to Hungary knowing almost zero about the country, including its cultural history. I knew that Zsa Zsa Gabor – God rest her sparkling soul – was Hungarian but that was about it. This year, I intend to continue my education in Hungarian culture.

This will start with checking out some of Budapest’s more off-thebeaten-track art galleries. As soon as I can, I plan to take the metro out to Óbuda to visit the Kassák and Vasarely galleries, both conveniently located in the 17th century baroque Zichy Palace, a charming little oasis of tranquility on the banks of the Danube.

If you don’t already know, Lajos Kassák (1887-1967) was a Hungarian painter, novelist and poet regarded as the father of the Hungarian avantgarde. Today, his influence extends far beyond Hungary. Victor Vasarely (1906-1997) was born in Pécs and is acknowledged as the first practitioner of op art, which uses optical illusion to achieve an often dazzling effect.

Before I came to Hungary, I had no idea either Kassák or Vasarely existed.

Expect a full report on these pioneering artists and the galleries devoted to their work later this year.

I’ll also be visiting Budapest’s

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Spend as much time in the spa as possible

Get more out of Hungary’s famed spa culture.

Mai Manó House in Nagymező utca, a photographic gallery that calls itself The Hungarian House of Photographers. It was built especially for Mai Manó (1855-1917), an Imperial

and Court photographer, and contains a daylight photographic studio that may well be the last remaining one of its kind in the world.

And this is only the beginning.

I don’t think Hungarians realize how lucky they are to be able visit a spa pretty much whenever they feel like it and to pay so little for the pleasure. As any British or American spa-aficionado will tell you, those in our home countries are usually eye-wateringly expensive and utterly lacking in atmosphere.

Apparently, sitting in the sauna increases your heart rate and blood flow, reducing the risks of heart disease and stroke and possibly protects against dementia. This is one reason why, for the past two years, I’ve schlepped down to the Anna, our local spa in Szeged, two or three times a week. The other reason is that I’m fascinated by spa culture.

Whenever and wherever possible, I visit a new spa, especially since I discovered the weird and wonderful world of the Sauna Séance, a subject I wrote about for this column in September of last year.

The day before New Year’s Eve, we spent six hours at the Lukács Baths on the Buda side of the Danube and managed five 15-minute Sauna Séances. While it lacks the fairytale beauty of the Széchenyi Baths, the Lukács is far less crowded.

A succession of Sauna Séance Masters flung aromatized water – and occasionally ice – onto the hot rocks

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while they waved a towel or sheet on a pole to move the hot air around. We were given a selection of preparations to smear on our skin, or in one case eat, while we sat and perspired. Each Sauna Master has their own performance. One guy even played the soundtrack to the spaghetti western “Once Upon a Time in the West” while he threw lemonscented balls of ice up at the ceiling.

I recommend you try a Sauna Séance. They’re hugely good fun. The performances are the perfect blend of the impressive and the slightly silly.

You’re never bored in a Sauna Séance.

This year I resolve to visit the art deco Gellért Baths in Budapest. They look incredible too.

I’ve resigned myself to the fact that it’s highly unlikely I’ll ever learn Hungarian or swim the length of the Danube. But I can certainly discover more and more of this remarkable country.

The Gresham Palace Budapest is in front of the Széchenyi lánchíd (Chain Bridge) on the Pest side.

Go to www.kassakmuseum. hu, www.vassarely.hu and www. maimanu.hu to find out more about these fascinating galleries.

Opening hours of the Lukács are at www.lukacsbaths.com. Details of Residence Ózon at www.ozon. hotel-residence.hu.

Catering Service Aims to Bring a Master Chef’s Kitchen to Your Event

ingredients from trusted suppliers.

Drinks will be managed by the hotel’s head bartender. Wines will be recommended by the hotel’s sommelier.

“Our objective is ambitious but straightforward: to source the freshest ingredients, gather the brightest minds and employ the most outstanding people in the industry, to take catering to the next-level, and become Hungary’s unrivalled caterer,” said Stephan Interthal, general manager of the hotel.

Kempinski Hotel Corvinus Budapest has launched a new catering service, The Kitchen Caters, with the goal of enhancing traditional culinary event delivery and execution to create what it calls a bespoke restaurant quality experience.

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According to the five-star hotel, no matter what the scale of an event might be – large corporate functions, sensational weddings or intimate family parties – the responsibility for the catering should rest with the professionals, and their creativity.

The remit for their service includes identifying the appropriate location and venue, providing furnishings, table settings, flowers and decorations, creating the right ambience, and training the staff to understand the theme and purpose of the event.

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The Kitchen Caters anywhere, even in your garden.

Comprehensive infrastructure In the background, The Kitchen Caters sets up comprehensive infrastructure complete with provisions for any eventuality, as if this were a master chef’s kitchen: whatever the guest might need should be at hand, just like a restaurant, be it an unplanned extra special meal or ingredients from off the menu.

The expertise contained within The Kitchen Caters is, as you would expect, wide, but the hotel says it does not believe it covers everything. As each event brief is interpreted, the catering service matches the requirements with the best possible chef to deliver them, even if that means sourcing that chef from another restaurant, be it Nobu or Fausto’s. The Kitchen Caters says it insists on sourcing the freshest seasonal

Kempinski Hotel Corvinus Budapest, designed by noted Hungarian architect József Finta, opened in Downtown Budapest in 1992. It now offers 316 rooms and 33 suites, and was voted Hungary’s Leading Business Hotel by the World Travel Awards, for the third time in 2016 (it previously won the title in 2007 and 2009). It is part of Europe’s oldest luxury hotel group, Kempinski Hotels, created in 1897. The group now manages a portfolio of 75 five-star hotels in 36 countries. Kempinski is a founding member of the Global Hotel Alliance, the world’s largest alliance of independent hotel brands.

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English Speaking Wine Events Aplenty in 2017

Our wine columnist takes us on a roundup of upcoming wine tatsing events that cater for English speakers.

ROB SMYTH

While wine may ostensibly know no language barriers, many nonHungarian speaking expats and visitors find themselves excluded from the plethora of tutored tastings that go on almost every day, once people’s palates wake up again after the seasonal excesses. However, the good news is that there are a number of vinous options for those not proficient in the Magyar tongue.

On January 20, the Xpatloop wine club will commence its tastings series, held every two months, at the atmospheric, olde-worlde Mátyás Pince, with unlimited tasting of 20 wines from the distributor In Vino Veritas. Entry costs HUF 5,000 and also includes finger food. The focus will be on “legendary Hungarian hospitality” and will feature the whole shenanigans of folk dancers and live Roma music, and the club’s very own “Taste & Play” games.

Stephen Linfitt, publisher of Xpatloop.com, says that the tastings could happen on a monthly basis in future, according to demand. The wine club tastings also serve as a lively business and social networking event and are not only attended by expats.

They are held in a different venue each time, from the traditional to the contemporary, explains Linfitt. The theme and structure of the tasting is constantly changing – sometimes it involves several wineries, at others

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The theme and structure of the tasting is constantly changing – sometimes it involves several wineries, at others just one, such as with Sauska, which makes wine in the regions of Tokaj and Villány and was able to offer a full palette of wine styles to a receptive crowd. Some of these events have involved live music as a backdrop to the bibulous fun. just one, such as with Sauska, which makes wine in the regions of Tokaj and Villány and was able to offer a full palette of wine styles to a receptive crowd. Some of these events have involved live music as a backdrop to the bibulous fun. The Xpatloop wine club has been around for more than 10 years and returned two years ago with wine expert Nóra Szegedi as the hostess. She feeds the convivial crowd with the nuggets of information they

need about the evening’s wines. Email info@xpatloop.com if you’re interested in knowing more.

The following day, on Saturday January 21, Belgian blogger Michael Zeebroek will steal a march on Furmint February by hosting a Furmint tasting at his home in District XIII. His tastings are scheduled to be held monthly in 2017 and the theme is decided by the consensus of the tasters, who are readers of Zeebroek’s blog. This is an intimate, laid-back tasting with an enthusiastic and welcoming small group, and is actually conducted in Zeebroek’s living room. He casually imparts the particulars of each wine. His December tasting put Bikavér under the spotlight and the participants got plenty of value for the HUF 3,000 entry fee, with some nibbles provided.

Find Zeebroek through his website: www.wonderfultasting.com At big walk-around events like the centerpiece tasting of the aforementioned Furmint tasting, language isn’t much of an issue, although those not proficient in Magyar will likely run up against winemakers who don’t speak English, when asking questions as they taste.

However, there’s often someone on hand who can jump in – often the children of the winemakers themselves, many of whom are being lined up to take over, or already have done.

This year’s Grand Furmint February tasting will take place on February 2, in the usual ornate surroundings of

the Magyar Mezőgazdasági Múzeum (Hungarian Agricultural Museum) at the Vajdahunyad vár in City Park.

Entry costs HUF 9,900 if you buy the ticket ahead, or HUF 12,500 on the day, although this mega popular event that showcases Hungary’s great white grape hope and rocks the museum to the rafters can easily sell out. It will feature between 90 and 100 producers with an average of two wines each. They will come from up and down the land, thanks to the fact that many wineries outside of its stronghold of Tokaj and Somló have identified the potential of the grape, and in some cases, like around Lake Balaton, they are re-establishing it.

It usually has a few guests making Furmint in neighboring countries.

For more information and to register, look for the Furmint Február facebook page. It will immediately follow the first ‘International Furmint Day’ on February 1.

VinCE Budapest is a major event that pulls in wine people from all over and is very open to nonHungarian speakers, with many of the masterclasses delivered in English, and by some very big names in the world of wine, which have included the likes of Jancis Robinson MW (the “Madonna of Wine”). This year’s VinCE is scheduled for March 17-19 and will be held in its usual venue of the Corinthia Hotel Budapest. Also keep your eyes peeled for foreign guest presenters at the Bortársaság’s Borsuli (Wine School).

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Budapest Business Journal | january 13 – january 26, 2017

The bijoux and cozy cellar setting of the Tasting Table at Bródy Sándor utca 9 has exciting sitdown tastings held in English, every second Thursday of the month, with the exception of January. The first Thursdays@the Tasting Table evening of 2017 will see Villány’s Heumman winery, which is owned by a GermanSwiss couple with the wines made by a Hungarian, present its beautifullycrafted reds that are full-bodied and intense, yet as balanced and elegant as wines from this warm southern region can be. Incidentally, as a judge at the Top 100 tasting, which is conducted blind, I have given my highest points to Heumann wines for the last two years. On March 9, wine writer Dániel Ercsey will preside over a blind tasting in which guests will be able to put their wine assessment skills into action. By the way, Ercsey is editor-in-chief of www.winesofa. eu, which is a fine source of articles in English on Hungarian and the wider region’s wine. Tokaj’s Erzsébet Pince makes distinctive wines that capture the essence of the area’s varied terroir and will be the guest on March 23.

Somlói Vándor’s Tamás Kis – a young winemaker who is really hitting his stride – is scheduled for April 20. Kis’ former employer, Eger’s excellent St Andrea, is also set to appear. June 15 will see yours truly in action, the subject of which is still in the planning stage.

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A recent Xpatloop wine club event. Photos by Russell Skidmore for XpatLoop.com

PARTNER CONTENT

Lab.Coop Wins Inaugural Management Innovator Award

This year’s Management Innovator Award was won by Lab.Coop, a team with an unconventional approach to organization governance. The Budapest-based Society of Management Innovators announced the results of the international competition on December 16.

The Society of Management Innovators launched the Management Innovator Awards in May of 2016 with the aim of celebrating and sharing the most innovative leadership, organization governance, and human resource management practices.

In total, 22 projects were submitted in the first round, some from countries as far off as Brazil and Malaysia. Eight projects made it to the second round, where the international jury picked the top three winners. Another two projects won the Budapest Business Journal Special Award and an Audience Award.

Knowledge sharing “Our main objective was to collect and share real-life case studies that represent the latest trends of innovative management practices,” explained Anna Márkus, program director of the awards. “The best applications represented topics such as innovation management, engaging leadership, strategic controlling as well as multigenerational management practices,” Besides a detailed description, each

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project was presented in a two-minute video, available to the public on the award website, where visitors could also vote.

Employees of venture builder Lab. Coop receive stock shares in exchange for investing certain parts of their benchmark market salaries, helping the founders of the company ensure growth and that the most talented software developers join and stay at the company. The management approach is based on Holacracy, a system which involves sharing decision-taking authority among all employees, complemented with radical transparency (even in regards of salary information). Employees can spend 20% of their time on individually designed personal development activities, which means a EUR 2,000/year/employee investment. The results speak for themselves: within one year, [Norbi, please highlight this] the number of partners at the company increased from six to 20.

Lab.Coop has started building three new companies in the last few months.

Central European Business School won second place with its revolutionary approach to leadership development,

co-developed with Professor Mihály Csíkszentmihályi. An on-line simulation game allows participants to live through the “flow” state, experience its positive effects on their performance as well as learn how to consciously apply it in business environment.

They make classic leadership decisions, while managing an imaginary company. At the end of the game they receive precise development feedback on their The winning entry for the Management performance, the individual and organizational effect of their Innovator Award. decisions and the flow-state of organizational development and their co-participants. culture change project that enables A gamified learning platform developed companies to generate innovations for BP by Games for Business won third place. Fuel Station Ville allows employees to rapidly, resulting in measurable business development. develop their company-specific knowledge The special award of the Budapest through an individually designed Business Journal went to the transparent development program. They can test their salary system of Neticle Technologies. knowledge, build their network, participate The leaders of the media monitoring in the operations of the knowledge sharing and analysis startup are strongly platform and can proceed in their talent committed towards fairness, openness development program. Participants and transparency. Their salary system receive feedback about their performance treats employees on an equal footing; in multiple ways. The game has a special compensation consists of a base salary reward system and employees may receive and a performance-based bonus that presents as well. are all transparently published on Leadapreneur won the Audience the intranet. Bonuses may represent Award with its Corporate Innovation 10-50% of the base salary. Thanks to Accelerator project. Leadapreneur transparency, tensions have decreased, believes innovation should be practiced trust has been enhanced, and rather than taught. It presented a performance increased at the company. three-phase year-long innovative

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