Budapest Business Journal 21/14

SPECIAL REPORT:

DOMESTIC TOURISM JULY 12, 2013 – JULY 25, 2013

VOL. 21. NUMBER 14

BUDAPEST

BUSINESS JOURNAL HUF 1,250 | €5 | $6 | £3.5

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

TIGHTFISTED BANKS 20%

rate of corporate non-performing loans

Photo: László Alapfy

In a regional comparison, Hungarian banks perform poorly in terms of profit made on funds allocated here by parent banks, says EBRD board member András Kármán. 10

ECONOMY

July brings sweeping changes all around Come July, a broad range of changes took effect, from the legal system, through the payment of road fees and the cost of utilities, all the way down to where someone can buy a pack of cigarettes. 03

NEWS

SPECIAL REPORT

Rude awakening

Hopeful hospitality

The Trans−Adriatic Pipeline has overcome Nabucco and ousted the troubled project from its only possible source of natural gas in Azerbaijan. As optimistic as the Nabucco consortium is showing itself, the dream has all but certainly died.

06

The tourism segment is hopeful that circumstances will allow it to return to pre−recession levels, even as travel and social issues continue to weigh. The latest statistics as well as the turnout for the prominent summer events so far give grounds for optimism.

14

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Budapest Business Journal | July 12 – July 25

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BACK IN ARMS The relative peace that developed between the Hungarian gov− ernment and the European Parliament ended quite spectacu− larly when the EP approved a report seriously criticizing Hun− gary for its observance of democratic values, or its lack thereof.

The report compiled by green MEP Rui Tavares took the Hun− garian example and proposed setting up a Copenhagen mech− anism to oversee whether fundamental European Union values are observed and upheld in member states. Representatives in Strasbourg approved the report despite protests.

Prime Minister Viktor Orbán, along with essentially all the prominent members of the governing right wing parties, lashed out at the EP, saying the decision is a serious infringement on Hungary’s independence and uses double standards. Orbán said that the latest move actually endangers the European Union as a whole, since a political majority can exercise unwar− ranted jurisdiction against handpicked countries, which is in bla− tant violation of the bloc’s core documents.

The government also reiterated that the report was approved by the left wing parties in the EP, which they stressed continues to represent multinational capital rather than what is best for the people living in the EU. Orbán told his critics that Hungary has no intention of giving up its policies: it will continue to tax the banks and will also go through with the mandatory reduction of utility fees, even if the affected companies and their mostly foreign owners disapprove.

In a political sense, Orbán couldn’t have asked for more.

On the one hand, he could easily rebuff some of the genuinely

unfounded criticism coming his way, which hasn’t changed a bit since his last appearance in Strasbourg. On the other hand – and more importantly – these events provide a perfect opportunity to stoke the flames of the “freedom fight” that is the defining narra− tive of his leadership.

Unsurprisingly, media loyal to the government was up in arms about developments. The EP move is bound to invigorate the Fidesz camp, and it allows the political right to score some points with the euro skeptics.

This political affair, which will lead to little or no actual con− sequence, is exactly what the government needed at a time when pet projects like the electronic road toll system is under− going a disastrous launch, when it controversially nationalizes yet another private business, and as the corruption charges sur− rounding tobacco sales licenses stubbornly refuse to go away.

Orbán stressed that the events only underline a continued antagonism from the European political left, which can’t accept the fact that Hungarians have elected a conservative govern− ment with a supermajority that also passed a new constitution.

He was quick to point out that through its criticism, the Euro− pean Parliament is insulting not only his government, but also the Hungarian people who chose that government.

Orbán added that he expects the conflicts to continue well into the future. What he didn’t mention is how hopeful he is that this will turn out to be the case. His political opponents are weak and the next general election isn’t far off. A return to a ‘war footing’ is exactly what the camp needs to keep motivated.

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THE TAXMAN STAYETH With no help from the European court and no chance of a change in the government’s determination to follow through its policies, industries bearing the burden of sectoral taxes might well have to reevaluate their activity in Hungary. The situation has boiled down to ‘take it or leave it’.

After the European Court of Justice found that sectoral taxes on the telecommunica− tion industry in Malta and France are in com− pliance with EU law, it became evident that the case brought against such levies in Hungary will, in all likeliness, meet a sim− ilar fate.

Telecommunication firms, especially mar− ket leader Magyar Telekom, which is see− ing its profits evaporat− ing in multiple areas of its business thanks to the sectoral taxes, had high hopes that the court would strike down the tax. Based on the logic of the ruling, none of the other affected sectors can expect any pressure for reparations from outside either.

They can also be all but certain that the government has no plans to ease its grip. In fact, the prime minister reiterated that the taxes will persist, and a senior official government

guaranteed that they will stay in effect at least until 2016, while the latest package announced by the economy minis− ter shows that they can and probably will be raised at ran− dom times, whenever the budget needs an obvious source of finances.

Taxed compa− nies have surely been weighing the pros and cons of stay− ing in Hungary for years and have now received guarantees not only that their sit− uation won’t improve, but that it is actually more likely to worsen without fair warning or consultation.

And the only mes− sage that the govern− ment is conveying through its measures is that it won’t be the least bit disappointed if one or more of the major international participants decide to quit the Hungarian market. It has long had its eyes on carv− ing out a bigger slice of the market for the state in the tele− communication, banking and energy sectors, and is happy to move in whenever it sees a chance.

If it wasn’t on the agenda before, a farewell to Hungary is now surely being discussed in several executive meetings in several places.

THEY CAN ALSO BE ALL BUT CERTAIN THAT THE GOVERNMENT HAS NO PLANS TO EASE ITS GRIP

BBJ

1 News macroscope

NEWS IN BRIEF

Retailers see ‘trafiks’ put thousands out of business

04

NEWS

Bridging the credibility gap

07

JULY BRINGS SWEEPING CHANGES ALL AROUND A whole barrage of new measures, regulations and the launch of controversial systems in commerce and transportation took effect on July 1. Smokers have had to start scouting their neighborhoods for places to buy cigarettes, while truckers now have to reach deeper into their pockets, and that isn’t the end of it by far.

STORY HIGHLIGHTS ■

Extensive legal, regulatory changes took effect on July 1 ■ More changes set to follow later this year

government, are far from fading, under− lined by photos spreading on social media that show cases where two separate store− owners won licenses in the very same build− ing literally meters from each other. Not to mention other cases where a trafik has opened right next to a fitness parlor, a youth

anteed percentage of profitability. Some 60 established kiosk operators have received grace period until the end of year in locali− ties where no license winners were declared or no applications were submitted.

Lajkó told thematic portal Útdíjhírek.hu. He stated that freight firms will have no option but pay up, since there is little to no way to find alternative routes, especially consider− ing that prospective detours (i.e. the main streets of smaller townships) have a ban on large vehicles.

The Economy Ministry had projected HUF 75 bln in revenues this year from the new toll regime. However, thanks to later revisions to the law with the aim of support− ing Hungarian freighters, the amount is now expected to be HUF 15 bln less.

HAULING FOR A PRICE The start of July also saw the launch of the electronic road toll system for cargo vehi− cles. The system dubbed HU−GO affects all vehicles weighing 3.5 tons or more along Hungary’s 6,513−kilometer road grid.

According to the Útdíj.hu information por− tal, freighters will now be required to reg−

GERGŐ RÁCZ

SMOKE ‘EM IF YOU CAN GET ‘EM With the start of the month, passers−by can see throughout the country vaguely omi− nous looking, opaque window fronts with the words ‘Nemzeti dohánybolt’ plastered above them, accompanied by the number 18 in a red circle. These ‘trafiks’ are the only retail outlets now legally authorized to sell tobacco products, with all others hav− ing until July 14 to sell whatever they had stockpiled before the deadline.

The transition is far from fluent. By July 1, many new trafiks hadn’t yet opened, while others had, but had no stock. Accounts are spreading of further teething problems, some larger than oth− ers, like clerks at newly opened stores being completely unfamiliar with the brands they are selling, or of minors still being able to buy cigarettes, which was one of thee justifications for the change in the first place.

Criticism, including charges of corrup− tion and incompetence leveled against the

Photo: Noémi Bruzák / MTI

Those on vacation in the middle of summer will find a broad range of altered circum− stances to get used to when they return.

The legal system underwent changes that particularly affect the users of various sub− stances, legal and illegal alike. The amend− ments to the criminal code introduce far stricter penalties for drug consumption, but the new stringency also applies to alco− hol, so that motorists caught with even the slightest amount of booze in their system should expect to face serious repercussions.

The government is making good on an earlier promise to eliminate double earn− ing, meaning people who have reached the age of retirement but are still working can pick up either their pensions or their sala− ries, but not both.

A LICENSED TOBACCO STORE IN BUDAPEST

CHEAPER UTILITIES July marks the second wave of the govern− ment’s sweeping campaign to reduce util− ity costs for households, introducing yet another 10% mandatory reduction. This time, the centrally dictated discount affects sewage removal, chimney cleaning, sewer fees and garbage disposal. As a result of common European Union regulation, roam− ing charges will also be reduced.

The government went ahead and intro− duced the reduction despite industry calls for reconsideration. For instance, the asso− ciation of chimney sweeps warned that the price reduction would lead to smaller busi− nesses folding, resulting in a shortage of professionals.

The situation is set to culminate for the winter season, where many homes with out− dated heating systems could remain unin− spected, thereby endangering the health or even lives of the residents.

CRITICISM, INCLUDING CHARGES OF CORRUPTION AND INCOMPETENCE LEVELED AGAINST THE GOVERNMENT, ARE FAR FROM FADING recreational center, a school, or even in one case in place of a pharmacy.

Altogether, 5,300 applications were approved to practice the trade in tobacco products, along with alcoholic beverages and, somewhat incongruously, ice cream.

The authorized product range was expanded so that license winners are assured a guar−

ister their vehicles to receive and install a suitable device to keep track of the dis− tance they travel. Large shipping firms can expect substantial cost increases.

Hungary’s market leader, Waberer’s, is projecting annual additional expenses of HUF 4 billion as a result of the new sys− tem as the company’s deputy CEO Ferenc

Nonetheless, Prime Minister Viktor Orbán reiterated in his latest appear− ance before the European Parliament in Strasbourg that not only will the gov− ernment insist on preserving the estab− lished price levels, but is also deter− mined to go through with yet another wave of cuts in the fall.

04 News

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NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS

IN BRIEF

Budapest Business Journal | July 12 – July 25

The proposals in the report clearly violate the treaty of the European Union and the sovereignty guaranteed to the member states in the treaty. They don’t have the right to do that.

PM Viktor Orbán talking about the recently published Tavares report

BUDAPEST PRIDE ATTRACTS RECORD TURNOUT

ECONOMY MNB ALLOCATES €100 MLN UNDER ‘FUNDING FOR GROWTH SCHEME’ The National Bank of Hungary (MNB) allocated €100 mln of 30−month in− terest rate swaps (CIRS) at the FX swap and CIRS tenders held under its ‘Funding for Growth Scheme’ on July 8, information on the bank’s website shows. The bid, submitted at the lon− gest CIRS maturity available was at the maximum acceptable spread of 39 basis points over Bubor. There were no bids on the other seven maturities.

These were the sixth weekly round of tenders held under the scheme since June 3, and just the second to see an allocation after €8 mln of 30−month CIRS on June 10. The volumes on offer at the weekly tenders has been unchanged at a combined €2.5 bln, including €300 mln at each of five ma− turities of CIRS on offer, and €200 mln of five−week swaps and €400 mln of three−month EUR/HUF swaps.

MAY INDUSTRIAL OUTPUT DROPS 2.1% Output of Hungary’s industrial sector dropped 2.1% year−on−year in May according to both unadjusted and workday−adjusted figures, a first read− ing of data published by the Central Statistics Office (KSH) shows. The drop came after a long−seen 5.3% un− adjusted and a 2.9% workday−adjusted increase in April. Unadjusted output fell yr/yr between September 2012 and March 2013, and workday−ad− justed output fell between last Octo− ber and March this year. Base effects could play some part in the May drop as in the April increase. In a seasonal− ly− and workday−adjusted month−on−

month comparison, output dropped 1.3% in May after a 1.2% increase in April. Output declined month−on− month in May after monthly increases in the first four months. Output in the first five months of 2013 was down 1.3% from a year earlier. Last year, out− put fell 1.7% after rising 5.6% in 2011.

INTERNATIONAL RESERVES DROP TO €34.3 BLN IN JUNE Hungary’s international reserves stood at €34.33 bln at the end of June, dropping €979 mln from a month ear− lier, preliminary data published by the National Bank of Hungary (MNB) shows. The drop followed a €586 mln drop in May. It brought the reserves to their lowest level this year. Princi− pal repayments on Hungary’s 2008 International Monetary Fund loan re− duced the reserves by about €490 mln in June, including SDR 158 mln by the MNB on the part of the loan it had taken out, and SDR 263 mln repaid by the state. There were no foreign bond repayments last month. Hungary’s central bank international reserves at the end of June were up €449 mln from the end of December, but down €1.245 bln from 12 months earlier.

EC APPROVES AGREEMENT ON EU FUNDS FOR HUNGARY The European Commission has ap− proved the first draft of the Hungary Partnership Agreement on resources planning for the 2014−20 European Union budgetary period, said Zoltán Cséfalvay, state secretary in charge of economic strategy at the Ministry of National Economy. Hungary wants to spend 60% of the resources on econom− ic development in the period starting next year. The largest amount, an ex− pected HUF 1,200 bln, will be spent on boosting employment, which is twice

Photo: Imre Földi / MTI

The annual march of the lesbian, gay, bisexual, transgender and queer community on July 6 in Hungary attracted a record turnout of what the organizers estimate was around 8,000 people. The event was supported by hundreds of companies as well as 19 embassies in Budapest. While several representatives of the opposition political parties took part, the conservative governing parties opted to stay away, dismissing the march as a provocation against those still believing in traditional family values. Opponents of the march were also present but were held at a distance through an extensive police presence. The only reported incident took place after the march, when a larger group assaulted three men heading home.

Numbers in the news

82%

of full−year target is Hungary’s general government deficit in H1, according data from the National Economy Ministry

40,502 homes sold in Hungary in the first half of 2013, data from real estate broker Duna House shows

as much as current spending, Cséfal− vay said. The government plans to spend a further HUF 1,100 bln on im− proving the competitiveness of SMEs. The government plans to submit the final draft of the partnership agree− ment in November this year, to be fol− lowed by negotiations. The document, together with the operative programs, is due to be approved in the first quarter or first half of 2014, Cséfalvay said.

TRADE SURPLUS REACHES €653.2 MLN IN MAY Hungary had a €653.2 mln trade sur− plus in May, the Central Statistics Of− fice (KSH) said in a first reading of data. May exports fell 1.9% to €6.906 bln from the same period a year earlier.

Imports were down 0.9% at €6.253 bln.

The trade surplus was down €76 mln from a year earlier. Euro−term trade fell after a steep rise in April, with both the May drop and the April rise influ− enced by base effects. In April, exports rose after yr/yr drops in February and March, while imports rose after one month of decline. Exports fell more than did imports (or rose less than im− ports) for the first time since February.

will rise to 0.6% from 0.3% from August 1. Banks must publish their new terms and conditions sixty days before they take effect, the paper noted.

RETAILERS SEE ‘TRAFIKS’ PUTTING THOUSANDS OUT OF BUSINESS Thousands of small retailers in rural localities could go out of business now that the new system of monopolized tobacco trade has taken affect said OKSz, the national commerce associa− tion. These stores already operated on the edge of viability, and with the ap− pearance of the trafiks, which are also allowed to sell alcohol and sweets, these outlets are suffering serious set− backs. OKSz highlight deficiencies in how the tobacco trade licenses were distributed such as having no specifi− cation about where the stores will be located or expecting the retailers to have any basic qualifications.

DOMESTIC BANKING COSTS TO RISE IN THE FALL Banking costs will increase in the fall as credit institutions pass on the trans− actions duty to customers, daily Nép− szabadság wrote. The paper said four of the eight banks covering most of the market have moved to raise their fees since Economy Minister Mihály Varga announced in mid−June that the transactions duty on electronic transfers will increase to 0.3% from 0.2% and the duty on cash withdrawals

“THIS FLAT WITH THIS PANORAMA?” 54 sqm vintage flat, located on Delej utca, with two rooms is for sale.

15 minutes walk from Nagyvárad tér. Looking south, it looks to an Art Nouveau school building. Each room is bright and sunny.

The bedroom includes a bathtub.

Ideal flat for young couples.

Selling price: HUF 12.9 million.

Tel: +36 20 354 7022

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News 05

Budapest Business Journal | July 12 – July 25

COMPANY GOV’T SIGNS STRATEGIC PARTNERSHIP AGREEMENT WITH ERICSSON MAGYARORSZÁG Hungary’s government has signed a strategic cooperation agreement with the local unit of Swedish mobile infrastructure maker Ericsson. National Economy Minister Mihály Varga and Thomas Jul, who heads Ericsson’s business in Central Europe, signed the agreement. Jul said it would strengthen and deepen Ericsson’s cooperation with Hungary.

He noted that the company’s second-biggest R&D center in Europe is in Budapest and operates with a staff of 1,200 Hungarian engineers.

Ericsson employs 1,700 people in the country. It also finances research laboratories at two universities in the capital.

The company plans further developments in Hungary that will create more jobs.

Developments in the areas of cloud computing and the analysis of big data are among those being launched in Budapest.

Hungarian drug maker Richter has registered a ten−for−one stock split with the Budapest Municipal Company Court. Richter shares have a nominal value of HUF 1,000 at present. The shares will have a nominal value of HUF 100 after the split. The split will take place on July 16, 2013 but the shares will trade with their new nominal value from July 11.

A new Hungarian−owned airline is in the making with the first flights set to take off in August, political daily Magyar Nemzet reported. The company named Sólyom (hawk) is set to hire 700 people in its first year with the eventual headcount planned to reach 3,000 in three years. Minority owners who are based in the Middle East are reportedly funding it.

Listed Hungary−based FHB Jelzálog Bank will acquire 100% of the fund manager Diófa, held by FHB supervisory board president Csaba Lantos under a contract signed on July 8. FHB will pay HUF 290 mln for Diófa in the transaction to be closed by September 15 this year.

The regional company court has extended until December the liquidation procedures of the two companies owning the Kapuvári meat plant that stopped operating last fall, regional daily Kisalföld said.

Denying earlier press reports, Russia’s Gazprom said it has no plans to buy German peer E.ON’s power plant in Gönyű, business daily Napi Gazdaság said. Gazprom Export told the paper that the company is not interested in buying the power plant, although it is considering other possible forms of partnership with the German company in connection to the Hungarian unit.

CIB Group offered 46 properties for sale within the framework of an online auction at the end of June 2013, the bank said in a press release.

CIB said it received bids for 80% of the properties auctioned and ac− cepted nearly all offers.

Hungary’s National Media and Infocommunications Authority (NMHH) has fi ned telco and cable TV company UPC HUF 60 mln for improperly informing subscribers about new contracts. UPC told subscribers their old contracts had been cancelled, but their continued use of UPC’s ser− vices and timely subscriber payments would be considered an acceptance of the new contract.

POLIOL PET Packaging, which makes PET bottles and blow−molding ma− chines, has completed a HUF 174 mln expansion at its base in Lakitelek.

The construction of the 600 sqm production hall was supported with a HUF 87 mln European Union grant.

Electronics maker Sanyo Hungary Kft is closing down its plant in Dorog, leaving 500 people unemployed, Panasonic, the firm’s Japanese parent company told state newswire MTI. The plant will be wound up in Septem− ber and will be fully liquidated by March.

Budapest Airport launched its own security company on July 1, the

Photo: László Beliczay / MTI

NEWS

THE TAX AND CUSTOMS AUTHORITY NAV has launched a campaign to rigorously audit service providers active in the summer season. Inspectors will scrutinize locations getting a lot of footfall from tourists between July 1 and the end of August.

Tamás Solt, CEO of Opel Szentgotthárd with State Secretary Péter Szijjártó

OPEL ANNOUNCES €60 MLN EXPANSION AT NEW ENGINE PLANT IN HUNGARY German carmaker Opel has announced another €60 mln ex− pansion at its new engine plant in Szentgotthárd, which will boost output at the plant by 70,000 units year and create 100 jobs. The plant’s product palette will be expanded to include 1.8−liter engines, too. The expansion will bring the amount Opel has invested at the new plant to almost €700 mln. Opel started production at its €500 mln engine plant last Septem− ber. It launched a €130 mln expansion at the plant in April and will wind up the project next spring. operator of Liszt Ferenc International Airport told MTI. BUD Security, wholly owned by Budapest Airport, started operating with a staff of 65.

BUD Security is expected to offer services to other companies, and in other countries in future.

A record−high of 16,000 companies closed down in Hungary during the first half of 2013, up 7.1% yr/yr and up 3.4% from the previous all−time high in H2 of 2010, company−information provider Opten told MTI. Part of the rise reflected the obligatory elimination of non−active companies from the company register by the company courts introduced last year.

The VOLT summer festival in Sopron ended on July 7 with a turnout of 110,000, an all−time record organizers said. The venue reached full capaci− ty on Saturday, when the organizers had to announce that no further guests could enter.

Home savings bank Fundamenta−Lakáskassza expects its home loan layouts to reach more than HUF 47 bln this year. The projected layouts are almost 7% more than those last year, excluding the effect of an early foreign currency−denominated loan repayment scheme initiated by the government.

Altogether 4,530 (or slightly more than 85%) of the 5,297 National To− bacco Shops authorized to sell, tobacco opened for business on July 1, the first day of operation of their concession, Nemzeti Dohánykereske− delmi, the state−owned company coordinating the introduction of the monopoly said.

The owners of the recently completed Cascade Hotel in Demjén are build− ing a HUF 1 billion spa. The owners won HUF 500 million in support for the project from European Union funding and state co−financing.

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06 News

Budapest Business Journal | July 12 – July 25

EXPERT OPINION

NO USE CRYING OVER NABUCCO István ZSOLDOS

Péter Simon VARGHA

Diána SZŐKE

NABUCCO PIPELINE DREAM ENDS WITH RUDE AWAKENING The Nabucco natural gas pipeline has been dealt what is, in all likelihood, an ultimate blow in being denied a source of supply from Azerbaijan. The implementing consortium remains optimistic, though just about everyone else says the embattled concept should finally be put to rest.

he decision of the Shah Deniz II consortium to choose the Trans-Adriatic Pipeline (TAP) over Nabucco West is certainly a heavy blow to the latter – yet it comes as no real surprise, since many factors, at least in the judgment of the consortium, speak in favor of TAP. But the key question from a Central European point of view is not whether Nabucco will survive in some form, but rather if it matters at all.

TAP clearly has its advantages. It would run along a considerably shorter route than Nabucco West (870 km instead of the latter’s 1,329 km), thus potentially lowering construction and permitting costs. Thanks to this shorter length, it would also pass through fewer countries than Nabucco, a step meant to reduce political risks and regulatory burdens. Furthermore, the TAP consortium is comprised of just three companies (Statoil, EGL and E-On Ruhrgas), putting a smaller group in an easier negotiating and bargaining position. Gas prices are higher in Italy, which could make the project more economical (although it remains to be seen if new entrants can reap this benefit). Apart from some other internal factors (e.g. Norway’s Statoil being a member of both the Shah Deniz II and the TAP consortia), external conditions – such as the EU’s less vocal political support for the Nabucco project – may have also influenced the final decision.

Let’s take a step back and look at the bigger picture. This most recent chapter in the seemingly endless Nabucco soap opera also highlights a shift in Europe’s midstream focus, namely that what we might call the ‘age of pipelines’ seems to be over. Transporting gas via ships (in the form of LNG, liquefied natural gas) usually makes more sense if the distances are long – and importantly, you do not get much political risk along the route.

Many LNG-receiving terminals are already in place, and so are the pipelines to bring the gas further inland.

This trend actually also casts doubt over the viability of the TAP project. The fact that TAP was picked by the Shah Deniz II consortium does not imply that it will ultimately be built. Political risks remain: TAP and the adjoining TANAP project route, after all, go through Azerbaijan, Turkey, Greece and Albania, with its final destination in southern Italy’s San Foca terminal – hardly a who’s who of European stability at the moment. For that matter, it is still an open question whether the Shah Deniz II partners will commit themselves to spend in the order of $30-40 billion (or more) to build phase two, in a market environment that can be labeled anything but predictable.

In the long run, the best way for Central Europe to reduce its dependence on Russia is to strengthen transport links to the large, liquid gas trading markets (the so-called hubs) of Western Europe and to make access to pipelines between countries less cumbersome and more transparent. The next best thing would be to legally circumscribe Gazprom’s room for price discrimination between importer countries.

All of the above are already happening to some extent. And since they are all ultimately more important than Nabucco, there is no real need to lament the latter’s demise.

Azerbaijan’s Shah Deniz II consortium announced that it would choose the Trans−Adriatic Pipeline (TAP) as a partner to deliver natural gas to Europe, denying the rival Nabucco venture its only viable source of supply.

The Azeri−based group comprising BP, Statoil, Total, Lukoil, NIOC and TPAO along with state−owned energy group SOCAR, decided that TAP was the better option eco− nomically and technically.

TROUBLES ALL AROUND The Shah Deniz choice can be considered a somewhat fit− ting end to the Nabucco venture considering the project’s tumultuous history, especially in light of the fact that more than a decade after its conception it hadn’t gotten any closer to actually being built.

Originally, the pipeline was meant to deliver natural gas from the Middle East to Europe. The project enjoyed the vocal

Source: TAP

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GERGŐ RÁCZ

Abdullayev and told him Hungary feels it highly important that the Nabucco pipeline is selected since it would contribute greatly to the country and the region’s energy independence.

President János Áder was also a signatory of a joint presi− dential letter from central European countries to Azerbaijan’s President Ilham Aliyev to support Nabucco’s cause shortly before the Shah Deniz consortium reached a decision.

“We remain confident that the unparalleled market access that Nabucco provides to the countries of Central Europe and also of Southeastern Europe and the Balkans, ensures that gas from Shah Deniz will arrive in Europe via Nabucco,” Reinhard Mitschek, CEO of the Nabucco consortium said at the time.

RIVAL PIPELINES Trans Adriatic Pipeline is to transport natural gas from the Caspian sea, starting from Greece via Albania and the Adriatic Sea to Italy and further to Western Europe. It is planned to be 791 kilometers in length with a maximum discharge of 20 billion cubic meters of gas annually.

The Nabucco-West pipeline is a proposed natural gas pipeline from the Turkish-Bulgarian border to Austria via central Europe. In its original specifications it’s planned to be 1,329 kilometers in length with a maximum discharge of 10 to 23 billion cubic meters of gas a year.

The members of the Nabucco group (Bulgarian Energy Holding, Turkey’s Botas, Hungary’s MOL through its gas pipeline business FGSz, Austria’s OMV, and Roma− nia’s Transgaz) could only acknowledge the decision and declare new goals they will strive for with their respec− tive markets and businesses A BIT OF A SETBACK The Nabucco consortium was diplomatic in its reaction to the developments and called the Azeri decision a “setback”.

“We remain convinced that the Nabucco route offers the only possibility to answer these needs. Nabucco is confident of developing opportunities based on alternative gas sources,” the company said.

In the meantime, essentially everyone else, observers, ana− lysts and decision makers have conceded that Nabucco has failed and that the story has come to an end. The Hungar− ian government also said it acknowledged the decision but stressed that it is still evaluating the possibility of getting access to the Azeri gas that will be channeled into Europe.

Prime Minister Viktor Orbán deflected questions on the matter upon announcement, saying that it is a matter Hun− gary has no influence over. In contrast, state secretary for for− eign trade relations Péter Szijjártó visited Azerbaijan shortly before the announcement. He met with SOCAR boss Rovnag

backing of the European Union, especially after seeing that supply disputes between Russia and Ukraine can easily result in the taps being turned off for everyone in Central Europe.

This is all the more true for Hungary, which relies heavily on natural gas, some 80% of which originates in Russia.

However, the Middle East was dropped as an option because of political and security considerations. This left Nabucco with doubts about the cost of the venture, wan− ing political support and most importantly, no source of gas that it could transport.

Members of the consortium started voicing their dissatisfac− tion. Germany’s RWE sold its share in the project this April, having been vocal about its doubts earlier. Another member, Hungary’s MOL voiced similar intentions in 2012 and with− held its financial contribution to the consortium unless exten− sive revisions were made to the overall project.

This led to the new, Nabucco West concept, which was a shorter pipeline that only extended to the Turkish border. This idea met the shareholders’ approval, who expressed optimism prior to the Shah Deniz decision, seeing the advanced state of preparation Nabucco was in.

“Nabucco thanks its stakeholders for their continuous and consistent support over the last decade. The shareholders of Nabucco will now discuss the next steps for Nabucco,” the consortium’s statement concludes.

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News 07

Budapest Business Journal | July 12 – July 25

BRIDGING THE CREDIBILITY GAP

SMES: EQUIPPED TO COMPETE?

A detailed economic program for a joint election campaign by the Socialists (MSzP) and the Together 2014 (E14) movement could be published within a month, MSzP leader Attila Mesterházy told an AmCham business lunch on June 27.

Asked when details might be made public, Mesterházy replied: “I think we will be done in a month’s time. We started negotiations with the content because we have to be able to tell people what we would do differently to the current government.” Earlier, he had suggested talks about the economic program would not be difficult. “The two [parties’] economic programs are not so very different; to match these just needs, I think, one day. This is not the biggest problem in the negotiations.”

It is important that the parties in any future coalition understand each other’s priorities and principles before forming a government, he said, suggesting that had not been the case when the MSzP was last in power, with the now defunct Liberal Democrats as the junior partner. Failure to reach understanding now could “cause serious problems” later, he added. For the present, though, the signs are good.

“Several experts have worked in both [negotiating] teams. There are [already] some good personal relationships.”

Should the Socialists be given the chance to form a government again, the party had to be realistic about how much it could achieve in one term. “In the first two years

Photo: András Hajnal

ROBIN MARSHALL

MZSP CHAIRMAN ATTILA MESTERHÁZY

we would concentrate on economic policy first, and the most important thing is we have to restart the engines of growth.”

There was much talk of restoring the country’s credibility with international investors, and the need to “reboot the financing lines”. There was little in the way of declared policy, except in one of the three priority public spending areas identified by the MSzP (namely health, education and public transport). “From 2014 September, we would like to provide to all students who would like to enroll [in university] that they can [do so] without tuition fees. We are very much committed to a system where you do not need to pay.”

It was also made clear that the MSzP do not like the special sectoral taxes – and especially the current high level of the bank tax – but there was an acknowledgement that, with the MSzP estimating these levies generate HUF 800 billion in budget

revenue, there is no realistic way of ending them all straight away.

In addition to restoring the country’s reputation, at least as the Socialist leader sees it, there was a recognition that the MSzP had to restore its own credibility.

Gordon Bajnai, the head of the E14 movement, was the last Prime Minister before Viktor Orbán came to power in 2010, but he was running an MSzP− backed crisis management government after Socialist PM Ferenc Gyurcsány had been forced to resign in the wake of a secret recording of him admitting to party members that they had lied “morning, noon and night” to get reelected in 2006.

The subtext to what Mesterházy was telling AmCham was that there could be no repeat of this. “What I can promise, what we had to learn from the Socialist Party’s past, is our commitment and promises won’t be unrealistic,” he insisted.

HALF OF DOMESTIC FIRMS WOULD RENEGOTIATE LOANS Half of Hungarian enterprises would renegotiate the terms of their credit contracts, far more than the international average, the Hungarian data for Ernst & Young’s ‘Global Capital Confidence Barometer’ shows.

KRISZTIÁN KUMMER

Almost half of Hungarian enterprises would reach an agreement with longer maturity and lower interest rates. And at present, the question is extremely relevant as the National Bank of Hungary (MNB) offers a very good opportunity for small− and medium−sized enterprises to do so with its 2.5% loan package.

“Hungarian enterprises focus on devel− opments and even before the announce− ment of the MNB’s ‘Funding for Growth

Scheme’ they felt that the time had come to realize part of the prolonged investments from previous years in the next 12 months,” explained Margaret Dezse, leader of EY’s Transaction Advisory Services based in Hungary. “For small− and medium−sized enterprises, the funding offering really dis− counted rates provides real assistance. And the allocated assets are really not negligi− ble, since it reaches 21% of the total Hungar− ian SME bank loans,” she added.

Following the crisis, banks around the world tightened conditions for their cli− ents because of changes in pricing and risk preferences and unpredictable mar− kets. According to this practice, banks offer shorter−term loans to clients. But now 44% of Hungarian entrepreneurs say they would renegotiate their loan agree− ment, more than half of them would like a longer maturity period, and 18% of them would like to see the interest rate in force reduced. The need for restructuring is sig− nificant at the international level too, as

29% of respondents would use such pos− sibility, the regular survey of 1,600 senior executives from large companies in 50 countries of the world shows.

32% would increase its loan portfolio and initiate new investments at the same time. Exploring new geographic mar− kets, innovation and research and devel− opment, as a driver of growth appears in the medium term vision of respondents.

The reason for parallel growth of loans and investments is that Hungary is tradi− tionally a poor capital in terms of capital, so most companies need loan to cover operation even if it’s hard to obtain and conditions are strict. This theory is sup− ported by the responds, as 66% indicated loan as a primary force source of funding for the company on the next 12−months’ horizon.

International respondents rather finance their companies from the operation, and only 30% would rely on loans, according to the Global Capital Confidence Barometer.

A recent study, titled ‘SMEs: Equipped To Compete’, reveals that growth opportunities in regional or wider markets are the greatest issue affecting Hungarian SMEs, with 42% citing it as a top concern.

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The study, sponsored by SAP and conducted by Oxford Economics, says that the second and third concerns are increasing regulatory requirements and shifting customer expectations and demands.

When it comes to global growth, the study finds that Hungarian SMEs are planning rather aggressive expansion across the borders: at the moment, only 13% of the firms asked said they do not generate revenue outside of Hungary, but this figure will drop to just 1% in three years. This is a 92% decrease, and, interestingly, is much slower at a global level (only 30%).

While about 10% of Hungarian SMEs operate solely in Hungary today, all of the participating firms said they plan international expansion in three years.

But despite this strong global orientation, SMEs in Hungary are less likely than any of their EU peers to have either recently completed, be in the middle of, or are about to begin a significant business transformation.

The survey also reveals that two−thirds of Hungarian SMEs questioned said that they invest in technology only when there is a clear return−on−investment ratio.

When asked about spending priorities, business management software and social media share the greatest focus among Hungarian SMEs, followed closely by mobile technology. It’s a bit different at a regional level, the survey shows.

“Almost every second respondent from the region’s SMEs see social media and mobile technologies as the greatest priorities for them to implement over the next three years, which is above the global average,” says Gergely Kézdy, SAP’s Central and Eastern European channel manager.

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08 News

Budapest Business Journal | July 12 – July 25

AN ANTI-EUROPEAN CAMPAIGN IN THE MAKING Fidesz has made no secret of its growing dislike of the European Union and especially its representatives. Viviane Reding is only the most recent high profile target in a long series of attacks on the EU and some of its leading politicians.

Fidesz needs certain faces to attach to its anti−Europeanism at a time when the invocation of nebulous international forces attacking Hungary is emerging as key mobilizing notion for the 2014 campaign.

people to try to tear down. We noted above that this was a symbiotic conflict as it helps both parties rally support; this is all the more true since both parties can do fairly little to hurt one another. The Fidesz orches− trated attacks on Reding in the Hungarian right−wing media presumably won’t sway many of the undecided if she were to run for president of the Commission, while Red− ing offers hypothetical threats in the name of an organization that does not have much in the way of potential real ones.

WHY HER, WHY NOW? Reding has angered the Hungarian right with her repeatedly expressed concerns over Fidesz’s handling of constitutional amendments, especially in the context of the massive fourth amendment. In an unusually sharp rebuke for an EU official, Reding told the Austrian daily Der Stan− dard that “[t]he state of law is not to be tri− fled with. A constitution is not a toy that one can change every few months.”

Reding is of course only the latest among a series of Fidesz’s critics at the European level, and actually by far from the harshest. Red− ing enters an arena whose previous and cur− rent combatants include Daniel−Cohn Ben− dit, Martin Schulz, Guy Verhofstadt and the young Portuguese Green politician Ruy Tava− res. In fact, even within the Commission Red− ing is not to first to engage Fidesz: European Commissioner for Digital Agenda Neelie Kroes had criticized the Hungarian govern− ment over the media law. Her public tiff with Minister of Justice Tibor Navracsics, in which they mutually accused each other of lying, was also highly publicized in Hungary.

AMBITIONS ABOUND There is ample speculation that in addi− tion to her genuine substantial concerns over the constitutional amendments, Red− ing also seeks to further her own political ambitions by pillorying Hungary’s trans− gressions. Reding allegedly wishes to be a contender to succeed José Manuel Bar− roso as the President of the European Commission, and needs issues to endear herself with the left−wing in the EU, who do not consider her a natural ally because of her EPP membership.

Photo: European Commission

It’s probably not a good idea to get on Fidesz’s wrong side when Hungary’s gov− erning party is in campaign mode. Even at its most relaxed, Fidesz’s propaganda machinery is not known for its subtlety and finesse, but with an election pending it’s more like a shiver of sharks with a scent.

To said sharks, European Commissioner for Justice Viviane Reding must seem like a tasty appetizer en route to the main course due next spring.

VICE-PRESIDENT OF THE EC VIVIANE REDING

Moreover, the entire Commission suppos− edly likes the idea of expanding its powers to enforce democratic standards, with new instruments somewhere between the soft proceedings for failure to fulfill an obliga− tion and the extreme Article 7 suspension procedures. By continually testing even the patience of its allies within the EPP, Fidesz might provide the right argument for pre− cisely such a power grab.

FIDESZ AND ITS ENEMIES: LIKE FISH AND WATER If any of these apply, then this is a situation of a symbiotic conflict, wherein both par− ties benefit from the bogeyman offered by the other. Over the past years, Fidesz has been steadily building up the European Union as an antagonist, by turns as a hap− less extension of the wily Hungarian left and as a sinister manifestation of the global liberal conspiracy that cannot abide Hunga− ry’s exceedingly successful refutation of the dominant economic model.

In its campaigns, Fidesz has tradition− ally relied on casting opponents as vil− lains. It is fairly clear now that over the past few years it has added the Euro− pean Union to the list of enemies that are meant to mobilize the right−wing to re−elect its government in a show of sol− idarity against the massive international forces that seek to regain control over the country through their left−wing pup− pets (who – to hell with consistency – are

simultaneously themselves crafty puppe− teers of the Europeans).

VIVIANE GRINCH AND HUNGARIAN UNORTHODOXY Such a campaign benefits massively from personalization, the ability to put faces to the sinister forces seeking to wrest con− trol of the country from the natural repos− itory of the popular will, Fidesz. Even more interesting is action, hence enter Ist− ván Lovas, the pro−Fidesz Brussels cor− respondent of Magyar Nemzet renowned for exposing conspiracies, regardless of whether they actually exist. Lovas claims to have found out that Reding is organiz− ing a campaign to cast doubts on the legit− imacy of any Fidesz election victory next year. László Surján, a leading member of Fidesz’s satellite party, KDNP, was obvi− ously convinced by Lovas’ reports but not persuaded that Reding was without Hun− garian allies in the plot, and thus initially even vowed to file a report with the police charging ex−PM Gordon Bajnai for his involvement in derailing Hungary’s demo− cratic process. One wonders at what point Attila Mesterházy, the chair of the Hun− garian Socialist Party will begin to feel slighted by his alleged non−involvement.

The right−wing media has great prac− tice in massive and sustained ad hominem attacks on political opponents, and since Viviane Reding has volunteered herself, it has been all too glad to add her to the list of

WANTED: POWERFUL PRETEND-ENEMIES Adding Europe and specific European play− ers to the plot makes sense. Both by virtue of their temperament and the fact that they are in opposition, neither Attila Mesterházy nor Gordon Bajnai – for now the only per− sons with even a theoretical shot at actu− ally ousting Fidesz – make for sufficiently convincing evil masterminds, which is why Bilderberg−attending eurocrats are ideal supplements to the steadily expanding list of Hungary’s enemies.

Of course, while the pro−Fidesz media seeks to evoke an impression that Hun− gary’s enemies are powerful, the party’s anti−European strategy attests to the tooth− lessness of the Commission. It makes for such a comfy target because for the time being it lacks any instruments of disci− pline that are neither feeble nor inconceiv− ably extreme. It must also be noted that even though Fidesz’s attacks on the EU are unusually vituperous, the Hungarian right is by no means the only political force in Europe that uses the EU as a punching bag.

The EU’s faults, real and perceived, are the subjects of contentious debate in much of Europe right now.

NOT ALL FOR SHOW Still, the anti−European rhetoric is not devoid of any substance. For one, it is true that Fidesz’s policies have diverged from the Euro− pean mainstream in many areas, in some cru− cial segments of economic policy and espe− cially when it comes to democracy and the rule of law. The government has also reori− ented its foreign policy towards the East, prob− ably not coincidentally seeking new friends in a region with several countries whose eco− nomic policies – a kind of oligarchic capital− ism with strong government involvement in the economy – and approach towards democ− racy are closer to what Fidesz has in mind for this “half−Asian lot” (quote Orbán) than cum− bersome checks and balances and indepen− dent oversight institutions. The current state is still a compromise between the European model that Orbán has repeatedly referred to as outmoded and Fidesz’s interpretation of the “Asian model”, but if the rapprochement to Central−Asia proceeds further then the enmity with the EU will become more than a mere campaign prop.

www.policysolutions.hu Political Research and Consultancy Institute

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2Business insight

Opinion: Talkin’ ’bout M−generation Trend: Bribery nation

BUDAPEST ANDRÁSSY AVENUE 3.

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11 12

CASE STUDY

VENDORS SHOULD KEEP AN EYE ON THEIR CLIENTS BACKGROUND The company was founded in 1997 by four Hungarian private individuals under the name P. and P. JEANS Kft. It adopted the Jeans Club name in 2003. Based on reports the firm operated 35 stores in Hungary and 18 abroad. It’s most active foreign markets were Czech Republic and Poland with six and seven stores, respectively.

It employed over 1,500 people.

Photo: Gergő Rác

Failure to properly prepare for the risks of currency fluctuation and neglecting the necessary hedges can bring down otherwise successful companies.

The Credit Management Group presents the potential pitfalls and early warning signs through a case study of Jeans Club, which went to bankruptcy from major success over the course of just a few years, causing serious headaches to its suppliers.

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The turning points in the company’s life came in 2008, having operated for more than a decade at that point and five years under the Jeans Club brand. In that year, the firm realized losses amounting to HUF 2.4 billion in exchange rate losses and was never truly able to recover, CMG’s Ákos Schmidt said. This lead to a realized balance sheet loss of HUF 1.9 bln that year alone.

This was only compounded by the fact that the year saw a rampant economic cri− sis, a clothing retail industry in a difficult sit− uation and low capital levels that launched a debt spiral that eventually led to the com− pany group’s liquidation and the shutdown of its stores in Hungary and the region.

As a result of the significant losses, the percentage of registered capital dropped

Worsening business, FX losses

2008

from a healthy 30% to 8.48%, meaning every day operations called for exter− nal financing. This was mainly managed through short−maturity loans of nearly HUF 4 bln, as well as HUF 1.4 bln in long−term loans.

Schmidt notes that in the critical year of 2008, Jeans Club had due payables amounting to HUF 7.1 bln, nearly as much as its annual revenues of HUF 8.2 bln. Out of the total, HUF 5.3 bln was due within the year whereas the com− pany only had collectibles of a little less than HUF 2 bln. The company also accu− mulated costs by directly financing sev− eral of its foreign subsidiaries.

Being strapped for cash meant that it typically paid its vendors with a 63 day

Bank mortgage filed

FROM BAD TO WORSE By the end of 2008, the financing bank filed mortgage rights for the company and the circumstances that sparked the downward spiral were only getting worse as 2009 progressed.

The company managed to increase turnover by 19%, but profitability was unchanged from a year before, which, com− pounded by growing interest costs, led to a minute profit of HUF 16 million in the year.

Change in management

Small profit, worsening stock management

2009

deadline and could only recoup the costs of its stock over 128 days. This compares to payments to vendors after 42 days and recouping over 116 days in 2007. Schmidt stressed that these timeframes indicate very poor efficiency.

Bankruptcy

2010

2011 Liquidation

Efficiency of sales also worsened, stock rotation increased to 148 days and rose in value to HUF 4 bln from HUF 2.9 bln.

Schmidt says that the figures indicate seri− ous overstocking. In financial terms, pay− ment deadline to vendors rose to 108 days, while liquidity reached critical levels.

This led to a change in management early 2011 who could only oversee in the end, as during the course of the year, the company declared bankruptcy, had its assets confiscated and eventually under− went full liquidation. After winding up its foreign subsidiaries, the company’s finances reached such a state that it was added to the tax authority’s black list of debtors with arrears overdue by 180 days or more by the end of 2011.

10

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2 Business

Budapest Business Journal | July 12 – July 25

WILLING TO GIVE MORE? NOT YET EBRD board member András Kármán sees the low revenue− generating ability of Hungarian banks as their mayor shortcoming in comparison to their regional peers. As long as this issue remains, banks’ willingness to lend will not improve, Kármán told the Budapest Business Journal.

Q

In some Central European countries such as Bulgaria or Ukraine, Western parents’ lower funding capacities are offset by loans from Russian banks that are quite willing to lend, despite the economy.

Can Eastern banks take over lending from their Western counterparts?

A Considering the shock that hit the sec− tor, fairly little consolidation has taken place. Most of the bigger players insist on having a strategic role in the region.

Except for a few, I have seen very few withdrawals: KBC is one. The bank with− drew from Poland and sold its stakes to Banco Populare Santander. Santander wasn’t a significant player but, with that move, it has appeared on the map. The takeover of Volksbank’s subsidiaries by Russia’s SpersBank’s is another exam− ple of Russia gaining visibility in sev− eral countries. Russian banks have been on the offensive in former Soviet states – indeed, they have an expansion strategy.

This is a potential script scenario, though so far we have seen only small steps.

ZSÓFIA VÉGH

Q

Since 2008, corporate lending vol− ume has shrunk in Hungary. Is this the result of the banks’ lim− ited ability to lend, as many studies sug− gest, or due to the low number of viable projects? Are banks in Hungary unable, or unwilling to lend?

A One can make arguments for both. The decline in corporate lending in Hungary is rather a complex matter, in which both supply and demand are a defining factor. On the sup− ply side, the major issue may be the low profit− ability of the domestic banking system. Many of the banks in Hungary are now loss−mak− ing. This has an impact on their lending and risk−taking capacities. This is coupled with a more difficult or limited access to long−term, cheaper resources.

The firms that banks would be willing to finance, usually large Hungarian firms with a good credit rating, balance sheet and a strong focus on exports, don’t plan to take up many loans. Many of these companies are not plan− ning or have postponed expansion or invest− ments as they can’t see whether it is worth it, or because there is so much uncertainty in, for example, the regulatory or taxing matters piv− otal for the investment that they feel the prof− itability of it is questionable.

Small− and medium−sized companies obvi− ously face the curb on bank lending more.

Lending for large firms, however, is depen− dent on their investment plans.

Photo: László Alapfy

Q

BANKS CANNOT PARTICIPATE AS MUCH IN FINANCING THE HUNGARIAN ECONOMY

Q

So banks have a hard time placing loans?

A The ratio of non−performing loans in the corporate sector is around 15−20%: very high. We may be over the worst, though, and the rate is slowly beginning to drop. Still, it translates into a very high profit margin for banks to be able to compensate for that much loss, for every sixth debtor that is insolvent.

This high margin deters many companies from borrowing – with interest rates so high the profitability of their investment would suf− fer. As seen, the problem is layered, so there needs to be several methods to address it. The banks’ withholding tax should be cut. This would result in lower lending interest rates.

Credit risks must be evaporated too, or partly taken over: Eximbank may be able to offer some important services to banks in return

for a guarantee fee for which it would take over risk of non−performing loans. Of equal importance is that the willingness to invest in the region/sector increases: after all, compa− nies will borrow if they see the chance of pros− perity. So the solutions are various, and prob− ably this is also the very same reason why the results take time to show.

Q

Compared to their peers in the region, are local banks taking enough risks?

A The regional angle is vital because many banks are present in multiple coun−

tries in the region, and parents measure performance at a regional level. Hun− garian banks are the weakest in terms of the amount of profit made on each unit of funds allocated here. Hungary fares poorly in this race. Losses stemming from foreign currency loans and the banking tax, higher than anywhere else in the region, both play a role in it. Opportuni− ties are more limited – Hungarian subsid− iaries have to fight to receive more funds from parents. This also means that banks cannot participate as much in financing the Hungarian economy.

How about Chinese banks – could they become significant players in the longer−term?

A Chinese banks have focused more on Chinese firms – they don’t seem to wish to become universal players in a market so far away from them. The stepping forward of Russian banks is more imminent, and I would expect a more enhanced role in countries that they are culturally closer to.

Q

How will the National Bank of Hungary’s growth program affect lending activity?

A Within the second pillar of the program, companies can replace part of their existing FX loans with forint ones. Being low interest rate loans, they won’t see losses in the interest.

Firms will underwrite the losses of exchange rate though. The question is whether com− panies are ready to swallow these losses or are still waiting for a weaker Swiss franc that could scrap some of the exchange rate losses.

I believe a number of firms will choose this program but only a smaller fraction. Large companies usually have euro−loans tied to export financing; SMEs are more likely to have borrowed FX loans speculatively. Over− all, I believe that the program will affect only a small portion of FX loans.

These steps alone cannot trigger an effect: they should be applied consistently and aim in the same direction. I find steps trying to get banks interested in underwriting losses very good. The MNB’s growth program also has an added benefit. Yet these steps are incom− plete without a calculated cut in the bank tax that improves revenues and return on equity.

Just as important is the improvement of an investment−friendly business environment.

By that I mean calculability of regulations and taxes in the first place. Today these two pillars are the weakest.

WWW.BBJ.HU

2 Business

Budapest Business Journal | July 12 – July 25

11

OPINION

TALKIN’ ’BOUT M-GENERATION The emerging era of mobile payments will eventually offer ubiquity, security and a seamless user experience to billions. But for now the reality remains a fragmented market of non−standardized and often difficult−to−use solutions.

J János K Kóka fo former economy minister, CEO of Cellum Global C

ONE SIZE FITS SOME With certain mobile payment applica− tions limited to literally single streets in single cities in the United States, it is difficult to exaggerate the fragmen− tation of today’s m−commerce market.

On the one hand, merchants suffer from ‘acceptance fatigue’, due to the increas− ing number of promising startups offer− ing ‘the latest winning sales channel’, new business models and fancy but untried technology. Still, retailers find ADVERTISEMENT

it difficult to turn down any new means of payment if there is a chance that doing so will result in the loss of even a single customer. They are also encour− aged to say ‘yes’ to new services that integrate payment with marketing and offer loyalty and couponing schemes that demand no upfront investment and bear only moderate commissions.

On the other hand, customers are likewise experiencing ‘gadget fatigue’, becoming lost in an overwhelming number of applications they have to download, register, activate and man− age separately: NFC wallets, remote cloud payment, online checkout, remit− tance or loyalty services, not to men− tion the merchant applications of their favorite retailers.

The mobile payment industry has too often promised its clientele imme− diate success. Yet due to the masses of new technologies with limited usability and the fragmented nature of the mar− ket, 80−90% of applications that are acti− vated remain unused. And according to current international experience, only those applications that are used at least once a week tend to remain in use.

Just think of all the fancy apps that you have downloaded, tried, and, in the absence of regular use, have deleted or left to molder at the bottom of your

applications list. It’s no different from those web pages you used to register for, only to later forget not only your login details but also the very reason you may have registered in the first place.

Why should anyone change their hab− its and invest time and effort trying to understand the new wave of payment technologies? We need to provide clear and tangible benefits, lower costs, bet− ter user experiences, and other real advantages if we are going to change this behavior. Only after we have made the rationale for adoption incontest− able and offered a sense of passion and impulse, as well as a degree of trendi− ness, will we see wide acceptance.

The absence of uniform security standards presents yet another prob− lem, as providers trumpet the security of their customers’ data without any external verification. Servers holding data on hundreds of millions of cards are regularly hacked, causing fear and outrage but no material change in cus− tomers’ behavior. The perceived trust− worthiness of safe and secure solutions is threatened by the failure of a single unprotected application. While immac− ulate, fraud−free operation rarely makes headlines, abuses and leaking of card credentials and other sensitive information always will.

CUI BONO? The industry is floundering in a Scylla and Charybdis choice between the monopolies’ disinterest and the lack of new business models. Only clearly aligned business interests could enforce cooperative business behavior. As long as legacy players insist on maintaining their existing but ailing revenue structures and new entrants are unable to break through due to market fragmentation, new busi− ness model will not be allowed to solidify.

SIM card manufacturers try to engi− neer customer lock−in by offering bun− dled services that prohibit third parties from providing independent over−the− air card management services. In the meantime, operators and handset manu− facturers are reluctant to abandon their exclusive access to certain function− alities, aiming at expropriating their customers, although with only limited success. Each stakeholder attempts to become indispensable by gravitating towards the epicenter of the ecosystem.

In a global world, only players with global aspirations and a new attitude can be genuine agents of change. A free flow of innovative ideas and a critical mass of customer demand, coupled with the devoted ambitions of some blue chip companies and private equity funds, can build up a robust, new value chain.

12

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2 Business

Budapest Business Journal | July 12 – July 25

Pole position

Bribery nation

Happy temps

Central Europe investment volumes increase

Majority think corruption increased in past two years

Temporary employment becomes recognized in Hungary

€1.73bln

INVESTED IN H1 2013, H2 TO BE SIGNIFICANTLY STRONGER

According to global property adviser Cushman & Wakefield, investment activity in the core Central European markets of Czech Republic, Hungary, Poland, Romania, and Slovakia maintained momentum with €631 million invested in Q2, ahead of the same period last year. Year to date some €1.73 billion has been invested in the region, up 24% on H1 2012, with 52 transactions completed compared with 31 for the same period last year. Given the significant pipeline of transactions that are signed but not yet closed, year−end volumes are expected to exceed 2012 levels.

“Whilst activity in the first half of 2013 was somewhat predictable, with Poland dominating, the real interest is in the coming six months with several significant transactions still to be closed and a number of large assets offered in the marketplace,” Charles Taylor, partner at Cushman & Wakefield said. “We expect positive news to emerge shortly regarding closed transactions in the Czech Republic and possibly Hungary too.”

Poland continues to lead the region, attracting almost 72% of investment during Q2 with both Czech Republic and Slovakia each only attracting close to €100 mln. Romania and Hungary experienced no significant investment deals in the last quarter, although investment into Hungary in Q1 2013 was relatively high at €159 mln.

Investors’ preference for the office sector continued, attracting 50% of the investment volumes in Q2 2013 and outperforming the retail sector for the past five consecutive quarters. Activity in the logistics sector declined compared with the previous two quarters, attracting just 10% of investment volumes.

70%

OF HUNGARIANS WOULD NOT REPORT IF THEY MET CORRUPTION

Hungary is corrupt, and the situation has only worsened in the past few years, according to the recently published ‘Global Corruption Barometer’ by Transparency International. Most Hungarians are bothered by pervasive corruption, but ever fewer are willing to take action against it, the survey reveals.

According to the majority of Hungarians (61%) corruption has increased in the past two years, and governmental corruption is a serious issue. According to 82%, the actions of the state and the government are “somewhat or heavily” influenced by a few groups of firms. Thus, Hungarians don’t like the fact that certain groups of firms benefit from state decisions instead of the country itself.

They estimate governmental corruption at 3.8 on a scale from 1 to 5, where 5 is the most corrupted, and only 1% of the people think that this type of corruption is “not at all problematic”.

Thus, 99% believe that corruption in Hungary’s public sector is a problem.

Having investigated some areas of public life, the results of the ‘Global Corruption Barometer’ show that a large majority of people found political parties most corrupt, and that public opinion on politicians has not improved over the years. In line with European and global tendencies, the business sector appears to be the second most corrupt area in Hungary. Further similarities include the fact that in Hungary, as in the European Union, most bribes are paid in the healthcare sector (i.e. facilitation payments made to doctors). In Hungary 18% (and in the EU 12%) of respondents admitted to giving extra money to doctors when using healthcare services.

The survey also found that seven out of ten Hungarians would not report a case of corruption – the worst ratio in Europe.

96%

OF TEMPS DO NOT FEEL DISCRIMINATED AGAINST

Although temporary employment in Hungary is still looked at as a rather uncertain form of employment, an increasing number of temps perceive their situation more positively.

According to a recently released survey conducted by temp agency Work Force Kft, 96% of those asked said they do not feel discriminated against or as an outsider and think that they are valued members of the employees’ team. The survey involved 500 temps and was part of the company’s ‘I Got A Job’ campaign, the aim of which was to make temporary work more popular as an alternative form of employment in Hungary.

The survey also reveals that temps think their position ensures the same level of stability when it comes to salary as a contracted job. Nearly 100% of the participants said they received their salary right on time every month.

The vast majority, 92%, said the temporary position they hold is in line with their education level and professional knowledge. They are satisfied with the amount of work they have to do, with their timetable, the working hours and the performance valuation system the company employs.

Further, 89% of the participants think that they receive all the necessary information for effective performance, and that they are given adequate technical background for their work.

When it comes to their relations with co−workers, the majority said they felt they received enough professional support from their colleagues. Only 15% of those temps asked thought their boss were a source for stress.

The survey also emphasized that the three−party job contract (involving the employer, the employment agency and the temp) was not such a huge administrative burden, as many had feared it might be.

INVESTMENT VOLUMES

DIRTY POLITICS

STRESS FACTORS FOR TEMPS

CE property investment volumes by country, Q1 2013 (€ mln)

Perceptions of corruption, by institution (score scale 1−5, 1=not at all corrupt, 5=extremely corrupt)

What causes the highest stress level at work? (number of respondants)

700

Political parties Parliament/legisleture Religious bodies

525

Business/private sector Judiciary

350

175

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y

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R

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Medical and health Police Public officials/civil servants Source: Transparency International

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150

100

50

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BBJ

3Special Report Hopeful hospitality 14

Where are the domestic guests? 15

DOMESTIC

Do you think spas are boring?

TOURISM

16

14

WWW.BBJ.HU

3

Budapest Business Journal | July 12 – July 25

HOPEFUL HOSPITALITY Although the overall economy is showing some signs of recovery from the recession of 2012, the tourism industry is yet to return to its earlier output and live up to central expectations for the segment’s role on the national stage, financially and socially.

STORY HIGHLIGHTS ■

Tourism industry remains in contraction ■ Lack of national airline changes clientele to less affluent groups ■ State hopeful tourism could assist disadvantaged regions

frame, not to mention the fact that the busi− ness model’s viability is also doubtful.

KEEPING UP NUMBERS Besides the obvious economic impact of the hospitality segment, the government is also hoping that it could have a profound mid− or even short−term positive effect on social issues. Tourism has been identified as one

local initiatives meant to reverse the unfa− vorable processes.

Already, there are pilot programs under way in 10 to 12 smaller localities aimed at developing best practices that could suc− cessfully be implemented in the most seri− ously affected areas.

Hungary has also locked horns with the European Commission over efforts to pro−

GERGŐ RÁCZ

The first quarter of 2013 brought a much− needed bounce back for the Hungarian economy when the country exited the technical recession of 2012 and produced a 0.7% growth on the previous quarter, even though the annual comparison was still in the negative. However, the tour− ism industry isn’t there yet, and after four consecutive quarters of contraction in 2012, once more dropped 1.1% on the year in the January−March period.

Naturally, the summer months are the most crucial for the segment, which is in high need of some good news. The statis− tics from April showed that hotel opera− tors saw their domestic business drop 11% on the year while foreign visitor turn− out was also down 4%. The latest figures for May showed a promising 14% overall increase on the year.If there is any indica− tion that the traditional festival season is providing a boost, it comes from Sopron’s Volt festival attracting an all time record turnout of 110,000, and the Hegyalja event in Tokaj recording 80,000 visitors despite rainy weather. The biggest event, the Sziget in Budapest is likewise set to draw hundreds of thousands.

Apart from the traditionally strong sum− mer months, the state−owned tourism pro− motion agency Magyar Turizmus Zrt is already preparing for the post−season lull and has announced the annual Budapest Winter Invitation campaign, where service providers pledge to offer various discounts and other benefits while also partaking in a promotion campaign abroad.

As in previous years, besides hotels and other accommodation providers, the pro− gram is open to restaurants and recre− ational facilities that are hoping to target a foreign clientele.

CLIPPED WINGS Perhaps the most important issue affect− ing Hungary’s tourism sector, namely the absence of a national airline, is far from solved, however. Most of the routes that were left uncovered by the collapse of Malév last February have been snapped up, especially the lucrative ones.

However, service providers complain that while passenger numbers have largely nor− malized, the dominance of low−cost car− riers at Ferihegy means that the composi− tion of the visitors has changed, in large part shifting to a less−affluent clientele who

THE DOMINANCE OF LOW-COST CARRIERS AT FERIHEGY MEANS THAT THE COMPOSITION OF THE VISITORS HAS CHANGED, IN LARGE PART SHIFTING TO A LESS-AFFLUENT CLIENTELE

take advantage of bargain deals rather than spend larger amounts of money.

Though there is a determination from the state to support the creation of a new national airline, the chances of that becoming a real− ity, and especially a success, seem very slim.

Experts agree that the airline industry is a very fast−moving business, which is why competitors immediately pounced on any via− ble business opportunities left in the wake of Malév’s demise, leaving no market gap.

The latest idea circulated in the press that a new, Hungarian firm dubbed Sólyom (hawk) could take off as soon as August has mostly evoked mirth rather than any− thing else, seeing that such an early launch couldn’t be possible in such a short time−

of the prospective industries that the govern− ment hopes will be able to advance rural econ− omies and consequently reverse unfavorable demographic processes in the countryside.

While the overall number of Hungarians is dropping, it is all the more prevalent in rural locations. Census data show that 63% of the Hungarian population lived in vil− lages in the early 1950s, which was down to 53% in the 1980s, 38% in the 1990s while the latest tally found only 30.5% of the pop− ulace remained.

Accordingly, the Human Resources Min− istry has announced a program with a bud− get of HUF 300 million in central Hun− gary and HUF 500 mln for underprivileged regions elsewhere that could be spent on

mote domestic tourism. The introduction of the state−owned voucher system sparked an infringement procedure in Brussels, since the system was launched while essen− tially ousting other, foreign providers.

“With this step, the EC endangers the future of a successful program that has proven its value at home, it provided a help− ing hand to the Hungarian people and set an example for other countries to follow,” the Economy and Public Administration Ministries said in a statement.

The government said that the SzÉP pro− gram allowed nearly HUF 70 billion to be channeled into the economy through tour− ism and other in−kind purchases available for the vouchers.

WWW.BBJ.HU

3

Budapest Business Journal | July 12 – July 25

15

WHERE ARE THE DOMESTIC GUESTS? The number of foreign visitors to Hungary didn’t decrease significantly in 2012 as many feared after the collapse of Hungarian airline Malév last February. But even if low cost and legacy airlines have been busy keeping passenger traffic up at Hungarian airports, the tourism and hospitality business is struggling to find the path to recovery.

KRISZTIÁN KUMMER

According to the Central Statistics Office, all of Hungary’s tourist regions were affected by the fall in domestic arrivals. Year−on− year, the number of arrivals decreased by 4.7%, with an 11% slump seen in terms of guest nights. In hotels accounting for 76% of domestic arrivals, the number of tourism nights decreased by 10%. And it is evident, that the slump largely affects rural hotels as the majority of foreign tourists (around 40% every year) visit Budapest.

REGIONAL DIFFERENCES That is not to say there are not great differ− ADVERTISEMENT

DEBRECEN AQUATICUM

ences among Hungary’s regions. In 2012, 70% of Austrians visited Western Transda− nubia, and hotels in this region very much felt the beneficial effects of the trend. “Last year our occupancy reached 79%, we have set records in every possible sense,” said Dezső Orbán, director of the Hotel Famu− lus in Győr, the regional center of Western Transdanubia. “An occupancy rate so high is highly unusual for a city hotel,” he added, but admitted that he doesn’t expect such good results for 2013. “Unfortunately, the economic and market outlook won’t allow us to stay too long at the top. We expect this year will be 5−10% worse,” he predicted.

Near the Austrian border in the town of Sárvár, famous for its thermal waters, the

wellness and spa Spirit Hotel has also felt the benefits. “Last year, more than 50% of our guests were Hungarian, while foreign visitors arrived from Austria, Germany, Slo− vakia, Czech Republic and Russia,” market− ing manager Balázs Víg said. The occupancy rate of the hotel, which opened in 2008, was 50−60%, but Víg expects an increase of some percentage points year by year.

At the other end of the country, the pro− portion of foreign visitors is significantly lower. “Two−thirds of our guests are domestic, foreign visitors arrive mainly from Romania,” said Dr. Gábor Hevessy, director of the Aquaticum Debrecen Ther− mal and Wellness Hotel, adding that the hotel is primarily interested in the leisure market and that conference tourism is less significant for them.

HELPING HAND FROM THE STATE “Promotion of the country is a key gov− ernment task, as it is important from both an economic and a social point of view to establish a consistent and positive image of the country and to show our values and diverse, unique offerings in an attractive way,” said Marianna Tóth, CEO of national tourism agency Magyar Turizmus, at the presentation of the marketing 2013 plan last November.

Rural hotels might not feel the benefits of the government’s plans, but that doesn’t mean they do not have their own ideas

of how to promote tourism to the coun− try. “Infrastructure is the key word,” Orbán emphasized. “If thermal baths and spas were renovated and sufficient conference centers were built in the capital and rural cities, national marketing campaigns would find their target easier.”

In Debrecen, foreign tourists would be welcome, but access is not so easy. “Market− ing an eastern and a western airport besides Budapest would be a great help, as would facilitating entry from Russian and Ukrai− nian territories,” Hevessy said.

Miklós Gaál, sales director of the Life− style Hotel Mátra in Mátraháza, admits that the industry would be at a great disadvan− tage without the help of Magyar Turizmus, but also has suggestions to make the tour− ism business more lucrative. “Reducing the tax burden on the hospitality business, increasing the national marketing budget for tourism, and making regional marketing more effective would increase the number of guests,” he insisted.

But Szabolcs Tari, director of the Szala− jka Liget Hotel in Szilvásvárad, looks at the situation from a different point of view. “Is it necessary to further increase the number of tourists? Isn’t it sufficient to increase the spending effectiveness of the existing tour− ists? Or target more wealthy tourists? It’s not necessary to find something new, it’s enough to take a look at the best practices of coun− tries ahead of Hungary,” he reasoned.

16

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3

Budapest Business Journal | July 12 – July 25

DO YOU THINK SPAS ARE BORING? A unique feature of Budapest, and a must−see for all tourists, is the numerous historical baths in the heart of the city. They offer various programs, not just for the elderly, but also the young crowd, like loud music parties that go on until dawn.

KRISZTIÁN KUMMER

Budapest is known as the capital of baths because of its many natural water sources and the number of spas in the city. Ther− mal waters were enjoyed by Romans liv− ing around the area as early as the sec− ond century AD, but the bath culture here really started to flourish in the 16th century during the almost 150 years of Turkish occupation. Many Turkish era baths are still open, and elderly tourists are keen to enjoy the combined healing power of thermal waters, peaceful relax− ation, and a good massage. But what kind of fun could a thermal spring offer younger generations?

Well, actually a lot. Every now and then the usual quiet chitchat heard in the his− torical pools is replaced with loud party music and the noise of dancing feet until dawn. These parties are not unknown to

Hungarians, but their fame is actually more wide spread amongst foreign tour− ists, who sometimes come directly just to visit one of the bigger parties. “We orga− nize pool parties every Saturday and twice a year on a more grand scale, the latest is called Cinetrip,” said Kriszta Tóth, com− munications manager of the organizing company Intersputnik. “We set targeted on− and offline campaigns abroad with the help of partner companies involved in festival and party tourism. Also we are frequently featured in the international airlines’ in−flight magazines, enabling us to reach quite a wide spectrum of tar− get groups around the world,” she said by way of explaining the strong international interest on the parties. (Indeed, only 0.4% of party visitors are Hungarian, accord− ing to Intersputnik.)

But those arriving with small children can find the appropriate amusement too.

“Budapest Gyógyfürdői usually orga− nizes family and sports days by itself, but many other events are held in cooperation with external event management compa− nies,” said Tamás Csébi, the communica− tion manager of the company that man− ages baths and spas owned by the city of Budapest. “The events don’t generate sig− nificant revenue but do provide additional services to the customers, attracting the attention of new target groups to baths and their services.”

RÁC TO OPEN NEXT YEAR? The renovation of the Rác baths – one of a handful of Turkish baths in Budapest – and the construction of a hotel at the site was completed more than two years ago, but a row over the capital’s stake in Rác Nosztalgia, the troubled project company that renovated the historic bath, prevented it from reopening. “To open Rác Hotel and Bath an extra HUF 1 billion in pre-opening costs should be disbursed, but due to the debts of the project company of more than HUF 10 bln, that wasn’t a realistic option,” said Enikő Kovács, press officer of the Mayor’s Office. “How much the total settlement will be, you can not tell in advance precisely, as many circumstances may vary the final sum. To date, Budapest Municipality has spent, all-in-all, HUF 2.2 bln to buy the debt claims of MFB Bank. Given our presentday knowledge, a grand opening for the hotel and bath would seem realistic between March and June 2014.”

The privately owned Aquaworld Water Theme Park organizes special events on a regular basis for youngsters, fami− lies, and fans of sports like beach volley− ball or soccer. The so−called moonlight wellness and sauna nights attract visi− tors with live Latin music and a beauty contest is held every year in the theme park. “Twenty percent more guests visit

our events, but the extra income they generate is hard to calculate as it is usu− ally spent on event development,” Anna Kövesdi, PR manager of Aquaworld said. “The proportion of foreign guests is around 15% in the park and not sig− nificantly affected by the events. How− ever, young foreign groups like to visit our night swimming parties,” she added.

BLOOD, SWEAT AND HEAT – LISTEN TO YOUR HEART Looks like we are in for a capricious summer – with the rivers ebbing and cold winds subsiding, a second heat wave is forecast for the weekend. For many, it is a literally heart-felt change of weather. Countering the yo-yo effect of meteorological highs and lows is beyond our control, but caring for your circulation is certainly manageable.

T

he inverted formula is simple: as the mercury rises in the thermometer, so your blood pressure drops.

“That’s the natural consequence of hot weather, as your blood vessels dilate,” explains Dr. Mónika Solymos, cardiologist at Dr. Rose Private Hospital. “It gets even worse with excess perspiration and

dehydration: blood thickens, BP further drops. You must be extra cautious if you are on medication to control high blood pressure, as the heat may uncontrollably enhance the drug’s effect.”

H2O Heavy perspiration cools the body, but

with all that sweat you are not only losing water: minerals and electrolytes are also secreted. Electrolytes are essential components to control cell metabolism, they keep your alkaline balance, and regulate water retention. “There is an extremely narrow margin for healthy electrolyte levels,” says Dr. Solymos.

“Upsetting the balance may lead to cardiac arrhythmia.” Making up for lost electrolytes and dehydration is not all that unpleasant: eat lots of juicy fruit and vegetables, and drink plenty of mineral water or isotonic drinks. “Coffee should be avoided, though,” warns the doctor, “it being a diuretic, depleting your body of water and minerals.”

GOOD TO KNOW An average adult needs 2-2.5 liters of water a day. Apart from what you take in naturally with food, you need to drink 1.5-1.8 liters of water. In extreme heat, your body needs 50% more water. Tea, soft drinks, energy drinks and lemonade contain 90-98% water, while milk and fruit juices contain 85-90%.on alcohol.

And do not forget pharmacological contraindication: a long list of drugs that cause serious side effects when combined with even a little alcohol. Should you have the slightest health issue, make sure that you discuss your drinking habit with your physician – how much and how often you are allowed to drink could be a lifesaver.

HEART MATTERS People are generally more active in the summer, spending time outdoors, exercising, and moving about. “Should you have the least circulation problem, it is important to find out how much activity your system can endure,” advises Dr. Solymos. With palpable heart problems or genetic disposition to cardiac disease, it is highly recommended to have at least a basic cardio checkup – an ultrasound scan and ECG – before you do sports or intensive exercises.

An extreme heat wave will take its toll, putting a heavy burden even on a healthy heart.

Undulating blood pressure and arrhythmia – irregular heartbeat – are not uncommon symptoms in the heat. If you experience similar conditions or feel dizzy and sick, avoid any physical activity, take a rest, find a cool place, and check your blood pressure and pulse frequently.

CHECK IN FOR A CARDIO CHECK-UP Call (+36) 1 377-6737 or book online at www.rendelo.drrose.hu Széchenyi square 7/8, 1051 Budapest

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

PROMOTION

18

WWW.BBJ.HU

3

Budapest Business Journal | July 12 – July 25

Four/five-star hotels outside Budapest

RESIDENCE Ă“ZON**** SUPERIOR CONFERENCE & 4 WELLNESS HOTEL / HOTEL Ă“ZON KFT

812

169 79 3 8

86 113

4* superior

786

272 136 0 0

89 146

4*

521

118 59 1 6

90 100

4*

483

404 170 1 7

72 100

4* superior

416

116 57 1 6

81 103

4*

240

134 45 1 4

85 120

4* superior

www.danubiushotels.hu/sarvar

6

HOTEL FAMULUS**** / PANNON FAMULUS KFT www.hotelfamulus.hu

7

HOTEL SILVER**** SUPERIOR *(27+(50 h'h/Ĺ‚ .)7 www.hotelsilver.hu

RESIDENCE BALATON**** CONFERENCE & WELLNESS HOTEL 8 / HOFFMANN HOTEL ÉS RENDEZVÉNY KFT.

–

–

–

–

–

–

–

–

1996 2012

Hungarian Kolping Family Holiday Foundation (50) Kolping Verwaltungs GmbH (50)

Csaba Baldauf Katalin MarkĂłnĂŠ HosszĂş DĂłra Kutai

8394 AlsĂłpĂĄhok, )Ĺƒ ~W (83) 344-141 (83) 344-142 sales@kolping.hotel.hu

Danubius Hotels Nyrt. (100) –

PĂŠter Katz ViktĂłria NĂŠmeth Gabriella HorvĂĄthTakĂĄcs

9740 BĂźk, EurĂłpa Ăşt 1.

(94) 889-400 (94) 889-413 buk.reservation@ danubiushotels.com

Hoffmann Hotel Ês RendezvÊny Kft (99,96), Henrik Hoffmann (0,04) –

Henrik Hoffmann – –

3233 MĂĄtrahĂĄza (37) 506-000 (37) 506-009 info@hotelozon.hu

Danubius Hotels Nyrt. (100) –

PĂŠter Katz ViktĂłria NĂŠmeth Gabriella HorvĂĄthTakĂĄcs

9600 SĂĄrvĂĄr, RĂĄkĂłczi utca 1.

(95) 888-400 (95) 888-499 sarvar.reservation@ danubiushotels.com

Âť

– –

'H]VĹƒ 2UEiQ RĂłbert Beke –

*\ĹƒU Liszt Ferenc utca 42.

(96) 547-770 (96) 547-779 hotel@hotelfamulus.hu

1989 2011

Lajos Tóth (100) –

Lajos TĂłth SĂĄndor Balogh Csilla Csontos

4200 HajdĂşszoboszlĂł, MĂĄtyĂĄs kirĂĄly sĂŠtĂĄny 25.

(52) 363-811 (52) 362-639 info@hotelsilver.hu

–

1996 2013

József Hoffmann (66,83), JózsefnÊ Hoffmann (4,07), Andrea Hoffmann (19,3), Henrik Hoffmann (9,8) –

Henrik Hoffmann – –

8600 SiĂłfok, Erkel Ferenc u. 49.

(84) 506-840 (84) 506-839 info@hotel-residence.hu

Relax park, apartment house, squash, cycling

2003 2008

Ildikó Halåsz (25), Kåroly Halåsz (25), Pharmainvent Kft (50) –

Szabolcs Tari ErvinnĂŠ StĂĄber Zsuzsanna Ablaka

3348 SzilvĂĄsvĂĄrad, Park utca 25/A (36) 564-300 (36) 564-302 info@szalajkaliget.hu

BÊla CserÊp – GrÊta MåthÊ

8230 BalatonfĂźred, GyĂłgy tĂŠr 1.

(87) 581-200 (87) 581-201 reservation@ annagrandhotel.hu

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

OTHER

4*

DANUBIUS HEALTH SPA 5 RESORT SĂ RVĂ R

8380 HĂŠvĂ­z, Attila utca 1.

(83) 501-500 (83) 340-468 hotel@carbona.hu

EVENT MANAGEMENT

121 210

www.hotelozon.hu

Ferenc LukĂĄcs AndrĂĄs KĂłsi Zsuzsa PĂĄpai

FAMILY FRIENDLY

1090

www.danubiushotels.hu/buk

386 200 0 3

DANUBIUS HEALTH SPA 3 RESORT BĂœK

(100) –

INTERNET IN ROOMS

4*

www.kolping.hotel.hu

1997 2010

CAR RENTAL

83 166

KOLPING HOTEL SPA & FAMILY RESORT/KOLPING HOTEL KFT

–

Outdoor pool, swimming pool, spa, medical center

GARAGE

362 134 4 6

2

BEAUTY SALON

1358

www.carbona.hu

WELLNESS

4* superior

BUSINESS CORNER

CATEGORY

121 183

RESTAURANT

TOTAL NET REVENUE (HUF MLN) IN 2012 2495

522 261 10 3

RANK

SINGLE RATE (EURO/NIGHT) DOUBLE RATE (EURO/NIGHT)

NATURMED HOTEL CARBONA****SUPERIOR / 1 HOTEL CARBONA ZRT

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

SERVICES NO. OF BEDS NO. OF ROOMS NO. OF SUITES NO. OF MEETING ROOMS

COMPANY WEBSITE

YEAR OF ESTABLISHMENT YEAR OF LATEST RENOVATION

Ranked by total net revenue in 2012

–

–

Indoor and outdoor pool, tennis courts, minigolf, obstacle course

–

Parking, squash, bowling, hot tub, ÀWQHVV FOXE

–

1986

Âť

1995 2010

1985

Âť

2007

www.hotel-residence.hu

SZALAJKA LIGET HOTEL**** SUPERIOR ÉS 9 APARTMANHà ZAK / TREND CONSULT KFT. www.szalajkaliget.hu

ANNA GRAND HOTEL**** WINE & VITAL / NR ANNA GRAND HOTEL KFT.

Âť

Âť

www.annagrandhotel.hu

Âť

APHRODITE HOTEL NR ZALAKAROS/ZALA-KRAFT KFT. www.wellnesshotelaphrodite.hu

CROCUS GERE BOR HOTEL/ NR PAULI & GERE CONSULTING KFT.

Âť

www.danubiushotels.hu/aqua

DANUBIUS HEALTH SPA NR RESORT HÉV�Z www.danubiushotels.hu/heviz

38 4 –

Âť Âť

crocus-hotel.gere.hu

DANUBIUS HEALTH SPA NR RESORT AQUA

100 – 8

25 – 1

–

Âť Âť

Âť Âť Âť Âť Âť Âť

–

Âť Âť

9LUiJ (UQĹƒ

VirågnÊ Bålint Måria (24), Viråg Zsolt (27) –

Måria Bålint VirågnÊ – Eszter NÊmeth VirågnÊ

8749 Zalakaros, Sport utca 10.

(93) 540-140 – info@hotelaphrodite.hu

–

Âť Âť

*HUH %RUWHUPHOĹƒ Kereskedelmi ĂŠs SzolgĂĄltatĂł Kft. (100) –

Zoltån Pauli – –

7773 Villåny, Diófås tÊr 4–12.

(72) 492-195 (72) 592-019 hotel@gere.hu 8380 HÊvíz, Kossuth Lajos utca 13–15.

(83) 889-401 (83) 889-402 aqua@ danubiushotels.com 8380 HÊvíz, Kossuth Lajos utca 9–11.

(83) 889-403 (83) 889-402 heviz@ danubiushotels.com

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462 224 7 1

Âť Âť

4*

Âť

420 203 7 7

Âť Âť

4* superior

–

–

Âť Âť Âť Âť Âť

Âť

Âť

–

ADDRESS PHONE FAX EMAIL

Vivamus Bt. (67), Balaton Imperial Kft. (23) –

Âť Âť

Âť Âť

–

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

Âť Âť Âť Âť Âť Âť Âť

–

–

Medical services

1984 2012

– –

Rita Nagy Erika Rakos TamĂĄs TĂśreky

Medical services

1976 2000

– –

Rita Nagy Erika Rakos TamĂĄs TĂśreky

WWW.BBJ.HU

HERTELENDY KASTÉLY / HERTELENDY NR KASTÉLYSZà LLÓ KFT.

HOTEL CARAMELL**** / NR BĂœKI KFT. www.hotelcaramell.hu

NR

www.hoteldivinus.hu

Âť

221

Âť

HOTEL KAROS SPA / NR KAROSINVEST ZRT. www.karos-spa.com

Âť

www.hotellycium.hu

KEHIDA TERMĂ L HOTEL / NR KEHIDA TERMĂ L KFT www.kehidatermal.hu

NR

KÉK DUNA WELLNESS HOTEL www.wellnesshotel.hu

MESÉS SHIRAZ WELLNESS & TRAINING HOTEL / NR HOTEL EGERSZALÓK ZRT.

www.parkinn.com/hotel-sarvar

PUCHNER KASTÉLYSZà LLÓ**** www.puchner.hu

190 87 4 15

Âť

Âť Âť Âť

Âť

110 45 1 4

2012 2013

KÉSZ Hotel Ês Konferencia Menedzsment Kft (100) –

Tibor Polgår – –

6000 KecskemĂŠt, IzsĂĄki Ăşt 6.

(76) 888-500 (76) 888-501 sales@ fourpointskecskemet.com

Âť Âť

90 108

Âť

4*

–

2007 2012

– Remi Finanz- und Verwaltungs Aktiengesellschaft (99,90)

Ermano Bassi IstvĂĄn Gyenesei BĂśhm Bianka

7541 KutasKozmapuszta, 0120/4 hrsz.

(82) 568-400 (82) 568-030 hotel@hotel-hertelendy.hu

Âť Âť

– Dayone Consulting Ltd. (100)

Låszló Birkås – Georgina Egresits

% NI UGĹƒ EurĂłpa Ăşt 18.

(94) 558-030 – info@caramell.hu

Âť

Divinus Hotel h]HPHOWHWĹƒ .IW

–

-iQRV 6]Ĺ?FV Zsuzsanna Teremi Zsuzsanna Varga

4032 Debrecen, Nagyerdei kĂśrĂşt 1.

(52) 510-900 (52) 510-901 info@hoteldivinus.hu

–

2004 2010

(100) –

ĂœsztĂśke Botond – Gyutai-Szalay Nikoletta

8749 Zalakaros, Alma utca 1.

(93) 542-500 (93) 542-501 sales@karos-spa.hu

ZLĂ€

2006 2013

– –

Lajos Fazekas Zsuzsanna HĂĄmos PĂŠter Palotai

4026 Debrecen, Hunyadi utca 1–3.

(52) 506-600 (52) 506-601 hotel@hotellycium.hu

–

2003 2012

TihamÊr Horvåth, SebestyÊn Horvåth (100) –

– Gåbor Vastag Flóra Bencsik

8784 KehidakustĂĄny, Kossuth Lajos utca 62.

(83) 534-501 (83) 534-592 sales@kehidatermal.hu

Âť

Szaktudås Kiadó Zrt. (100) –

Krisztina Sårvåri – –

2300 Råckeve, DÜmsÜdi út 1–3.

(24) 523-230 (24) 523-250 recepcio@ wellnesshotel.hu

Âť Âť

– –

– – –

3233 MĂĄtrahĂĄza (21) 300-7200 (21) 300-7201 info@hotelmatra.hu

2003

Âť

(100) –

Richård Szepesi – –

3394 EgerszalĂłk, SzĂŠchenyi Ăşt 31.

(36) 574-500 (36) 574-505 info@shiraz.hu

– –

BĂĄlint TĂślli Mariann LukĂĄcs Krisztina Hamar

9600 SĂĄrvĂĄr, Vadkert utca 4.

(95) 530-100 (95) 530-101 info.sarvar@ rezidorparkinn.com

–

–

Âť Âť Âť Âť Âť

–

Âť Âť Âť

–

–

Âť Âť

–

90 140

4*

Âť Âť

Âť

4* superior

–

–

–

–

–

Âť Âť

–

–

–

–

–

SPIRIT HOTEL THERMAL SPA/SPIRIT HOTEL GYĂ“GYSZĂ LLODA KFT

NR

THERMAL HOTEL VISEGRĂ D www.thv.hu

VELENCE RESORT & SPA www.velencespa.com

Âť = would not disclose, NR = not ranked, NA = not applicable

2003

Âť Âť

Âť

134 51 3 5

Âť Âť

Âť

446 223 12 5

Âť Âť

4*

–

–

–

–

–

Âť Âť

Âť

Âť Âť

4*

–

–

–

–

Âť Âť

– –

– – –

7346 Bikal, RĂĄkĂłczi utca 22.

(72) 459-546 (72) 459-549 info@puchner.hu

100 182

5* superior

–

–

–

–

Âť Âť

– –

Judit Lamperth AndrĂĄs KĂłsi BalĂĄzs Vig

9600 SĂĄrvĂĄr, Vadkert kĂśrĂşt 5.

(95) 889-500 (95) 889-510 info@spirithotel.hu

–

–

Âť

– –

– – Andrea Gregor

2634 NagybĂśrzsĂśny 0208/56 hrsz.

(27) 378-034 (27) 378-065 szentorban@ szentorban.hu

Âť Âť

–

2004

DBI Ingatlanhasznosító Kft. (100) –

Gåbor Nådas – Låszló Durkó

2025 VisegrĂĄd, Lepence-vĂślgy (26) 801-900 (26) 801-918 info@thv.hu

– –

PÊter Bårsony – PÊter FejÊr

2481 Velence, Tó utca 4–6.

(22) 589-900 (22) 589-971 reservation@ velencespa.com

Âť

111

Âť

Âť

Âť

Âť

Âť Âť Âť Âť Âť Âť

271 17 5

Âť

184 57 3 5

80 101

4*

Âť

398 164 10 10

Âť Âť

Âť

www.szentorban.hu

NR

2008

Âť Âť

www.spirithotel.hu

SZENT ORBĂ N ERDEI WELLNESS HOTEL**** / NR NAGYIRTĂ S KFT

Âť

Âť

114

–

3

NR

2004

Âť

www.shiraz.hu

PARK INN BY RADISSON NR SĂ RVĂ R RESORT & SPA

ADDRESS PHONE FAX EMAIL

200

LIFESTYLE HOTEL Mà TRA**** NR SUPERIOR - BÉRC HOTEL KFT. www.hotelmatra.hu

NR

Âť 2

HOTEL LYCIUM**** DEBRECEN / '(%5(&(1, *<Ă?*<)h5'Ĺ&#x201A; NR KFT

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

OTHER

179 10 5

EVENT MANAGEMENT

Âť

Âť

â&#x20AC;&#x201C;

FAMILY FRIENDLY

Âť Âť

Âť

HOTEL DIVINUS*****

â&#x20AC;&#x201C;

INTERNET IN ROOMS

â&#x20AC;&#x201C;

CAR RENTAL

Âť

GARAGE

Âť Âť

â&#x20AC;&#x201C;

BEAUTY SALON

Âť

170 80 1 3

www.hotel-hertelendy.com

Âť

WELLNESS

Âť Âť

4*

BUSINESS CORNER

Âť

41 19 8 1

118 127

RESTAURANT

Âť

160 136 6 8

SINGLE RATE (EURO/NIGHT) DOUBLE RATE (EURO/NIGHT)

CATEGORY

NO. OF BEDS NO. OF ROOMS NO. OF SUITES NO. OF MEETING ROOMS

www.fourpoints.com/kecskemet

YEAR OF ESTABLISHMENT YEAR OF LATEST RENOVATION

FOUR POINTS BY SHERATON KECSKEMĂ&#x2030;T HOTEL AND NR CONFERENCE CENTER

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

SERVICES

TOTAL NET REVENUE (HUF MLN) IN 2012

RANK

COMPANY WEBSITE

19

3

Budapest Business Journal | July 12 â&#x20AC;&#x201C; July 25

Âť

Âť

179 4 7

Âť Âť

4*

â&#x20AC;&#x201C;

â&#x20AC;&#x201C;

â&#x20AC;&#x201C;

â&#x20AC;&#x201C;

â&#x20AC;&#x201C;

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â&#x20AC;&#x201C;

2007

Âť

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This list was compiled from responses to questionnaires received by July 5, 2013 and publicly available data. To the best of the Budapest Business Journalâ&#x20AC;&#x2122;s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, MadĂĄch Imre Ăşt 13â&#x20AC;&#x201C;14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

BBJ

4Socialite BOOK REVIEW

RESTAURANT REVIEW

Robertson−Breen: Brick by brick

22

WHO'S NEWS

Name ÁKOS KOVÁCH Current company/ position GIDE LOYRETTE NOUEL BUDAPEST / PARTNER

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Kovách was elected partner at Gide Loyrette Nouel Budapest in June 2013 after serving as co-head of the office since last year. He has more than ten years of experience in all fields of competition law, assisting clients throughout various proceedings initiated by the Hungarian Competition Office and regularly representing clients before the European Commission. In addition, he advises major international companies in various cross-border M&A matters, and assists clients on structuring their investments in Hungary.

Gundel, the living legend

23

Do you know someone on the move?

Send information to research@bbj.hu

Name EDINA TÖRŐ Current company/ position ADECCO MAGYARORSZÁG / HEAD OF PERMANENT PLACEMENT DIVISION

Adecco Magyarország has named Edina Törő as head of the company’s permanent placement division. The company wants to further strengthen its market position with the current assignment, Adecco said in a press release. The new director previously worked with various multinational companies as HR manager, and has also gained experience in operative management. She graduated from the Eötvös Loránd University of Budapest in 1996, and obtained further degrees at the Central European University in 2003 and at the Science University of Pécs in 2010.

Name GÁBOR ÉRY Current company/ position ERICSSON MAGYARORSZÁG / CHAIRMAN-CEO

As of July 1, Éry is the new CEO of Ericsson Magyarország, and was also named chairman of the company’s board. He succeeds Ali Shah, who continues his career as technical director of the company’s Central European Business Unit. Éry has more than 20 years of professional experience, and has worked at Ericsson’s parent company in Stockholm, in North Africa and in Russia.

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21

Budapest Business Journal | July 12 – July 25

D

PROMOTIONAL FEATURE

EVERY PERSON HAS A RESPONSIBILITY

NOTE: ALL ARTICLES MARKED PROMOTIONAL FE ATURES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

To promote ethical business conduct and recognize commitment to fight against corruption, Telenor launched its Ethical Company Award last year. The Budapest Business Journal asked Frank Klausz III, Chief Corporate Development Officer of Telenor Hungary, about what measures a company should take to promote ethical conduct, what Telenor itself does, and how colleagues can motivate each other for common improvement.

Q: WHAT KIND OF ADMINISTRATIVE TOOLS CAN A COMPANY USE TO PROMOTE COMMITMENT TOWARDS ANTICORRUPTION? A: If you decide that ethical conduct is of key importance, as we did at Telenor, you have to make sure all employees know this and follow your lead. It is essential that each and every colleague understands what this is about and works accordingly. There are various administrative tools and processes that can be used to make sure that the entire operation runs ethically. Establishing an integrity system with a proper code of conduct, anticorruption handbook or set of policies, together with a whistle-blowing or hotline solution, provide a firm foundation.

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CV

These serve two purposes: first, to be clear about what is expected, and second, to provide the tools to make it easy to comply with the expectations. But administrative solutions are not efficient enough without management commitment. We conducted an informative survey with our partners Transparency International last year and it showed that such tools alone would not eliminate the risk of corruption. You need serious and evident leadership commitment and processes that actually work to make a real difference.

Leaders really must set a good example and don’t forget: it is always what you do, not what you say!

Q: WHAT KIND OF TOOLS DOES TELENOR USE? A: We have a functioning integrity system with various elements including an anonymous hotline, code of conduct, anti-corruption handbook, plus a robust compliance system that works in harmony with that of our mother company. It ensures that all our processes are in compliance with regulations, that those regulations are constantly monitored, and that incidents are reported as appropriate to management and handled according to our policies. Risk assessments are carried out on a regular basis and potential risks handled with special attention and care. We have been developing a corporate culture where fighting corruption is not taboo; we speak openly about our efforts. We believe that by simply doing this we reduce the possibility of some-

Telenor Hungary’s Chief Corporate Development Officer Frank J. Klausz III graduated from Harvard University in 1992 and from The Warthon School University in 1997. He spent several years at Oracle and A.T. Kearney before joining Telenor in 2011. one even thinking about breaching regulations. It is also important that co-workers have trust in the system, and that they are willing to use the hotline. Colleagues must understand it is not an act of denouncing but an act of responsibility when they seek advice before damage is done. At Telenor we make it very clear: a question has no consequence, but wrong decisions definitely do. In the case of any infringement we exercise zero tolerance.

Q: WHAT KIND OF TOOLS WOULD YOU SUGGEST FOR AN SME? A: It is obvious that SMEs do not have a mother company’s background or finances and knowhow to develop and manage their own integrity system. Unfortunately, in Hungary they operate in an environment where corruption exists, and their solvency may depend upon the next tender result. Therefore it is especially valuable when an SME decides to work fairly in any respect and we really appreciate them. It is for their sake we established the Telenor Ethical Company Award to acknowledge and celebrate them. We have also developed a new e-learning toolkit ‘SME Courage’ together with Transparency International where typical SME dilemma cases are elaborated. We encourage all our business partners to use it to train their own colleagues.

Q: WHO IS RESPONSIBLE FOR A COMPANY’S ANTI-CORRUPTION MOVEMENTS? A: People usually think anti-corruption is what scholars, civil organizations or man-

agers do. Most people believe they are not corrupt because they would not take envelopes with money. We at Telenor explain to our employees that in an ethical corporate culture each and every person has a responsibility. We all make decisions at work and we always have to evaluate these according to fairness among other factors. All decisions have to be made or reviewed by more than one person so there is continuous control. Conflicts of interest are dealt with openly and are therefore easily manageable.

Q: SOMETIMES THE EMPLOYEES TEND MORE TOWARDS ANTI-CORRUPTION MORE THAN THEIR SUPERIORS. DO THEY HAVE ANY MEASURES OR TOOLS TO FORCE EMPLOYERS TOWARDS MORE ETHICAL CONDUCT? A: I think they simply vote with their choice of workplace. An interesting trend has started since Telenor took a brave step forward and communicated to the wide public that we are an ethical company. Our HR department reported that eight out of ten job applicants mention Telenor’s ethical values as a motivation. I believe that in the long-term fairness pays off; it attracts people with similar mindsets and our partners, our customers, and ourselves will all definitely benefit from that.

Q: IS THIS A SPECIAL DEDICATION UNIQUE TO TELENOR HUNGARY OR DOES YOU GROUP WORK LIKE THIS IN OTHER COUNTRIES, TOO? A: These are values and commitments Telenor Group maintains in all countries. For example during the recent and successful tendering process in Myanmar, Telenor was also evaluated according to our ability to contribute to building a new, competitive, and democratic country. We are very proud that our worldwide ethical commitment, experience, and proven contribution in countries like Bangladesh, Pakistan and India helped us to win the trust of the Myanmar people.

www.telenor.hu

WWW.BBJ.HU

22

Budapest Business Journal | July 12 – July 25

BOOK REVIEW

JUST ANOTHER BRICK IN THE WALL LEGO is one of the world’s best−loved and most familiar brands, adored by generations of children. What is less well known is that this iconic company came close to total collapse in 2003, before staging an astonishing recovery.

‘Brick By Brick’ tells the compelling story of a Danish family−owned company that enjoyed decades of suc− cess before its inability to keep in step with a rapidly changing market brought it crashing to earth. It’s also the story of an extraordinary turn−around. As disas− ter stared them in the face, the management of LEGO embarked on an audacious plan to restore their for− tunes, and then painstakingly implemented it. Today, the company is riding high once more, and enjoying results that are the envy of its competitors.

Granted unprecedented access to every part of the LEGO Group, David Robertson and Bill Breen chart each twist in the company’s story and explain pre− cisely what went wrong. By the end of the 1990s, the growing demand for electronic toys had trans− formed the toy market. It had become a fast−paced and extremely competitive digital environment, and LEGO was falling behind. To combat this, the compa− ny’s leaders implemented some of the business world’s most widely espoused prescriptions for boosting inno− vation, and in doing so pushed LEGO to the brink of

bankruptcy. The company’s near−collapse shows that what works in theory can fail spectacularly in practice.

The book goes on to explore LEGO’s brilliant recov− ery plan, and shows how a new leadership team was able to fundamentally rethink what ‘innovation’ meant to them. Through this exploration, the authors address the difficult questions confronted by most organiza− tions: how can a company give its employees free− dom to innovate while maintaining their focus, allow them autonomy while ensuring accountability, and deliver in the short−term while working on a long− term strategy? Most importantly, how can a company work within the limitations of business practice while implementing a plan for significant growth? “In other words,” the authors write, “how can a company inno− vate INSIDE the box?”

Sometimes radical but always applicable, ‘Brick By Brick’ abounds with real−world lessons for unleashing breakthrough innovation. Its clear−sighted analysis will prove invaluable to all those who want to under− stand how companies can not only ride the storms of change, but benefit from it.

BRICK BY BRICK

by David Robertson and Bill Breen Published by Random House Business Books ISBN 9781847941169 Available to order through www.hungaropress.hu

BBJ FESTIVAL FAVES July 11−20 EGYKETTŐ BUBBLING DAYS Location: 1053 Budapest, Károlyi Mihály utca 12.

Summer may have arrived in full force, but Budapest always offers cold drinks and excit− ing new programs. In the heart of the city, on the court of the renewed Ybl Palace opened last year, the Egykettő restaurant offers differ− ent programs throughout the whole summer.

In this case, Hungarian handcrafted beers and hot dogs will be in the spotlight for 10 days. And don’t think about regular New York ADVERTISEMENT

Don’t be afraid, give it a try!

More info: http://egyketto.eu/sor−es−hot−dog/ July 19−21 BUDA SPRITZER AND BARBECUE FESTIVAL Location: Kopaszi−gát, 11th district hot dogs, but rather something like rabbit sau− This brand new initiative opens on July 19 on sage with thyme in milk and butter croissants Kopaszi−gát one of the friendliest parts of the with sweet spicy sauce and dried tomatoes. Danube banks in Buda. The organizers prom− Bizarre and exciting at the same time, right? ise delicious barbecue dishes, cold spritzer, jazz music, and a theater program. The loca− tion is ideal for a weekend picnic, so visitors are encouraged to bring their own blankets, but everything else is available on site, even outdoor grill plates, if you prefer to grill meat in your own particular style. Small children will also be entertained with skill develop− ing games and a toy house, while parents are occupied with the delicacies.

More info: www.facebook.com/budaifroccs/info

race of ChaChaCha Cabrio Club, guests will enjoy a light and sound show similar to those of the world’s biggest clubs.

More info: http://sungoesdown.hu/

July 28 FORMULA 1 HUNGARIAN GRAND PRIX Location: Hungaroring, Mogyoród No need to advertise this festival of speed: yet to hosts a FIFA World Cup or Olympic Games, the Formula 1 Grand Prix has been the great− est sports event in Hungary for every year since its debut in 1986. Last year, 220,000 July 25−27 SUN GOES DOWN FESTIVAL people visited the track during the four days Location: of the grand prix, and organizers really try to ChaChaCha Bistro, Margitsziget, 13th district attract the maximum number of guests pos− Down on the beach at Zamárdi by Lake Bala− sible, for example with its now traditional so− ton, Balaton Sound has claimed the top spot called ‘Public Pitwalk’, when everybody hold− for electronic music festivals in Hungary, ing a valid Grand Prix weekend ticket will be while Budapest has a smaller but more unique able to visit the team garages on the pit lane festival in July. Organizers of Sun Goes Down on Thursday, July 25. bring quite a few names that have never been More info: to Hungary before to the city. On the open ter− www.hungaroinfo.com/formel1/index_en.htm

WWW.BBJ.HU

23

Budapest Business Journal | July 12 – July 25

GUNDEL

THE LIVING LEGEND Fashion and hype may come and go in gastronomy, just as in any other walk of life, but it is usually time that truly judges quality. From this point of view, few Hungarian restaurants can measure up to Gundel, a restaurant that is located on a road named after its founder.

With more than 100 years of business behind it, Gundel still qualifies as the gold standard of Hungarian gastronomy. The Budapest Business Journal paid the restaurant a visit to see why.

dodgy corner shop confectioneries, you might be wondering what all the hype about this dessert is about. The explanation, as it turns out, is right in its origins. The harmonious taste of the nuts and the chocolate sauce and the flawless texture does the trick. Imagine a HUF 2,200 pancake that is worth every forint, and you are almost there!

The other dessert – the caramelized strawberry with homemade ice cream is a show in itself. You want fire? You’ve got fire!

The chef will personally come to your table to set your dessert alight. A few drops of Tokaji Aszú, lots of (Hungarian) strawber− ries with sugar syrup, and the next thing you wish for is for time to stop right then.

Yes, it looks and tastes awesome.

The Gundel experience, all in all, deliv− ered on all of our expectations. The mixture of traditional Hungarian gastronomy and cutting edge modern cuisine, with a staff that is well−prepared for the job (while we were seated in the garden we heard waiters speak English, German, French and Rus− sian, too), delicious meals and an awesome

The picturesque view of the Városliget park and the late 19th century buildings of the restaurant (as well as that of the neighbor− ing Budapest Zoo) immediately give you a

hint of what you should expect when you first enter Gundel. And the setting is just the beginning: the iconic restaurant, whose owner not only revolutionized Hungarian gastronomy, but also put Hungary on the culinary map of the world, still delivers what its century−long tradition promises.

Of the various options Gundel offers, ranging from a lunch menu starting at HUF 3,800 to a ‘Menu de Luxe’ for HUF 95,000, it is worth giving serious thought to the com− bination of meals and courses. For the sake of curiosity, we decided to taste a little bit of everything, ensuring that we made the most of our visit. The strategy paid off: with the help of a stunningly well−prepared staff we managed to try both the classics and the novelties – not missing the colorful combi− nations of the two, of course.

For starters we ordered a tasting selection of Gundel soups (three cups for HUF 4,100) and a goose liver quartette (HUF 9,900). The essence of beef, the asparagus velouté and the Hungarian goulash soup are all remark− able, but, ah, the goose liver! The foie gras is

from another universe, and it would outshine all the soups in the world! Our personal favor− ite was the seared goose liver with egg bri− oche toast‥ or maybe it was the goose liver pâté with golden raisins and red bell pep− per marmalade – it’s virtually impossible to decide. And that’s just two of the four! Oh, have I mentioned yet that we were sipping Sauska Tokaji Aszú wine to boost the effect?

It’s only the starters and we’re already out of words! Okay, here’s the deal. If you remember only one thing, let it be this: never leave Gun− del without having goose liver. Like, ever. You have been warned.

Moving on to the main course, we were advised to try something light (grilled trout, HUF 6,600) and something more serious (Gundel duck trio, HUF 8,900). Both the trout and the duck were flavorsome, tasty and juicy, combined with excellent garnishing (rocket− based green salad in the case of the trout and braised cabbage with apple, truffle−enriched celery purée and fried onions to accompany the duck). Quality aside, the restaurant is pas− sionate about being Hungarian, too; Hungar−

ian raw materials, Hungarian fish and, evi− dently, Hungarian wine are among their top priorities. And this is the right place and time to say that the Kadarka (in the past an oft for− gotten Hungarian red wine, but one that is now enjoying a revival) that was suggested for the duck was the best I have ever tried.

“Flaming is a novelty. It was introduced sometime in the ’60s,” our waiter remarked when it came to our choice in desserts. It seemed to be a no−brainer: who wouldn’t go for the Crepe á la Gundel, when here you can have the original? But surprising as it is, the original Gundel pancake is not on fire.

Now, this is not your average Gundel pan− cake. If you are familiar with this dish from

selection of fine Hungarian wines – there is not much more that you could ask for from any restaurant. So if you want a tasting menu representative of Hungary, Gundel is a choice you will not want to miss. RATATOUILLE-

GUNDEL

1146 Budapest, Gundel Károly út 4. +36 (1) 889 8100, www.gundel.hu

Terrace

Degustation

Price range

Reservation

Speed of serv.

Sommelier

Hotspot

Priv. dining

Bus. menu

Breakfast

Credit cards

Parking av.