Budapest Business Journal 22/15

3Special

BBJ

Waltzing down

SPECIAL REPORT:

the Blue Danube

9

Vintners help to

ian Keeping Hungar people Whether its younger seeking from Western Europe looking ruin bars, or Russians Hungary for wellness vacations,visitors. offers a lot to foreign Horváth, deputy But, as Viktória for tourism, state secretary effort to explains, a special tourism is promote domestic to grow. helping this sector

cultivate wine tourism

10-11

tourists at home

BY THE NUMBERS

years. The to improve in recent was in Hungary continue January−May 2014 Tourism numbers in the period from to tourism nights in Hungary year, according number of guest same period last most increase over the region was the 7,390,351, a 6.5% Central Danube nights, followed Budapest and the 8,766,060 guest officials. In 2013, overall, with a reported But Balaton had the most local popular destination guest nights. for Budapest with 4,603,674

by Lake Balaton, compared to 1,600,287 Council notes: – a total of 2,831,210, and Tourism visitors in 2013 The World Travel 1,209.3 bln Danube region. to GDP was HUF and the Central and to rise of Travel & Tourism by 4.0% in 2014, “The direct contribution forecast to rise 2024.” in 2013, and is of total GDP) in GDP) (5.0% total bln of (4.1% 1,819.1 2014−2024, to HUF by 3.8% pa, from

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events and classical meaningful cultural place drawing ever earned is over− take a look music festivals Would you Budapest or could Dr. Viktória Horváth the year. Just take from the 2002, Festival, more guests by supplied with hotels, What can be drawn her law degree in Budapest Spring or the tourism policy it handle more? to at what the deputy state government’s hall, the Opera up to the government previous and is currently the MÜPA concert to offer.

A: That is not pursued in the have at the In fact, relevant but the market. whilst tourist Music Academy term? secretary for tourism Economy, of our decide, that parliamentary apparent result boom. data demonstrates hotels in 2008− Are you encouraging A: The most Ministry of National a specific domestic tourismvisitors overnights in Budapest accommodation involved development of activity is the mainly foreign post− 2013 went up by 30%,18%. Accordingly, and was heavily nightlife quarter?

Whereas it was by the Erzsébet created sector during capacity rose only improved lately. A: The party quarter has been jammed in drawing up the that drove the are the growth dynamic the occupancy rates have that funds crisis years, now Around 60−70 places 7 offering projects in Budapest surpassed program, a scheme tourism has No hotel building of District budget or already. social of domestic foreigners. This are subsidized from the statetrends and in those few streets is a factor in drawing vulnerable for to vacations This industry that connected Furthermore entertainment. stability to the due to its concentrated the EU resources. keep changing, and so are provides more groups of society. tourism, probably way no one particular to overcoming travelers’ needs this and contributes in seasonality. the places they overnight at. nature since in travelers’ mental more weaknesses inherent place is put on the Time will tell regionally trendy is a feeling. apparently experience.

Domestic tourism importantly, jobs are map, but rather the life of Arabic investors with travelling to most might have on ago, but those balanced and, as a result. with health−related what impact this have given a thumbs−up at least in Hungary is associated us equals health created in the countryside the city. the future here, segment as high services, so visiting hotel funding eyes. They expect grow tourism, terms of the premium European Union boosting special awareness in their In an effort to in purchases of flagship attention needs quality for their money including Four shown by their must play a role in surely special as Le Meridien, and communication mostly domestic demand. period of properties such al. Now care and attention,very appreciative if they to be paid to those the most and InterContinent out of the budgetary are produce Seasons They previous that the hotel In Russian.

A: need to expand Asian countries than 1,100 tourism− are making a fancy on it, so we definitely 2007−2013, more received European they Institute’s historical building outbound travel? been set up lately in obtain this customer base. related projects will continue to be Ballet A center has Andrássy Avenue. money to the hotel A: to coordinate tourism funding. Tourism 2013 survey It is Budapest in order area in the next The influx of According to a region is more between China and CEE countries. to a key development proper utilization A: Budapest from the Gulf help The propel Hungary

by Euromonitor, is a industry seven years. visited Such investmentsglobal expected this will help in the area for natural heritage is the 27th most than welcome. top tourism hubs of cultural and position on the and ranks the one of the EU. East. Since dynamic destination in the world, solidify Hungary’s is Prague. priority for the More importantly, key travelers from the Far that rival top from map.

Our come tourism in the a in Europe. is projected to is strengthened wave of sixth in order to assume Emirates growth country’s brand What are the major like to ride the What can be done the region? projects being deluxe segment. The fact that Dubai to region, we would in infrastructure leading position flight from are meant trend. and more attractive will launch a direct is another success for that planned now that We need to be better as such. I have the A: that October appear of travelers Budapest in an elite clientele and we also must we lag behind in terms Another group to develop tourism? potential now grandiose infrastructure us, as an airline carrying case feeling that for has a large growth A: The most a large−capacity will fuel high−end tourism. image. But in this Russians.

The of reputation and globally are the development concerns from decades−long travel in Budapest. especially have been launched we need to change conference center years such as the The ruin bar scene, Quarter, Direct flights won’t happen overnight. past the major spa town the patterns, and that projects of the those that seek in District 7’s Jewish famous Moscow to Hévíz,Are specific measures of Kossuth Square, become Our capital magnetizes destinations. I reconstruction the City Park or the seems to have a by Lake Balaton. of them? and less explored were and the city gets development being taken to serveRussian visitors keeps novelty we are on the right track, though, the Castle Bazaar The outside the country, restoration of number of times they believeis shown by the scores Budapest tourists happy. there A: The of “nightlife” tourists. extent that at which contests by to make leisure are such lot are many out soaring to the city, however, biggest country has achieved in recent voting as Lonely A: Today there the famous features of the up the second up a high−quality motivated primarily by target group with opinion leading portals such tourist make that call for setting tourists. It’s a culture. Every the visiting the not sending party are These professionals Budapest power. its “must−do” Planet or TripAdvisor. facility for study is under lists ruin−bars amongonly that scene strong purchase to visit ten years country. The feasibility the conference guide it is not people who came 2017−18 activities. However, A growing number of same way, and by up and running. that is developing. center could be

LEVENTE HÖRÖMPÖLI-TÓTH

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VOL. 22. NUMBER 15

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AUGUST 01, 2014 – SEPTEMBER 04, 2014

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

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NEWS

Making the homeland a destination

Central bank goes as low as they want to After surprising analysts with a big cut in the base lending rate, MNB officials said their constant program of reducing interest, which has been going on for two years, is now over.

We look at how the new environment could affect your investment decisions.

03 NEWS

Flooring firm may hit the floor of the BSE Graboplast’s announcement that it would consider floating shares on the Budapest Stock Exchange is an encouraging sign. As others weigh IPOs, the struggling bourse is hoping to rebound from a year that saw more exits than entries. Watch for new offerings from Wizz Air and the diet company of fitness guru Norbert Schobert.

04 BUSINESS

With spas, famous nightlife and Lake Balaton, Hungary attracts plenty of foreign visitors.

But Viktória Horváth, deputy state secretary for tourism, says her office is also working hard to encourage locals to vacation here in their own country. 7

SOCIALITE

Don’t let the visitors have all the fun Budapest has become famous for its nightlife, and a growing number of visitors come here to roam the ruin bars. We offer a quick primer to help you get out and enjoy the hot spots. 12

Battling workplace discrimination With half of Hungarians surveyed reporting experience with some kind of discrimination in the workplace, there is clearly a problem. Forward− thinking local companies have joined in an effort to improve efficiency by targeting prejudice.

06 SPECIAL REPORT

The tourism business in Hungary Already providing 4% of the country’s GDP, the tourism sector is expected to grow in importance. Our Special Report looks at development in the tourist infrastructure and new trends in the business.

07-11

WWW.BBJ.HU

Budapest Business Journal | August 01 – September 04, 2014

BBJ

3Special Waltzing down

SPECIAL REPORT:

the Blue Danube

9

Whether its y ruin bars, or Russ for wellnes offers a lot to foreign But, as V for tourism, state secretary effort to explains, a special tourism is promote domestic to grow. helping this sector

Vintners help to

cultivate wine tourism

10-11

tourists at home

recent years. The was anuary−May 2014 to tourism year, according same period last most increase over the region was the 7,390,351, a 6.5% Central Danube nights, followed Budapest and the 8,766,060 guest officials. In 2013, ad the most local overall, with a reported popular destination for Budapest compared to 1,600,287 Council notes: – a total of 2,831,210, and Tourism visitors in 2013 The World Travel 1,209.3 bln Danube region. to GDP was HUF and the Central and to rise of Travel & Tourism by 4.0% in 2014, “The direct contribution forecast to rise GDP) in 2024.” in 2013, and is bln (5.0% of total (4.1% of total GDP) to HUF 1,819.1 pa, from 2014−2024,

TOURISM

CV

by 3.8% events and classical meaningful cultural place drawing ever earned is over− take a look music festivals Would you Budapest or could Dr. Viktória Horváth the year. Just take from the 2002, Festival, more guests by supplied with hotels, What can be drawn her law degree in Budapest Spring or the tourism policy it handle more? to at what the deputy state government’s hall, the Opera up to the government previous and is currently the MÜPA concert to offer.

A: That is not pursued in the have at the In fact, relevant but the market. whilst tourist Music Academy term? secretary for tourism Economy, of our decide, that parliamentary apparent result boom. data demonstrates hotels in 2008− Are you encouraging A: The most Ministry of National a specific domestic tourismvisitors overnights in Budapest accommodation involved development of activity is the mainly foreign post− 2013 went up by 30%,18%. Accordingly, and was heavily nightlife quarter?

Whereas it was by the Erzsébet created sector during capacity rose only improved lately. A: The party quarter has been jammed in drawing up the that drove the the growth dynamic the occupancy rates have that funds in Budapest 60−70 places are crisis years, now surpassed 7 offering building projects program, a scheme or already. Around tourism has social This No hotel the state budget of domestic few streets of District in drawing to foreigners. and in those subsidized from vacations for vulnerable This is a factor industry are that connected Furthermore trends entertainment. stability to the due to its concentrated the EU resources. keep changing, and so are provides more groups of society. tourism, probably way no one particular to overcoming travelers’ needs this and contributes mental in seasonality. the places they overnight at. nature since in put on the travelers’will tell more weaknesses inherent trendy place is is regionally a feeling. Time life of apparently experience.

Domestic tourism importantly, jobs are map, but rather the Arabic investors with travelling to most might have on ago, but those balanced and, as a result. with health−related what impact this have given a thumbs−up at least in Hungary is associated us equals health created in the countryside the city. the future here, segment as high services, so visiting hotel funding eyes. They expect grow tourism, terms of the premium European Union boosting special awareness in their In an effort to in purchases of flagship attention needs quality for their money including Four shown by their must play a role in surely special as Le Meridien, and communication mostly Now domestic demand. period of properties such care and attention,very appreciative if they to be paid to those the most and InterContinental. budgetary the that produce Russian. They are A: In the previous than 1,100 tourism− Seasons making a fancy hotel out of need to expand Asian countries are on it, so we definitely 2007−2013, more received European they Institute’s historical building outbound travel? been set up lately in obtain this customer base. related projects will continue to be Ballet A center has Andrássy Avenue. money to the hotel A: to coordinate tourism funding. Tourism 2013 survey It is Budapest in order area in the next The influx of According to a region is more between China and CEE countries. to a key development proper utilization A: Budapest from the Gulf help The propel Hungary

by Euromonitor, is a industry seven years. visited Such investmentsglobal expected this will help in the area for natural heritage is the 27th most than welcome. top tourism hubs of cultural and position on the and ranks the one of the EU. East. Since dynamic destination in the world, solidify Hungary’s is Prague. priority for the More importantly, key travelers from the Far come from that sixth in Europe. Our top rival tourism map. in the a is projected to is strengthened wave of in order to assume Emirates growth country’s brand What are the major like to ride the What can be done the region? projects being deluxe segment. The fact that Dubai to region, we would in infrastructure leading position attractive flight from are meant trend. better and more will launch a direct is another success for that planned now that A: We need to be I have the appear as such. of travelers that Budapest in October an elite clientele and we also must we lag behind in terms Another group to develop tourism? potential now grandiose infrastructure us, as an airline carrying case feeling that for has a large growth A: The most a large−capacity will fuel high−end tourism. image. But in this Russians.

The of reputation and globally are the development concerns from decades−long travel in Budapest. especially have been launched we need to change conference center years such as the The ruin bar scene, Quarter, Direct flights won’t happen overnight. past the major spa town the patterns, and that projects of the those that seek in District 7’s Jewish famous Moscow to Hévíz,Are specific measures of Kossuth Square, become Our capital magnetizes destinations. I reconstruction the City Park or the seems to have a by Lake Balaton. of them? and less explored were and the city gets development being taken to serveRussian visitors keeps novelty we are on the right track, though, the Castle Bazaar The outside the country, restoration of number of times they believe is shown by the scores Budapest tourists happy. there A: The of “nightlife” tourists. extent that at contests by to make leisure are such lot are many out country which soaring to the city, however, in recent voting A: Today there the famous second biggest features of the such as Lonely with has achieved make up the up a high−quality motivated primarily by It’s a target group the opinion leading portals Every tourist that call for setting visiting the sending tourists. party culture.

These are not Planet or TripAdvisor. among its “must−do” strong purchase power. facility for professionalsstudy is under Budapest lists ruin−bars to visit ten years scene country. The feasibility the conference guide it is not only that people who came 2017−18 activities. However, A growing number of same way, and by up and running. that is developing. center could be

LEVENTE HÖRÖMPÖLI-TÓTH

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VOL. 22. NUMBER 15

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AUGUST 01, 2014 – SEPTEMBER 04, 2014

BUDAPEST B

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

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

NEWS

Making the homeland a destination

Central bank goes as low as they want to After surprising analysts with a big cut in the base lending rate, MNB officials said their constant program of reducing interest, which has been going on for two years, is now over.

We look at how the new environment could affect your investment decisions.

03

Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT

NEWS

Flooring firm may hit the floor of the BSE Graboplast’s announcement that it would consider floating shares on the Budapest Stock Exchange is an encouraging sign. As others weigh IPOs, the struggling bourse is hoping to rebound from a year that saw more exits than entries. Watch for new offerings from Wizz Air and the diet company of fitness guru Norbert Schobert.

04 BUSINESS

With spas, famous nightlife and Lake Balaton, Hungary attracts plenty of foreign visitors.

But Viktória Horváth, deputy state secretary for tourism, says her office is also working hard to encourage locals to vacation here in their own country. 7

Battling workplace discrimination With half of Hungarians surveyed reporting experience with some kind of discrimination in the workplace, there is clearly a problem. Forward− thinking local companies have joined in an effort to improve efficiency by targeting prejudice.

06 SPECIAL REPORT

SOCIALITE

The tourism business in Hungary

Don’t let the visitors have all the fun

Already providing 4% of the country’s GDP, the tourism sector is expected to grow in importance. Our Special Report looks at development in the tourist infrastructure and new trends in the business.

07-11

Budapest has become famous for its nightlife, and a growing number of visitors come here to roam the ruin bars. We offer a quick primer to help you get out and enjoy the hot spots. 12

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THE EDITOR SAYS

Frightening words from the Prime Minister Prime Minister Viktor Orbán’s July 26 speech in Baile Tusnad in Romania outlined a bleak, “illiberal” future for Hungary, and we can only hope that it was more political grandstanding than an actual roadmap for the next few years.

In his speech, Orbán said that an “illiberal democracy” would better serve Hungary’s interests. He said freedom is nice, but not the “core value” of the government he envisions. He promised to protect the country and its national assets from foreign ownership, in many cases by buying those assets. He suggested that this government could model itself after “successful” countries like Russia, China, Turkey, India and (why not?) Singapore. “Liberal democratic states cannot remain globally competitive,” Orbán was quoted as saying. “I don’t think that our European Union membership precludes us from building an illiberal new state based on national foundations.”

Simply put, this speech opposes a lot of the basic principles the Budapest Business Journal seeks to uphold.

First, there’s the need for a democracy that can guarantee basic rights and freedom. This statement seems obvious, but apparently it needs to be made at this time: Democracy is the best way to ensure our quality of life, and to allow for a market that is stable, competitive and efficient. Truly democratic countries support a large middle class – people who have a stake in seeing their society thrive. Undemocratic states can silence the poorer dissatisfied members of society for a while, but with greater injustice this group tends to grow larger and more unruly.

There are also problems with renationalization and heavy state ownership, which we’ve mentioned in this column recently.

The state is already going over budget because it is buying up private companies, and government−run companies are not as efficient as private ones.

The “successful” countries that Orbán wants to consider imitating make for dubious examples. In Russia, a dictatorial leader used wealth from fossil−fuel resources – something Hungary lacks – to enrich a small group of oligarchs, many of whom have now become his enemies. In China, the miracle of growth occurred following economic democratization, which

helped build a large middle class – something that is shrinking in Hungary. Turkey was the scene of deadly riots this year after a seemingly power−drunk dictator decided to reshape the capital with dramatic building plans – something of an object lesson for Hungarian leaders. India has been a democracy since its founding, and its biggest anti−democratic trend is caused by corruption – something that Hungary should try to avoid. Singapore is a small city−state where the populace endures invasive regulation in exchange for life in a tropical island paradise – something that Hungary cannot offer, even at Lake Balaton.

While there may be success stories coming out of Turkey, China and Russia, there are also too many innocent people going to prison in those countries, simply because they tried to speak the truth. Hungary should seek to avoid such a fate.

Orbán has enjoyed the role of “bad boy” before, thumbing his nose at EU criticism of his policies and the idea of Europe meddling in Hungarian affairs. In this speech, he said that Hungary needs to increase trade with non−European countries, and to keep a check on the influence of EU regulations. Currently, however, Hungary is financing its recovery with large EU projects. In the construction sector alone, EU funds helped drive a 60.5% increase in civil engineering projects between May 2013 and May 2014; other areas of the economy benefit greatly from Union membership.

In such a situation, anti−EU rhetoric seems self destructive, and it stirs shock among the foreign community. But it plays well at home, especially with right−wing isolationists in parties like Jobbik, which has become the biggest party in opposition to Orbán’s ruling Fidesz party. It seems that a big motivation for this speech is to woo voters away from Jobbik, and we hope that’s true.

But it also sounds as if the speech is a prelude to a reduction of individual liberty here in Hungary. If that is indeed the case, then the people of Hungary, as well as the world community, must react strongly. Democracy is a social good, but it only works if the members of a democracy are willing to defend it.

Tamás Botka CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu PRINTING:

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August 20 is St. Stephen’s Day – a celebration of the first king of Hungary, who ruled about 1,000 years ago, and one of the most important holidays in the country. At left is a recent fireworks show for the holiday. The photo above, from Fortepan.hu, is from August 20, 1978. Loathe to honor a king or saint, but aware of the holiday’s popularity, communist authorities dubbed August 20 ‘Constitution Day’ and marked it with fireworks over the river, as we still do today.

BBJ

1 News

NEWS

Graboplast eyes BSE entry

4

NEWS

Hungarian Government buys MKB

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macroscope

Central bank makes a big rate cut, then calls it quits

The Monetary Policy Council of the National Bank of Hungary (MNB) reduced the central bank base rate by 20 basis points from 2.3% to 2.1%, with effect from July 23, 2014. The council said that the rate “has reached a level which ensures the medium− term achievement of price stability and a corresponding degree of support for the economy”. As a result, the two−year easing cycle of a cumulative reduction of 490 basis points has ended, according central bankers. MNB governor György Matolcsy stressed at an extraordinary press conference that the central bank would keep the 2.1% base rate unchanged until the end of 2015 at any rate, unless the inflation target is in danger.

The rate cannot go much lower, and in this environment, analysts say a different approach to investment is warranted.

The MNB ended its cycle of rate reductions with a flourish: It surprised market participants who had expected a 10 bps to 2.2%, Pioneer Investments bond portfolio manager József Nagypál told the BBJ. After the rate decision, governor Matolcsy signaled that the bank intend to keep monetary conditions loose for an extended period. Nagypál pointed out: “Even though inflation expectations are well anchored and headline inflation is not expected to pick up, we believe markets will test the MPC’s commitment to keep rates low.” External shocks – mainly through the EUR/HUF exchange rate – could change the interest rate outlook. If the United States’ ten−year yield rises and Fed hikes are priced in, the MNB will not be able to keep rates at current levels.

“I would assume that in the second quarter of 2015, the MNB will have to start tightening monetary conditions,” he added. These processes may have a significant impact on the performance of fixed income portfolios, which could

8 7 6 5 4 3

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7/23/2014

6/25/2014

5/28/2014

4/30/2014

2/19/2014 3/26/2014

1/22/2014

12/18/2013

11/27/2013

9/25/2013 10/30/2013

8/28/2013

7/24/2013

6/26/2013

5/29/2013

4/24/2013

3/27/2013

2/27/2013

1/30/2013

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Source: Hungarian National Bank

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GABRIELLA LOVAS

However, the low interest level could cause problems in the second half of next year because, by then, the actual level of inflation will reach or even exceed the base rate based on the expectations of the central bank, OTP Bank and the market. In addition, the big global central banks including the Fed and the Bank of England will probably start to raise rates next year.

Thus, an unchanged level to Hungary’s base rate could weaken the forint.

Two−year reduction programme: The MNB base rate in %

10/31/2012

After cutting the base lending rate for two years, the National Bank of Hungary said its July rate cut was the last. The Budapest Business Journal asked analysts how portfolios should be rebalanced in an environment of persistently low rates.

FACTORS FACILITATING THE EASING CYCLE: • Rapid disinflation supported by subdued domestic consumption, favorable international environment, greater fiscal discipline.

• Gradual improvement in global risk perception, persistently accommodative monetary policy by developed country’s central banks.

• Positive consequences of the easing cycle.

THE REDUCTIONS IN THE BASE RATE LED TO: • Decreases in bank interest rates and a reduction in the private sector’s debt burden by several hundred billion HUF, as household and corporate loan rates dropped by around 450−550 basis points.

• A decrease of nearly 400 basis points in average benchmark rates, which led to a decline of more than HUF 300 bln in Hungary’s interest expenses on its forint−denominated government debt.

• Both the gradual downward shift in the forint yield curve and the move towards HUF denominated financing made government debt financing cheaper and improved the MNB’s profit/loss.

• A decline of more than 300 basis points in ten−year yields at the longer end of the yield curve.

• An estimated 1.1% increase in the average annual inflation rate in two years.

• A 1.1% increase in economic growth in two years.

Source: MNB

make investors more interested in equity and total return strategies.

OTP chief analyst Gergely Tardos pointed out that the closing of the easing cycle was not a big surprise, as several MPC members had previously suggested that the rate− cutting cycle would end before the base rate reached 2%. However, there was a “scary” moment before the MNB published its statement, as the 20 bps cut also meant an

acceleration of the cutting cycle. As the end of the cycle itself was not a huge surprise, OTP analysts do not foresee a significant impact on the bond and currency markets.

Tardos believes that the 2.1% base rate will not cause serious tensions until mid− 2015 considering the current level and the expected path of inflation, as well as the expectations of persistently loose monetary conditions in the eurozone.

NEW ENVIRONMENT Investors should be made aware that the yield environment has completely changed compared to what they were used to in the past few years and that the interest rate will remain low for an extended period, stressed Tardos.

Thus, they cannot reach high, double− digit yields with a risk−free strategy any more, and need to get used to taking risks. As with bank deposits and money market funds investors cannot reach yields higher than 2%, he recommends absolute return funds and real estate funds to anyone looking to earn higher yields than those available on risk−free investments. Investors might also consider investing in Bónusz and Prémium government bonds, he added. Bond funds may still appear to be attractive due to their high retrospective return. However, this could be misleading, warns Tardos, as the decrease in long−term yields could come to an end with the closure of the rate− cutting cycle, thus bond fund returns are expected to significantly decrease.

There is a good chance that the MNB can keep the base rate unchanged until the end of 2015, Equilor analyst Ákos Kuti told the BBJ. Global developments rather than inflation continue to have the greatest impact on potential changes in the base rate.

With its forward guidance, the MNB wanted to assure markets that the rates would indeed remain low: “It is not just trickery or dust in the eyes.”

When markets anticipate permanently low rates, businesses will hopefully launch previously delayed investments and there will be a higher demand for loans under the MNB’s “Funding for Growth Scheme”.

In a low−rate environment, fixed income investors will channel their funds from long−term to short−term bonds as the yield curve becomes flatter, said Kuti. In the case of bank deposits, the analyst does not expect any more major interest rate cuts and he foresees a rebound in the real estate market. As for the forint, the EUR/HUF rate might stabilize at around 303 by the autumn, but later on the currency changes will be determined by the compensation of the FX loan debtors.

WWW.BBJ.HU

04 News

Budapest Business Journal | August 01 – September 04, 2014

Graboplast eyes BSE entry, more listings in the pipeline Flooring manufacturer Graboplast’s plans for a possible IPO seem to be part of an encouraging trend.

KATONA FORESEES NEW LISTINGS BSE CEO Zsolt Katona would welcome the entry of a company with such a good reputation, he told the Budapest Business Journal, when asked to comment on Graboplast’s plans. He sees a good chance of a stock exchange listing despite the choice of other financing options.

“There are other companies in the pipeline, I hope to see a couple of new listings in 2014,” said Katona. Besides continuously monitoring the market searching for potential candidates, the BSE also receives information on promising businesses from banks

IN BRIEF HUNGARIAN GOVERNMENT BUYS MKB BANK The Hungarian government is buying MKB Bank from BayernLB Bank for EUR 55 million, the German parent bank announced July 24. Once the state cleans up the bank’s troubled portfolio, it will attempt to sell it to private owners, Economic Minister Mihály Varga said In an interview with InfoRadio late on July 29. In order to be eligible for support from the German state, BayernLB Bank had to sell MKB Bank, and Hungarian officials, have said they are eager to reduce the proportion of foreign ownership of banks. Before the sale went through, BayernLB Bank had to agree to eat some of its bad debt, according to reports. MKB was one of the German bank’s poorer performing assets

GABRIELLA LOVAS

BSE CEO Zsolt Katona.

and investment providers. These are typically privately owned Hungarian SMEs. However, said Katona, there is a bigger firm among them, which could replace pharmaceutical producer Egis, a former blue−chip, as well as a couple of micro−sized enterprises. Katona stressed that a stock exchange entry can be a viable financing option for healthy, profitable companies with only a few billion forints in revenues. He pointed out that the BSE is preparing the launch of a market segment for SMEs with a support system of EU grants following the example of JEREMIE funds.

Hungarian low−cost airlines Wizz Air is still among potential candidates for a possible dual listing, said Katona. The company decided to hold off on its entry to the London Stock Exchange in June, citing current volatility on the market as the reason for the decision. According to some media information, another candidate is Norbi Update Lowcarb Nyrt., a company set up by fitness guru Norbert Schobert and his wife.

Katona hopes that the BSE will rebound this year after changes implemented in 2013.

These included the introduction of a new categorization; “Standard” and “Premium” tiers replaced the earlier baskets. Issuers in the premium category are required to enhance the transparency of their operation in order to encourage investors. Another, even more important change was the implementation of the Xetra trading system in December 2013. The three other members of the Central European Stock Exchange Group (the Wiener Börse, the Prague Stock Exchange and the Ljubljana Stock Exchange) already use the platform. The new platform gives investors in a host of different countries easy access to Hungarian stocks. There is room for improvement, after daily turnover and capitalization both dropped last year, according to the BSE’s annual review.

MKB Bank branch in Budapest.

Photo: Lajos Soós / MTI

Hungarian flooring maker Graboplast is considering to return to the Budapest Stock Exchange – good news for an exchange that saw three exits and only one IPO in 2013.

Indeed, there is reason for optimism on the BSE, which has undergone some investor−friendly improvements in the hopes of spurring a rebound.

Győr−based Graboplast aims to raise funding for a HUF 6.3 billion investment project and one of the three financing options is a return to the BSE, announced Graboplast chairman−CEO Péter Jancsó on July 17. The company’s shares were listed on the bourse between 1994 and 2001. Following delisting, Hungarian−owned holding company Wallis, the company’s majority owner, implemented a new strategy for a global market presence and a streamlined product range focusing on floorings rather than of a wider array of home decoration products.

Graboplast has already won HUF 1.6 bln in non−refundable European Union funds for the project to boost capacity at its Tatabánya site, some 60 km west of Budapest. This accounts for 31% of the total investment value. The new facility will focus on two dynamically growing product groups, LVT (Luxury Vinyl Tiles) and homogeneous non−directional floor coverings. The development, which is expected to be finished in September 2015, will create 50 new jobs.

As to the other financing options, Graboplast is in talks with foreign investors as well as Hungarian investment funds and venture capital firms. The company aims to raise HUF 2−3 bln in capital, thus it is also in talks on a long−term loan, said Jancsó.

Graboplast had HUF 650 million after tax profits on HUF 16.9 bln revenues last year. Exports accounted for HUF 15.5 bln or 93% of the total.

The company altogether employs 550 people at its three sites in Győr, Kecskemét and Tatabánya.

NEWS

NO PROGRESS AT MOL, CROATIA TALKS OVER INA Hungarian oil and gas company MOL said July 24 that the latest round of talks with the Croatian government brought no progress regarding the future of Croatian energy group INA. MOL owns 49.08% of INA’s shares, and the state of Croatia owns 44.84%. A perceived lack of investment in the company by MOL and the state’s failure to take over INA’s loss−making gas business, as stipulated in a shareholders agreement, have been sources of tension between the two stakeholders. The team of the Croatian government, led by economy minister Ivan Vrdoljak and MOL’s team, led by chief executive officer Jozsef Molnar, started a fifth round of talks on INA July 24.

K&H ANALYSIS: BUSINESS EXPECTATIONS IMPROVE Judging by the K&H corporate growth index, the expectations of domestic enterprises improved, K&H Bank reported in its analysis published today. The growth in expectations is chiefly the result of the positive perception of the macro environment, according to the report. The measures of the index reached positive figures in Q2, which showe an improvement over Q1.

Along with noting an improving trend of the macro environment, company CEOs seem to be more optimistic regarding the situation of their own companies.

KSH: SLOW RECOVERY IN THE HOUSING SECTOR Both the number of dwellings built and dwelling construction permits rose by a respective 22% and

18% in the first half of 2014 as compared with a year ago, a report published by Central Statistics Office (KSH) revealed on July 29. The growth of dwelling construction in H1 resulted from the high values of Q1 as Q2 showed only a slight growth of 1% y.o.y., while building permits saw the growth of Q1 continue in Q2, KSH reported.

Despite the increase, the number of dwellings built was low and it made up only 29% of the dwellings put to use during the first half of the last pre−crisis year, 2008.

RETAIL SALES GROWTH SAID TO DECELERATE Retail sales in Hungary rose 4.9% in May as compared with a year earlier, according to calendar−adjusted figures, the latestpublication of KSH revealed on July 23. According to the first reading of the data, published on July 3, the figures were expected to reach 5.1%. The increase in May is less than in April, when there was a calendar−adjusted increase of 6.3%. KSH said that the figures for the period of January−July 2014 are not comparable with those for the same period of 2013, as the statistics office has been using different data sources since introduction of the state monopoly on retail tobacco sales in the middle of 2013. In the non−food segment, sales of shops proffering industrial goods, textile, clothing and shoes rose 18.1%, sales of industrial goods were up 10.7%, sales of second−hand goods increased 6.4%, and sales of pharmaceuticals and cosmetics rose 4.4% in the year to May. Sales volume was down at furniture shops, bookshops and shops selling IT products.

ORBÁN’S REJECTION OF LIBERAL DEMOCRACY DRAWS FIRE Hungarian Prime Minister Viktor Orbán’s speech on July 26, in which he said Hungary is not a liberal democracy, drew criticism from the liberal opposition, while the far−right Jobbik party agreed with some aspects of the speech. The speech, given at a gathering in Romania, drew worldwide attention after the Prime Minister questioned the value of liberal democracy. “The new state that we are building in Hungary today is not a liberal state. It doesn’t deny liberalism’s basic values, such as freedom, but doesn’t make it its core element.

It uses a particular, national approach,” Orbán was quoted as saying. The far−right Jobbik party, which has said that social services should only go to those who work, said they agreed with the idea of a “work−based state”, to replace a welfare state. The Socialist Party, said: “A state that is not organized around freedom, sooner or later leaves democracy behind.”

Former PM Ferenc Gyurcsány’s Democratic Coalition criticized the speech, noting that “Viktor Orbán is now saying that a fascist and freedom−denying state organization is the example to be followed.” The leftist Együtt−PM said that “the Hungarian state is not a state for every Hungarian anymore, but a state for the thin beneficiary layer.”

NAV AUDITS ELECTRONIC TILLS, FINES 3,000 USERS The National Tax and Customs Authority of Hungary (NAV) levied fines worth HUF 260 mln as a result of the more than 25,000 targeted audits of recently installed electronic cash registers, the authority told Hungarian news agency MTI on July 25. The authority encountered approximately 3,000 cases with shortfalls – 12% of the total audited, MTI reported. NAV said that, as a result of the installation of the electronic tills, the whole trade sector generated 15% more revenue, reaching HUF 55 bln in H1 y.o.y. The new online cash register system was introduced in January and is designed to reduce tax fraud. Currently 143,048 electronic tills are connected to the online network of NAV.

BBJ

2Business

BUSINESS

Targeting pervasive work−place 6 discrimination

Grand Prix ticket sales down

COMPANY NEWS

COMPETITION OFFICE OKS AXEL SPRINGER−RINGIER UNION Hungary’s Competition Office (GVH) said it approved a merger of the Hungarian businesses of media giants Axel Springer and Ringier on July 28. Axel Springer and Ringier withdrew a request for approval from the GVH to consolidate their holdings in Hungary in the spring of 2011 because the merger was opposed by the Media Council, whose decision is binding for the antitrust authority. Since that time, the companies have taken steps to part with some assets: In January, they announced the sale of broadsheet Népszabadság, business daily Világgazdaság, sports daily Nemzeti Sport and eight regional dailies to Vienna Capital Partners.

SKANSKA SELLS GREEN HOUSE OFFICE BUILDING TO FHB UNIT Real−estate investment fund Torony, managed by Diófa assets manager, which is part of the Hungarian FHB Group, bought Swedish property developer Skanska’s Green House office building located in Budapest, Skanska Magyarország Ingatlan told the Hungarian news agency MTI on July 29. The

price of the transaction was not revealed. The cost of the project was estimated at €32.5 mln in 2011 at the launch of the investment. The seven−story building, located in Budapest’s 13th district, was completed at the end of 2012. It has leasable office area of 17,800sqm, 98% of which is let. The building last year received LEED Platinum certification, the highest level of the international LEED environmental rating system. Skanska’s next project is dubbed Nordic Light, which will be a 26,200sqm office building built in the same street of Budapest, with the expected opening date of the beginning of 2016.

MAGYAR TELEKOM TO LAY OFF 1,700 WORKERS Magyar Telekom, the local subsidiary of Deutsche Telekom, declared 1,700 workers redundant following negotiations with worker−advocacy groups, the Hungarian service provider announced July 24.

The layoffs would begin in October and continue in stages until January 1, 2016, according to reports. Magyar Telekom currently employs 11,141, so the layoffs will reduce about 15% of staff.

Photo: Szilárd Koszticsák / MTI

In line with expectations, ticket sales for this year’s Hungaroring – the Hungarian Grand Prix – were down to 169,000 as compared to last year’s record of 247,000, the company in charge of the circuit told Hungarian news agency MTI on July 28. Hungaroring Sport said the race on July 27 attracted approximately 67,000 racing enthusiasts as compared to 99,000 a year earlier.

Observers speculate that the main reason for the dwindling popularity of the Hungarian venue is competition from the Austrian Grand Prix in Zeltweg, which was recently revived after more than a decade. Shown is Daniel Ricciardo of the Red Bull team, the winner of the race, speeding down the track on July 27.

MAPEI: SALES GROW AS BUILDING MARKET IMPROVES Mapei Hungary, the subsidiary of the Italian building material manufacturer of the same name, said on July 24 that its 32% growth of Q2 sales y.o.y. is an indication of a recovering construction market. The company announced revenue of HUF 3.39 bln in H1 this year.

Although the main source for growth was the result of EU−funded improvements in infrastructure, the company said in its announcement that there were also signs that the Hungarian residential market is growing.

TELENOR MAGYARORSZÁG Q2 REVENUE RISES TO HUF 38.8 BLN Revenues of mobile telecommunications company Telenor Magyarország rose by approximately HUF 700 mln, reaching HUF 38.8 bln in Q2 y.o.y., thanks to smartphone sales and extraordinary items, the Telenor unit announced. The company’s earnings before interest, taxes, depreciation and amortization, excluding one−off items, fell from HUF 14.7 bln to HUF 14.2 bln because of the telecommunications tax on corporate clients, Telenor Magyarország said. Capital expenditures rose by HUF 1 bln to HUF 2.5 bln as the company developed its 4G network.

Subscriber numbers fell by 34,000 to 3,435,000 because of a government tender, the company said. Based on the number of active SIM cards, Telenor Magyarorszag reported that its market share reached 31.03% at the end of March.

AUDI PRODUCING NEW COUPE IN GYŐR German carmaker Audi is launching serial production of its third−generation Audi TT

Coupe in Hungary, Audi Hungária Motor announced on July 24. The model is entirely and exclusively manufactured in the Győr plant of the German carmaker. With the launch of the current production the factory is reaching its full capacity, Thomas Faustmann the managing director of Audi Hungária said.

WING CREATES NEW PRODUCTION HALL FOR GE Property developer WING on July 29 reported the completion of a new 11,000sqm, HUF 4.5 bln production hall for General Electric at its East Gate Business Park in Fót, near Budapest.

GE now leases 17,500 sqms, and it created more than 100 new jobs at the industrial park, WING reported. The eight−month−long construction of the unit was supported with EU funding of HUF 272 mln and financed by Unicredit Bank.

GE is planning to make central control units for power plants at the site.

CEVA-PHYLAXIA TURNS OUT 50 BLN POULTRY VACCINES Hungary−based and French−owned veterinary company Ceva−Phylaxia marked the production of its 50−billionth dose of poultry vaccine at a July 23 ceremony. Poultry vaccines make up 80% of the company’s output. State secretary Péter Szijjártó noted that the company Phylaxia had been established more than 100 years ago in Hungary and the Hungarian unit is currently Ceva’s biggest research and development center. Ceva−Phylaxia had revenue of €50 mln last year, said company zone director László Máté. Exports accounted for €40 mln of the total, he added.

WWW.BBJ.HU

06 2Business

Budapest Business Journal | August 01 – September 04, 2014

Targeting pervasive work-place discrimination A recent survey shows that just over half of all Hungarian workers experience discrimination in the workplace, and for some groups, discrimination is even more common. One initiative is promoting tolerance at work as the smartest way to do business.

Have you encountered discrimination at your workplace?

Yes, against someone else at the workplace Yes, against m]WIPJ WTIGM½GEPly No

26%

GROUPS SINGLED OUT When it comes to workplace discrimination, many groups are disadvantaged, but the worst off are the Roma and LBGTQ people. More than two−thirds of employees (69%) said they would not accept an LGBTQ person as their manager, and even fewer, 76% would do so in the case of a Roma individual.

The problem appears to be driven by ignorance: The majority of workers have little experience of interaction with these two groups, according to Stoics.

“People belonging to sexual minorities have a visibility problem,” he explained.

“Even though they make up 5−8% of society, not everybody dares to come− out, so colleagues ultimately have less personal experience with them.”

Prejudice against the Roma has a different but similar cause, according to Stoics. He noted that discrimination in education and the workplace dramatically reduces Roma participation in the labor market, which again reduces first−hand contact with them on the part of employees. “Accordingly, most workers form their opinion on the basis of what is presented to them by society and the media, which leads to solidifying stereotypes,” Stoics added.

48%

Include them too: The LGBT Pride March in Budapest.

30%

Which colleagues are most rejected in Hungary?

Who would you not like to work with in the following positions (%)? as my coworker

as my manager

60

40

20

a Rom

LGB TQ

Jew ish

Wit disa h a phy bilit sica y l

Wit poli h differ tica e l vie nt ws

e

0

Source: Gemius Survey, 2014

A GENERAL PROBLEM There are other reasons for discrimination.

For instance, 56% of respondents said they did not want to work for a Jewish person and 55% said they don’t want to work for someone who has different political views.

Apparently, people don’t simply hold prejudiced opinions, they also act on them: the Gemius research found that a total of 52% of the 2,500 workers surveyed have encountered negative discrimination at work.

That compares poorly with the Western European average of 35%, but is better than some countries in Southeast Asia, where about 60−70% of the workforce report workplace discrimination.

While some may think that tolerance is growing, and prejudice is more common among older generations, the survey does not bear that out.

“There were no significant differences between age groups concerning employment related prejudice,” Stoics said. “The probability of better acceptance showed a correlation only with the level of education of workers.”

OPEN FOR BUSINESS If the key to fighting discrimination is education, then education about discrimination itself could improve the situation in Hungarian working

Source: Gemius Survey, 2014

as my subordinate

80

Fem al

Around half of all Hungarian workers report experiencing discrimination at work, according to a survey released on July 4. This compares poorly with Western Europe, where 35% of workers report discrimination.

The survey also found that those most likely to face discrimination are Roma, closely followed by Lesbian, Gay, Bi−sexual, Transgender and Queer (LGBTQ) people.

The survey of 2,500 workers over the age of 15 was conducted by Gemius Hungary, a member of the “We’re Open” initiative, which tries to battle workplace discrimination. The initiative has already enlisted hundreds of Hungarian companies in its efforts to make work places more tolerant, but it is seemingly fighting an uphill battle.

Here in Hungary, the pay gap between men and women in the same position has grown from HUF 40,000 to HUF 50,000 HUF in favor of men in the last three years, according to another recent survey, this one

by Educatio in Hungary.

The latest survey by Gemius shows the extent of this gender−based prejudice in detail: some 45% of respondents said they feel uncomfortable about having a female superior at work – and almost one in four don’t want to work with a woman at all.

“Not only men would not accept women; both female and male workers have prejudice against women,” Gemius analyst Ambró Stoics told the Budapest Business Journal.

Photo: Stefi Szilagyi

LEVENTE HÖRÖMPÖLI-TÓTH

environments. This seems to be the thinking behind the “We’re Open” initiative. Any company, organization or community that believes others should be judged solely on the basis of their actions and performance is welcome to join.

“On a daily average, we have two new members, so the initiative that was launched barely a year ago now has a 750+ membership,” Melinda Miklós from the Google Press Service told the BBJ on behalf of the founding firms, Prezi, Google and espell. Supporters are made up of a diverse bunch. Global brands, internationally acknowledged Hungarian startups, NGOs and a number of organizations and communities, small and large alike, are represented. “Some found us in the press or through their acquaintances, others are contacted directly by us,” Miklós said.

Perhaps the least known founder behind “We’re Open” is espell, a translation and software localization firm. “Our activity is about information exchange and transformation. We deal with communication after all just like Google and Prezi in their own way. That may play a role in the fact that we have a similar mindset in terms of corporate values, commitment and social responsibility, regardless of size or fame,” Miklós Bán, CEO of espell said.

CARRY THE TORCH The initiative has run three major campaigns so far, with more are planned. One that is bound to become standard is the involvement in the Budapest Pride march.

Both last year and this, the initiative had its own float, and Prezi front man Péter Árvai greeted the crowd in person.

“This summer, with the involvement of ‘We’re Open’, a record number of companies and organizations participated in the event and many well−known people, among them a lot of ‘first−priders’ walked along with our float,” Miklós added. “We believe that it is not enough to accept diversity, it must be supported and celebrated as well.”

“We’re Open” also launched a video campaign in the spring where high−ranking corporate representatives, celebrities and Internet users shared their experience online, and so raised their voice against prejudice.

The YouTube video clips generated some 200,000 views in two weeks.

BEING INCLUSIVE PAYS OFF As evidenced by statistics, it makes business sense too to stick to being open−minded. “We would lose our colleagues if we didn’t accept each other. We would like to continue working together with our best ones. There is no other way to succeed on the global language market and with an international clientele,” Bán said of espell’s policy.

The Gemius survey strengthens the belief that, for future generations, this tolerant approach will be high on the priority list when choosing an employer, with 83% saying that they would like to work at a place where there is no discrimination.

Therefore, the current situation, where one third of employers are perceived as not open, cannot be maintained.

“Serious change could come if firms realize that pursuing a prejudice−free internal policy may provide them with a competitive edge,” Bán said. “On the other hand, it will result in loss of competitiveness if those who are employed meet the personal, yet from the assignment’s perspective irrelevant, expectations of the recruiter but are not capable of performing at a high level. That is why we say being open is not only the right thing to do, but it pays off as well”.

BBJ

3Special Report Vying for business on the Danube

9

Vintners help to cultivate wine tourism 10-11

Keeping Hungarian tourists at home Whether it’s younger people from Western Europe seeking ruin bars, or Russians looking for wellness vacations, Hungary offers a lot to foreign visitors.

But, as Viktória Horváth, deputy state secretary for tourism, explains, a special effort to promote domestic tourism is helping this sector to grow.

LEVENTE HÖRÖMPÖLI-TÓTH

Q

What can be drawn from the government’s tourism policy pursued in the previous parliamentary term?

A: The most apparent result of our activity is the domestic tourism boom.

Whereas it was mainly foreign visitors that drove the sector during the post− crisis years, now the grow th dynamic of domestic tourism has surpassed that connected to foreigners.

This provides more stability to the industr y and contributes to overcoming the weaknesses inherent in seasonality. Domestic tourism is regionally more balanced and, most impor tantly, jobs are created in the countr yside as a result.

Q

European Union funding must play a role in boosting domestic demand.

A: In the previous budgetary period of 2007−2013, more than 1,100 tourism− related projects received European funding. Tourism will continue to be a key development area in the next seven years. The proper utilization of cultural and natural heritage is a priority for the EU.

Q

What are the major infrastructure projects being planned now that are meant to develop tourism?

A: The most grandiose infrastructure development concerns a large−capacity conference center in Budapest. The projects of the past years such as the reconstruction of Kossuth Square, the development of the City Park or the restoration of the Castle Bazaar were to make leisure tourists happy. The features of the city, however, are such that call for setting up a high−quality facility for professionals visiting the country. The feasibility study is under way, and by 2017−18 the conference center could be up and running.

BY THE NUMBERS Tourism figures in Hungary continue to improve in recent years. The number of guest nights in Hungary in the period from January−May 2014 was 7,390,351, a 6.5% increase over the same period last year, according to tourism officials. In 2013, Budapest and the Central Danube region was the most popular destination overall, with a reported 8,766,060 guest nights, followed

by Lake Balaton, with 4,603,674 guest nights. But Balaton had the most local visitors in 2013 – a total of 2,831,210, compared to 1,600,287 for Budapest and the Central Danube region. The World Travel and Tourism Council notes: “The direct contribution of Travel & Tourism to GDP was HUF 1,209.3 bln (4.1% of total GDP) in 2013, and is forecast to rise by 4.0% in 2014, and to rise by 3.8% pa, from 2014−2024, to HUF 1,819.1 bln (5.0% of total GDP) in 2024.”

Q

Would you Budapest is over− supplied with hotels, or could it handle more?

A: That is not up to the government to decide, but the market. In fact, relevant data demonstrates that whilst tourist overnights in Budapest hotels in 2008− 2013 went up by 30%, accommodation capacity rose only by 18%. Accordingly, the occupancy rates have improved lately.

No hotel building projects in Budapest are subsidized from the state budget or EU resources. Furthermore trends and travelers’ needs keep changing, and so are the places they overnight at.

Q

Arabic investors apparently have given a thumbs−up to the future here, at least in terms of the premium hotel segment as shown by their purchases of flagship properties such as Le Meridien, Four Seasons and InterContinental. Now they are making a fancy hotel out of the Ballet Institute’s historical building on Andrássy Avenue.

A: The influx of money to the hotel industry from the Gulf region is more than welcome. Such investments help solidify Hungary’s position on the global tourism map. More importantly, the country’s brand is strengthened in the key deluxe segment. The fact that Emirates will launch a direct flight from Dubai to Budapest in October is another success for us, as an airline carrying an elite clientele will fuel high−end tourism.

Q

The ruin bar scene, especially in District 7’s Jewish Quarter, seems to have become famous outside the country, and the city gets a lot of “nightlife” tourists.

A: Today there are many out there motivated primarily by the famous Budapest party culture. Every tourist guide lists ruin−bars among its “must−do” activities. However, it is not only that scene that is developing. A growing number of

meaningful cultural events and classical music festivals take place drawing ever more guests by the year. Just take a look at what the Budapest Spring Festival, the MÜPA concert hall, the Opera or the Music Academy have to offer.

Q

Are you encouraging development of a specific nightlife quarter?

A: The party quarter has been created already. Around 60−70 places are jammed in those few streets of District 7 offering entertainment. This is a factor in drawing tourism, probably due to its concentrated nature since in this way no one particular trendy place is put on the travelers’ mental map, but rather a feeling. Time will tell what impact this might have on the life of the city.

Q

In an effort to grow tourism, surely special attention needs to be paid to those mostly Asian countries that produce the most outbound travel?

A: A center has been set up lately in Budapest in order to coordinate tourism between China and CEE countries. It is expected this will help propel Hungary to one of the top tourism hubs in the area for travelers from the Far East. Since dynamic growth is projected to come from that region, we would like to ride the wave of that trend.

Q

Another group of travelers that has a large growth potential globally are the Russians.

Direct flights have been launched from Moscow to Hévíz, the major spa town

by Lake Balaton. Are specific measures being taken to serve them?

A: The number of Russian visitors keeps soaring to the extent that at times they make up the second biggest country sending tourists. It’s a target group with strong purchase power. These are not the same people who came to visit ten years

CV Dr. Viktória Horváth earned her law degree in 2002, and is currently deputy state secretary for tourism at the Ministry of National Economy.

She was heavily involved in drawing up the Erzsébet program, a scheme that funds vacations for the vulnerable members of society. ago, but those with travelling experience.

Hungary is associated with health−related services, so visiting us equals health awareness in their eyes. They expect high quality for their money including special care and attention, and communication in Russian. They are very appreciative if they obtain it, so we definitely need to expand this customer base.

Q

According to a 2013 survey

by Euromonitor, Budapest is the 27th most visited destination in the world, and ranks sixth in Europe. Our top rival is Prague.

What can be done in order to assume a leading position in the region?

A: We need to be better and more attractive and we also must appear as such. I have the feeling that for now we lag behind in terms of reputation and image. But in this case we need to change decades−long travel patterns, and that won’t happen overnight.

Our capital magnetizes those that seek novelty and less explored destinations. I believe we are on the right track, though, which is shown by the scores Budapest has achieved in recent voting contests by opinion leading portals such as Lonely Planet or TripAdvisor.

WWW.BBJ.HU

08 3

Budapest Business Journal | August 01 – September 04, 2014

UK group buys into Hévíz Airport The HUF 800 million bid for the airport’s facilities raises hope of more flights and greater tourist traffic for the spa town, and nearby Lake Balaton.

A group of investors from the UK bid HUF 800 million in their successful tender to take over Hungary’s Hévíz−Balaton Airport, raising hopes of regular airline service to Lake Balaton, the country’s second−most popular travel destination.

While the new buyers have not spelled out their plans, Jasbir Mann, a representative of the group did say, “We are committed to invest in Hungary and develop Hévíz−Balaton Airport – at the moment that is what I can confirm on behalf of the companies I am representing.”

The closest airport to Europe’s second largest freshwater lake has been at the center of speculation for a while. In 2007 and 2008, when budget carrier Ryanair announced service to the airport, the facility recorded more than 100,000 flights each year. After Ryanair left, the number of flights dropped to 15,000 a year.

Since 2010, when Gábor Papp was elected mayor of Hévíz the trend has been steadily improving. Papp said he introduced new marketing strategies, and Hévíz has seen a growth in tourism. With 1,043,000 guest nights reported in 2013, Hévíz was second only to Budapest, which had 7,810,000 guest nights, according to the Central Statistics Office. Along with being the airport for Lake Balaton, Hévíz is also a tourist destination in its own right, with a huge thermal lake drawing wellness tourism.

The first flight from Prague arriving in Hévíz on July 28.

Thanks to exclusive charter agreements, by 2012 the airport managed to reach 18,000 flights, and by the next year it was at 29,000, according to Papp.

This year the target number is a minimum of 35,000 flights, he said.

CSA Czech Airlines became the latest carrier to start regular weekly flights to Hévíz when the first flight from Prague landed on July 28. Most of the charter flights into the town come from Germany – dominantly by Lufthansa – but about 35% of the travelers are flying from Russia, figures show.

More Russians are expected, as this year, a new charter contract was arranged with UTair, with weekly flights from March through October bringing an average of 200 people from Moscow.

The airport is operated by the municipality of Hévíz through a city– owned company. But the field where

We are committed to invest in Hungary. airplanes land is owned by Zalavár village, and the land around the airport belongs to Sármellék village. Hévíz has a long−term right to lease the lands from the other villages, and until mid−2015 the right to operate the airport as well.

The latest tender was for the technical assets and facilities of the airport –

MTI Photo: György Varga

RÓBERT VÁGÓ WALLENSTEIN

including the hangar, terminal building, runway, fuel station, etc. These were valued at HUF 2 billion a few years ago, but there were only two bidders in the latest tender, with the winning bid going to the relatively unknown UK group.

The losing bidder was Gábor Széles, one of the richest men in Hungary, who reportedly bid HUF 600 mln, HUF 200 mln less than the winners.

Széles, the former head of the Ikarus bus company, owns a good deal of real estate in the area surrounding the airport, as well as the daily newspaper Magyar Hírlap, and he used his newspaper to question the validity of the group represented by Mann.

While Hévíz Mayor Papp is a political and personal associate of Széles, he said the winning bidders would bring good things to Hévíz.

Papp told the Budapest Business Journal that his priority is full−scale development of the region, to attract businesses and provide new jobs for locals. He said that investors who can forward this cause are welcome, regardless of where they are from.

“We need dedicated and professional experts,” said Papp. “Running the airport cost the city around HUF 50 mln per a year. It is not profitable for us per se. What brings us 10−100 times more revenue is the indirect taxes generated by the landing tourists – so it is our natural interest to examine the investors and in case of clarification offer them partnership.”

In the near future, the plans for the airport should become clear to Hévíz – and everyone else.

C&W says it is expecting written offers and queries up to September 15.

Half-done hotel on the hill up for sale CIB’s efforts to sell this wonderfully located but neglected site indicate new movement in the market.

DAVID LAWRENCE

A blot on the Budapest landscape for years, the 23,000 sqm Rose Hill site known as the SZOT (National Committee of Trade Unions) Hotel in one of Budapest’s most exclusive residential areas overlooking the Danube from the Buda Hills, has been put up for sale by the current owner, CIB Group. The proposed sale arguably reflects the increasing interest being shown by investors and developers in the Hungarian commercial property market as it slowly recovers from the post−2008 downturn.

CIB Group is now marketing the unfinished grey concrete structure – clearly visible to tourist boats on the Danube and bathers in the Lukács thermal baths – along with the land at the site. The building is located in Budapest’s second

Fixer upper for sale.

district and boasts a panoramic view overlooking the Hungarian Parliament, Margaret Island and the historic bridges spanning the Danube. The four−story building was constructed in the 1970’s and functioned as an exclusive “medical” hotel for around 20 years. Some additional parts were added to the structure and the concept and development plans were changed several times by different owners and the hotel closed in 1991. Since 2007 there has been no activity at the site and it has remained a symbol of how the commercial property development and financing market can malfunction and the extent to which it is hostage to the wider

economic environment, leaving the grey structure an ugly stain on an otherwise stunning landscape.

“Everyone living in Budapest is familiar with the former SZOT hotel. It is in all our interests that this landmark site, which is such a defining feature of the cityscape, should be developed and finally take pride of place in the Rose Hill panorama again. We trust that with the expert help of Cushman & Wakefield the site will soon find a new owner and will once again be the jewel in the crown of the district and of Budapest as a whole,” said Michael Clark, Deputy CEO of CIB Group.

Mike Edwards, Head of Capital Markets at C&W, who have been appointed to sell the property, commented that: “We are confident that the right purchaser is out there who can see the potential vision of acquiring this site and the opportunity of putting their own mark on it. On the back of a recovering investment market in Budapest, we are confident that CIB will enjoy decent interest in this site and look forward to formally bringing it to the market in the short−term.”

A sign of recovery in the Hungarian

property market is the growing number of participants in the on−line auctions that are being held for “distressed assets” by CIB Group that can provide potential developers and investors with value−add development and investment possibilities. Under the system potential bidders are able to download details of a building and arrange a visit to the property if required. They then have the option of making a preliminary bid and participating in a public on−line auction.

The SZOT Hotel site is seen by commentators as offering possibilities for the development of residential health care and hotel space. Both private individuals and Hungarian and foreign investors have shown general interest in redeveloping the site.

Although the major Austrian and German institutional investors have not returned to Hungary, at the top end of the hotel investment market the Dubai−based Al Habtoor Group has recently purchased the InterContinental Hotel in Budapest for an undisclosed fee. The group, which is active in hotel and hospitality development, bought the Le Meridien Hotel in 2012.

C&W says it is expecting written offers and queries up to September 15.

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Budapest Business Journal | August 01 – September 04, 2014

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Vying for business on the Danube Looking out at the river on a summer day, you will probably see a host of leisurely passenger craft. The people in the boat business see a competitive market. Here we take a look at the city’s pleasure cruise market.

ANDRÁS ZSÁMBOKI

If you feel like a leisurely ride along the Danube, there are boats that can help you: a lot of boats.

“In the summer high season, about 50 ships cruise up and down the Danube on any given afternoon,” Attila Sztankó, owner and cruise director of the Európa Group, explains to the Budapest Business Journal.

“At the top we find the boats with the biggest internal space and the broadest range of services: these vehicles often function as conference boats. Budapest can boast only two of these, MAHART’s Dutch−built cruise ship named ‘Budapest’ and our ‘Európa’, which has an capacity of 800 persons,” he continues.

“So−called event ships come next; they are smaller than conference boats but they possess kitchens of their own as well as dining halls, so they are capable of hosting parties, receptions and other events with full hot meals.”

Approximately one−third of the Danube fleet consists of such event ships.

“Finally, about 30% of Budapest boats belong to the category of the so−called program ships. As far as their facilities are concerned, these are only suitable for sightseeing. Traditionally, these boats used to be equipped with rows of seats, but that arrangement is considered more or less out of fashion today. It is more common to have tables on board with seats around. These boats, however, do not offer hot meals,” Sztankó says.

TOURIST AND SERVICES The three types of boats attract three types of audience, and serve three different types of tourism. “The lowest category is represented by the program ships,” Sztankó points out. About 50% of their passengers purchase their tickets directly on the banks of the Danube, at the local river stations at Belgrád Rakpart. Miklós Hudacsek, director of family firm Legenda, explains: “This kind of cruising is often combined with sightseeing bus tours, especially with the ‘hop on – hop off’ type”. These buses run on the main tourist routes within Budapest; they have stops at major traffic junctions, where passengers can board or leave the vehicles as they like. Tourists who choose this form of sightseeing usually purchase tickets valid for three days; if they pay a little extra, boat rides will be included as well. So hop on – hop off tourists are the likeliest to show up on program ships. They represent the least sophisticated category of tourists, and can be more or less identified with the crowd that frequents the so−called “ruin bars” in the inner district 7.

Pleasure boats ply the Danube. Below, fun on a river dance cruise.

The organized tourists who buy tickets for event ships represent the middle segment of the Budapest cruising market.

“They are citizens of the most diverse nations, but Far Easterners – i.e. Japanese, Chinese and Korean tourists – constitute a substantial proportion among them.”

Most arrive with their families, and their favorite mealtime is dinner or supper. In this genre, about 50% of the expenses are generated by catering,” Hudacsek explains. “And of course the greater part of the profit comes from catering as well,” he adds.

Conference cruisers, however, generate the biggest profit, which is why they demand the biggest investment of all.

“I used to receive requests every two weeks from international pharmaceutical companies whether we could provide boats for medical conferences. I had to turn them down continually, explaining that we, Group Európa did not have a large enough boat for that,” Sztankó recalls.

It took the group a long time to commit itself to making a huge investment, and buy and equip a boat capable of hosting 300 people at a time. “After we had purchased the boat, pharmaceutical companies came one after the other to rent it for their events. They made special efforts to organize their medical conferences on our boat ‘Európa’. The era of luxurious conferences then ended with the economic crisis”, Sztankó says. “That is why we never purchased a second conference boat.”

The new decade beginning in 2010 brought about the strengthening of cheaper forms of tourism anyway. “In terms of both absolute and relative

figures, the number of individual – that is, not organized – tourists has grown among the cruising public. Among cruising companies, competition among services has been replaced by price competition,” Hudacsek evaluates the recent trends.

A PYRAMID OF COMPANIES One company, namely MAHART Passnave, owns about half of Danube boats. Under state socialism, MAHART was Hungary’s state−owned merchant navy company. After the political transition of 1990, the company was privatized; its passenger branch acquired the name Passnave, meant to be a witty abbreviation of passenger navigation.

In 2011, MAHART was taken back into state ownership, which clearly reflects the spirit of the present political era.

“MAHART Passnave is a profitable company,” Gábor Spányik, managing director of the company boasts. In 2013, it generated a HUF 200 million profit.

That profit is in fact not that large if you consider the company’s HUF 3 billion in net assets and HUF 150 mln operational profit. Within MAHART Passnave, passenger cruising on the Danube provides only 40% of revenues. Middle− and long−distance passenger transport on the Danube is another significant profile. “From Esztergom to Baja, we run regular boat services. Water transport plays a serious role in commuting, too.

Several passengers commute from the Budapest agglomeration on a daily basis.

The biggest profit is produced, however, by the Danube−based long distance passenger transport. In that genre, there are practically only organized tourists.

They usually reserve journeys half a year in advance. Most of them are wealthy, retired North Americans: they simply love streaming down the whole length of the Danube,” explains Spányik.

The second biggest cruising company is Panorama Deck, part of the Európa Group. It is present in every segment of Danube river cruising but the one in which it is unbeatable is program ship maintenance. Apart from its own fleet, it also has the resources to operate fleets of smaller hop on – hop off touring companies like Eurama.

Family firm Legenda is specialized in dining cruises, which secures its position among the mid−size cruising companies.

Finally, one will find the hop on— hop off companies at the bottom of the pyramid. They own and operate river cruise ships as a kind of complementary profile.

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Budapest Business Journal | August 01 – September 04, 2014

Vintners help to cultivate wine tourism Wineries are attracting visitors to lovely parts of the Hungarian countryside, prompting development in infrastructure aimed at wine tourists.

As you leave the road from Budapest, and pull in to the dynamic Tokaj town of Mád, the modern Első Mádi Borház is the first building you encounter. Here visitors can find and taste wine – not only from the state−of−the−art Szent Tamás Winery, which opened behind it earlier this year – but also from other members of the influential Mádi Kör (Mád Circle), and contemporary cuisine and beverages.

Now that Hungarian wines are firmly shaping up in terms of quality, wineries are increasingly looking towards tourism as a means of enhancing their revenues. In the southern Hungarian wine region of Villány, tourism has always been an important part of the picture, and the adjacent region of Szekszárd is also developing its tourism offering. Meanwhile, some of the more exciting new developments are taking place in the famous Tokaj region in north− central Hungary, especially in Mád.

The Első Mádi Borház (The First Mád Wine House) and Szent Tamás Winery are part of a wider group of wine tourism related investments in the town.

The group is building the Botrytis Hotel, which will sleep 20 people, and is named after the so−called “noble rot” that attacks the region’s grapes causing them to shrivel, concentrating the sugars and acids in the process, which in turn enables the production of Tokaji Aszú. Educational centers such as the Aszú house will project a high tech film detailing how the wine comes into being, as well as offering tasting. Meanwhile, the group has already caused a buzz with the Gasteau Restaurant. It has

Images on these pages are from last year’s Bor, Mámor... Bénye, which takes place this year from August 15-17.

Lake Balaton is naturally well set up for wine tourism with a considerable, ready−made market of visitors already existing. also invested in a full−sized bus in which it can whisk visitors to Mád from Budapest or directly from Budapest Airport. Wine tastings and banquets are often hosted in the vineyards, with food often prepared on the spot.

When I broach the subject of wine tourism with Gábor Rackaczi, winemaker at Sauska Tokaj, he shrugs

and says simply, “Look out of the window”. Located in the very heart of the town of Tokaj in the former casino, one might have expected to see droves of thirsty tourists knocking at the gate on a Saturday afternoon in May. Instead, barely a sole could be spotted.

What trickle of tourists there were had not made it this far and had already been snaffled up by Tokaj Hétszőlő’s historic Rákoczi Pince, where János Szapolyai was elected King of Hungary in 1526, or by a host of less salubrious cellars on the road into town.

RUSSIAN TOUR GUIDE The day before, as I tasted at the Erzsébet Pince in Tokaj’s town center, a Russian tour guide had turned up unannounced with a couple and wandered into the cellar, demanding an instant tour and tasting.

While winemaker Miklós Prácser accommodated them in an instant, many Hungarian wineries (including his) typically have most of their human resources engaged in the winemaking and prefer to be contacted in advance to arrange tastings. This applies especially if you want to meet the winemaker.

Nevertheless, Lake Balaton is naturally well set up for wine tourism with a considerable and ready−made market of visitors already existing. Steady streams of visitors flow through during

the summer months. For example, the Szászi cellar on Szent György hegy sells half of its wine directly at the cellar.

Back in Tokaj, Prácser noted that Erzsébet Pince has a successful cooperation with Taste Hungary, which brings groups in from Budapest and beyond. Gastro tour operator Taste Hungary, which is run by couple Carolyn and Gábor Bánfalvi, achieved international recognition this year when it won an award from the prestigious Drinks Business magazine for “Best Contribution to Wine and Spirits Tourism”. Erzsébet Pince itself has recognized the potential for offering visitors experiences beyond wine and has opened the Tokaj Roasting Coffee Company and Coffeehouse, on Bethlen Gábor utca where it blends imported green coffee, then either serves directly or sells it.

In the sleepy Tokaj town of Tarcal, Basilicus is both a winery and a wine culture center that cooperates with and arranges tastings for visitors with leading winemakers. Managing director András Kanzler noted that there had previously been nobody in Tarcal to direct visitors to the quality producers and give them the information they need; Basilicus is backed by the New Széchenyi Plan. Tarcal already played an important part in Tokaj tourism story, being home to the four−star Gróf Degenfeld Kastély hotel, which is surrounded by the Degenfeld winery’s organic vineyards, and the five−star Andrássy Rezidencia wine hotel and spa. Indeed, hotels and guest houses are going up at a remarkable rate in wine regions around Hungary, and are often part funded by the EU and can be also be a requirement on funding packages the cellars receive for expansion.

Szekszard’s Bodri Pincészet is building an extra guesthouse to accommodate the growing number of visitors to the winery’s attractions that

Photos: Zsolt Szentirmai

ROBERT SMYTH

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Budapest Business Journal | August 01 – September 04, 2014

include the locally renowned Optimus restaurant, the winery and cellar itself, plus conferencing and event facilities, all set within the vineyards. Bodri can currently provide accommodation for around 30 guests. Speaking in the Optimus restaurant on busy Friday night, owner István Bodri said he sees the touted expansion of the nearby Paks Nuclear Power Plant as an opportunity for the region and its winemakers in terms of high−end wine tourism. The Bodri winery is investing HUF 2 billion of its own money, supported by an additional HUF 2 billion from funds in the overall estate and related projects, and expects a return of investment in

15−20 years. Takler is also expanding its already considerable accommodation with a glittering new building that is also to be used for tastings and gastronomy, which the winery’s head of sales András Takler said visitors “are calling out for”.

Szekszárd is notable for the considerable distances between the wineries, while the town of Villány is more naturally geared towards tourism with many of the region’s key producers within short walking distance of each

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other. A couple of investments are going into Szekszárd to make it more of a wine destination, however. Mészáros Borház Borászati Kft. is building a new hotel in the center of the town and was granted HUF 494 million in EU support, which amounts to 70% of the HUF 695 mln project. Also, the city’s oldest wine cellar, the Garay Pince, has just been renovated with a HUF 200 mln EU grant. It now offers wine from 30 local wineries and has a 70−seater restaurant.

FESTIVAL FRENZY Every summer Hungary is abuzz with a plethora of wine festivals. The “Bor, Mámor... Bénye” festival has managed to put the sleepy Tokaj backwater of Erdőbénye on the map all year round.

Attracting between 2,500 and 4,000 visitors per year it is notable for its laid back and intimate atmosphere and this year takes place August 15−17.

In 2009, there were just six wineries in Erdőbénye (now there are 16) and the village was relatively unknown by wine lovers and tourists alike, recalls organizer and winemaker Zsolt Berger of the Karádi−Berger winery.

“Local winemakers intended to do something in order to make the village more attractive for visitors,” he said.

Berger, who had previously received an offer from a bank to sponsor them if they could organize an exciting festival, had made a draft plan for a festival whereby visitors could have local wines and food in the gardens of the wineries and walk around the village. Winemakers Attila Homonna and Norbert Csite suggested that the festival programs should also be organized at the gardens, not on a main stage. “This is how the concept of the festival formed and it still works the same way,” said Berger.

Berger observed that the non−profit festival brings visitors and revenue for the region as well, not only for Erdőbénye.

“Most of the restaurants that are present at the festival are not from Erdőbénye and most of the visitors have accommodation somewhere else in the region,” he said.

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SOCIALITE

Who’s News

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SOCIALITE

Summer wines

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A national treasure that comes out at night center of town has blossomed. The Gozsdu Udvar, which once looked like a candidate for demolition, is now a property−owners dream, and the rest of the center is full of restored old gems.

The capital’s nightlife has become a major draw, especially because of its “ruin bars”, but you don’t need to be a tourist to enjoy these sublime hangouts.

TOM POPPER

Walk in and around the Gozsdu Udvar and you may notice how many people are not speaking Hungarian. This is a hub for eating, drinking and partying in Budapest, and now that the capital’s nightlife is a world−renowned tourist attraction, this pedestrian−only zone is packed with foreigners.

But part of the reason the scene took off here is that Hungarians enjoy an evening out: They know how to run great bars and clubs and they like going to them. That means the “ruin bars” and other nightspots are real places to relax, not just tourist sights. Anyone living in Budapest should check out the national treasure that is the local nightlife.

The inner part of District VII, the old Jewish Quarter, has become the focus for the fun. Given its central location, you might assume that the area was designed to be a party zone. In fact, it was a desire by real estate developers to abandon the center of town that helped the scene to blossom.

After the transition, this historic heart of the town was filled with beautiful old landmarked buildings in deplorable shape. Rather than comply with difficult regulations on restoring century−old structures, developers went to the edge of town to build new places. Many older buildings in the center, with pretty old courtyards, were left to sit, in the hopes that there would come a day when the city would allow massive demolition and rebuilding.

A crew of creative bohemian types got permission to take over the buildings temporarily, and they turned the courtyards into party spaces. This was the birth of the “ruin bar” or “róm kert”. Since then, the

A QUICK SAMPLING There are good “kert” bars and regular nightspots all over town, but if you really want to get in the thick of things, you could start in the walkway that leads from Madach tér, past the Gozsdu Udvar, and on to Kazinczy utca.

At the intersection of Kazinczy are three bars that helped get this scene started: The 400 has a big terrace, a big interior, speedy servers and a relaxed but lively atmosphere, with the expert team of Nenad Andjelic manning the outdoor Serb−style grill. The Ellátó Kert, a funky rangy place with a big hidden garden and a fun bar staff, has a stand in the rear that serves what may be Budapest’s best taco.

Mika Tivadar is a little fancier, especially in its big interior, which features a well−used cellar concert space, but their large garden area is relaxed, and generally busy.

Venture a few blocks down, to Akácfa utca 47, to find the ruin bar of the moment, which opened on July 19. Mazel Tov is run by the long−time crew behind the Hummus Bars, a small Budapest chain of simple eateries serving superior Middle Eastern food. They ensure that the kitchen here offers great grilled meats and satisfying vegetarian options. Set up on the sight of an old ruin bar, the Sufni G’art’n, the Mazel Tov has a fantastic space, made of a courtyard covered in a tall translucent atrium and a spacious garden in the back. The décor is a little fancier than some ruin bars, and the atmosphere feels a little more grown up.

If you want to move on, no need to go further than the neighboring building, Akácfa utca 39, for the Fogaskert, the lively garden bar run by the arty crew of the nightlife staple Fogasház, at number 51, which has its own open air space and a huge pair of lips on the roof. Both spaces feature a fun party vibe that goes late into the night.

Fun with the staff at Ellátó Kert. Below is Mazel Tov.

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Budapest Business Journal | August 01 – September 04, 2014

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Auction marks BSE’s birthday

How much for the pen?: Bidders at the auction.

Budapest’s stock exchange turned 150, and the financial elite gathered to celebrate.

ANDRÁS ZSÁMBOKI

The 150th anniversary of the foundation of the Budapest Stock Exchange was celebrated by a grandiose charitable auction attended by the Hungarian financial elite on June 12. The sale was extremely successful: auctioneers raised HUF 17 mln through the 22 items offered for bidding.

The auction was also successful in the sense that the cream of the Hungarian financial world was represented: from the management of big Erste Bank to tiny Calyon, from Concorde Brokers’ House to Equilor and Buda−Cash. The organizers hoped to assert the prestige of the financial elite in three different ways: through the historic past of the stock exchange; through the connections between the finance profession and the power elite; and through the knowledge− based internal coherence within the profession itself.

The historical aspect was expressed by the anniversary itself, as well as the choice of location and the paintings sold ADVERTISEMENT

at the auction. The auction was held in the domed upper hall of the Hungarian National Gallery in Buda’s Royal Palace, the place where royal receptions used to take place before 1918. Several paintings and etchings that once adorned the walls of the bourse in its former building at downtown Szabadság tér were offered for auction at the event.

As far as relations between the political and financial elites are concerned, that was mostly reflected by the choice of those asked to donate objects for the auction, including János Áder, President of Hungary (who was also the patron of the charity auction), Prime Minister Viktor Orbán, and National Bank Governor György Matolcsy.

The knowledge community of the profession was embodied by such objects as university textbooks offered up for auction; objects familiar to everyone in stock exchange practice, such as the great clock and bell of the BSE. Auctions make it glaringly obvious what matters most to those who show up at such an event. What this community holds in highest esteem should hardly be a surprise: the object sold for the highest price was the letter of re−foundation of the bourse from 1990, sold for HUF 3.2 million; the clock and the bell went for

a pretty penny too, as was the corporate finance textbook which most of the attendees probably used during their university years. “These are all loveable trinkets,” Nóra Winkler, the hostess and main auctioneer of the event remarked. As obvious as it is that plenty of emotions are attached to the above, they do not have much value of their own.

While the inner coherence of the profession was amply demonstrated by the high prices paid for these collectively cherished items, neither the historical aspect of the stock exchange nor the bonds between the finance and power elites seemed entirely convincing. The historical dimension was somewhat diminished by the fact that the BSE was

closed and its operations completely suspended for 40 long years between 1950 and 1990. The suggestion that the profession’s relations with the power elite are not quite satisfactory might be inferred from the fact that the entire income of the charitable auction was donated to the Department of Corporate Finance at Corvinus University of Economics. Both the university and the department have been under attack by the government, expressed by the total withdrawal of state funding from Corvinus since 2010.

Prime Minister Viktor Orbán’s fountain pen, used for signing international treaties, strategic agreements etc., was sold for HUF 750,000, a fair price for a simple writing implement.

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Budapest Business Journal | August 01 – September 04, 2014

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WHO'S NEWS Do you know someone on the move?

Send information to research@bbj.hu

Name ZOLTÁN BENEDEK

Zoltán Benedek was appointed leader of the audit and counseling branches of MAZARS on June 6. After joining MAZARS in 2004, he became the senior manager of Transaction services in 2010. From May 1, 2013, he took over the branch as the director. Benedek is a qualified auditor, a member of ACCA and acquired the FCCA qualification this year. He also plays a role in the work of the Education Committee of the Hungarian Private Equity and Venture Capital Association.

Current company/ new position MAZARS/DIRECTOR OF TRANSACTION SERVICES

Name DIANA ILLÉS Current company/ new position RANDSTAD/SSC FINANCE RECRUITMENT BRANCH MANAGER

Name DR. GÁBOR LAKI Current company/ new position PWC HUNGARY/LEADER OF CORPORATE INCOME TAX EXPERTS

Diana Illés was recently appointed manager of the shared service center Finance recruitment team at Randstad Hungary. In her new position, her key focus is to increase the SSC sector and further develop top finance executive searches and headhunting services. She joined Randstad Hungary in March 2010. Previously, she worked for wellknown multinational companies like IBM and AnheuserBusch Inbev. In her new job, her main duties involve the management of a team of five consultants and two researchers, focusing on active business development in the SSC sector, and handling top executive searches and headhunting services.

Dr. Gábor Laki (35) joined PwC Hungary’s tax consulting team on July 1, and was appointed director of the corporate income tax team. Before joining PwC, he was head of the division of income tax and contributions at the Ministry for National Economy. He has a long history of dealing with taxation issues and has gained extensive experience in various fields of direct taxation. From 2008-10, he was engaged in international tax planning at another large professional services firm. Between 2006-08, he worked as an official at the corporate income tax department of the Ministry of Finance.

Krisztina Patai has been appointed manager of the corporate finance/banking and legal recruitment team at Randstad Hungary. Her key focus will be business development and further development of top finance executive searches. She joined Randstad in June 2014 as a recruitment branch manager. She manages a team of five consultants and three researchers.

Name KRISZTINA PATAI Current company/ new position RANDSTAD/RECRUITMENT BRANCH MANAGER

Name MÁRTON LÁNYI Current company/ new position KUEHNE + NAGEL – EASTERN EUROPEAN REGION/NATIONAL MANAGER IN HUNGARY

Márton Lányi was appointed national manager of Kuehne + Nagel’s Hungarian office on May 31, 2014, succeeding Elemér Él, who retired following seven successful years leading the company. Lányi started working for Kuehne + Nagel as a Regional Operations Manager for the overland business and developed the company’s group network in Eastern Europe. “I am convinced that Marton Lányi’s expertise of the local logistics market will be a strong asset for our future business success,” said Bob Mihok, Regional Manager Kuehne + Nagel Eastern Europe.

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Budapest Business Journal | August 01 – September 04, 2014

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WINE REVIEW

Summer wine: Cool choices from last year’s vintage Our wine expert picks out some good Hungarian whites, roses – and even a couple of reds – for sipping in the warmer weather.

ROBERT SMYTH

The relentless heat of the Hungarian summer serves up the ideal opportunity to cool off with the help of scintillating sparklers, zesty whites and crispy rosés from last year’s vintage. It can also be a time to lap up lighter− bodied but flavor packed reds.

Szekszard’s Szeleshát has found a terrific way to imbibe Cabernet Sauvignon in hot summer weather; namely make rosé out of it and then fill it with carbon dioxide to make Cabernet Sauvignon Gyöngyöző 2013. János Szekretár, who looks after the vineyards, explains that they missed a bit of heat to ripen Cabernet Sauvignon sufficiently for making red wine in 2013. “So we decided to pick it earlier, although they were still pretty ripe grapes,” Most of it has gone to Bortarsaság where it sold under the Nagyon Pezseg (Very bubbly) name.

Hungary’s most widely planted red wine grape Kékfrankos is ideal for making crispy rosé out of, with its zippy red fruit and zesty acidity. However, some winemakers prefer Pinot Noir for the greater elegance it typically achieves.

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Péter Vida’s rosé 2013 from Szekszárd is a blend of Kékfrankos, Pinot Noir and Kadarka, the latter bringing its playful acidity to the pink party comprising grapefruit, redcurrant, peach and a touch of banana and tropical fruit.

János Németh has gone for straight Kékrankos for his Németh Janó rosé 2013.

Using wild yeast present in the grapes and the cellar in a bid to make the most authentic wine possible from the terroir, it’s a little restrained on the nose but fleshy and full on the palate.

It’s not all about traditional methods since Németh says that it’s just not possible to make good rosé without cool fermentation carried out in tanks. It’s got lots of strawberry and raspberry juiciness, while the touch of CO2 enhances the freshness Szekszárd’s Fuxli, which is Siller made with a day or two of maceration on the skins, provides a spicy bridge between rosé and red. Sándor Merfelsz, who is a noted cook down in Szekszárd where he makes deliciously ripe wines in conjunction with his winemaker Attila Godor, has found sushi the ideal accompaniment to his (Kékfrankos backbone with some Kadarka spice) and other Fuxlis. In particular, he finds the spicy ginger really hits the spot. Merfelsz describes Fuxli as a highly versatile wine that can enjoyed by itself, or as a cool aperitif and as it warms up a few degrees it can also go with starters and main courses.

2013 is looking to be a top vintage for whites with awesome aromas and freshness jumping out of the glass, which is welcome after the hot and desperately dry vintage of 2012 left the wines tired and old before their time.

In Tokaj, some very nice dry and off−dry Sárgamuskotály (Muscat Lunel) has been coming through from 2013. All too often this grape can be a bit flabby on the palate and all about the primary grapey cum floral aromas, but in 2013 the acidity is also there making the wines fresh and giving them structure.

Royal Tokaji’s 2013, the first wine made since the immensely talented Stéphanie Berecz joined as a consultant, displays an enticing combination of considerable body, freshness, spice and varietal character. The former Royal Tokaji winemaker Károly Áts has also had success with the same grape at his new employer, Tokaj Kereskedőház, picking up a Gran Menzione (Commendation) at “Vinitaly for the Áts Selection 2013”.

It is worth contrasting it with its supposedly less noble but more aromatic Muscat family relative Muscat Ottonel.

From Badacsony, Szeremley’s 2013 is also in impressive nick in 2013 oozing grape soda and peachy zestiness.

Badacsony is well known for Kéknyelű, which is more of a cooler weather wine, but it has to be pollinated by Budai Zöld. It usually makes unexciting wine, but in the hands of Válibor’s Péter Váli it makes a complex floral

Szekszárd’s Fuxli (left) and Nagyon Pezseg.

(white flowers), citrusy wine with crispy acidity that goes down a treat in summer.

Lighter reds with low tannins like Kadarka from the likes of Szekszárd’s Heimman or Márkvárt with their thirst−quenching red fruit and peppery spice, are also delicious in the heat, especially when chilled a little.

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