Budapest Business Journal 23/13

Report 3Special ire

BBJ

Festivals & music

SPECIAL REPORT: VOL. 23. NUMBER 13

ival to an emp From an island fest Festival timeline Budapest’s Sziget among Festival ranks s in the top contender e the highly competitiv circuit. global festival part of But it is only one that a larger enterprise making is 23 years in the and has been expanding every year.

Sziget Festival Foundation: 1993 Date: August 10-17 arts Focus: Music and Festival Telekom VOLT Foundation: 1993 Date: July 1-4 Focus: Popular music Sound MasterCard Balaton Foundation: 2007 Date: July 8-12 music Focus: Electronic

last year.

Gourmet Festival Sziget’s Main Stage of customers at management: A happy crowd Taken over by Sziget Packing them in: and foreigners 2010 apart Sponsorship, promotion secret to its success, that Date: Mid-May So what is the ten marketing campaign among the top party? from a catchy Focus: Local gastronomy Sziget is ranked according to festival managed to get and a non−stop caught “Somehow, we sells freedom, love having global festivals, Business Journal to find Sziget Gerendai, despite The Budapest director Károly smaller budget than organizers Generali Gyerek to think of the Sziget up with the festival well−oiled machine people a significantly in this category. The you Foundation: 2013 this out what keeps Festival as an experience are other contenders festivals Date: June 6-28 the top three took performing at optimum.

6.6 activities 2015 budget for Festival, which amount to HUF get elsewhere, so they Focus: Children’s The first Sziget being the Sziget roster Island (as have won’t in Óbuda on of of Sziget’s budget of place in 1993 billion with 12% was the brainchild Zene willing to travel thousands sponsorship revenues. all others since) Strand Nagyon derived from owner Károly Gerendai of course an important current majority page 16) and musician kilometers to attend.”

Foundation: 2013 Sponsorship is structure, of the financing name to 19-22 (see interview on same year was also the August component Date: their lending Péter Müller. That Festival, which would with key players VOLT as Pepsi once Focus: Popular music little profit. and first for the VOLTeight years later. Few are Balaton Sound that yields so late ’90s. “These create endeavor join the empire the U.K.’s Glastonbury, did for Sziget in the at the time to I don’t think B.my.Lake most successful marriages that aspirations existedrecognized brand, but Interestingly, course is one of Europe’s only £764,000 the kind of to the brand. Of a not which Foundation: 2014 an internationally are a detriment in Hungary that we’ve also reported the Iron Curtain an festivals, sales last year, with the fall of Date: August 19-22 criticism to this was clearly on £35 mln in ticket electronic in the we get but this does no damage so distant memory,to capitalize on a void profit article published Focus: Underground sold out says Tamás according to an in the long run,” and CEO of of last year. opportune moment music non−existent Hungarian Guardian in October was a cozy affair the brand in the hitherto director of marketing The original festival According Kádár, Management. festival market. overseen by the with only 10,000 in attendance. Kardos: Sziget Cultural sponsorship contracts József Today, the festivals company is power Although big Management Company to Sziget program director size of says. The the marketing Festival, Sziget Cultural it’s Kardos shift in quality and came dramatically boost its efforts on Spain Telekom VOLT “There was a big Pepsi its its affiliated festivals, set currently focusing include Sziget, Sound, B.my.Lake, the festival around 1996 whenThat’s when of Sziget and while increasing all international network and Australia Gyerek MasterCard Balaton sponsor. in the U.K., and Management Zene Festival, board as a major the leap to pay for the complex marketing budget Sziget Cultural Strand Nagyon Island) and Gourmet on local effort, were able to makeacts.” Simultaneous up within transformed its marketing campaigns, including the Sziget (Children’s more of a pet project we on has through a centralized the “man international also that is Sziget adopted are organized Festival was Festival, which also happens to be part bigger this, the VOLT and just as Pepsi capacities. concept at the end of the production unit in Budapest. for Gerendai who the first restaurant in to grow coming of foreign visitors the ground” beginning to The breakdown the VOLT Festival ’90s with the first promoterwhich he owner of Costes, Michelin star. terms of the a not only in was leaving Sziget, buy tickets, empire and to telling, that is Sziget campaigns Budapest to win show the Holland from joined for 2014 and acquaintances effectiveness of the local effect of Visitor numbers running organizers were merged. then sold to friends building of the but also in the remarkable appears to be the two portfolios of mouth. the operation we are 25% owners back home. “A conscious recorded 415,000 “At the moment began about eight social media and simple word Volt Invest smoothly: SzigetBalaton Sound sold attend the Lobenwein via international network the festival Hungarians course had with Norbert ownership of Sziget Kft. years ago, and these days at just Of visitors, while in VOLT it is visitors, largest numbers, come and Kft. And 75% in Holland as Sziget in the out with 145,000 45,000. Yet the is split between Károly Gerendai is as well known the remainder Zoltán Fülöp, HUF Holland, over 50%, while says Kádár.

120,000 and B.my.Lake a scant profit of Takács,” explains and Balaton Hungary,” in almost every in proportionate order from countries company reported taxes that same year, Gábor 60 “We have promoters of the VOLT that handle and Germany – after director country Italy Lobenwein get to million and Sziget France, European 351 for Western contract for we managed festivals. Fülöp and ticket sales with Sziget in all. “Somehow, the Sziget Festival as despite a sponsorship to 12% of the total Sound in cooperation local promotion responsible of also also work the Strand and B.my.Lake Sziget. Every country is people to think elsewhere, Festival that amounted to marketing you won’t get and Balaton Sound an experience a state to manageunder their company Volt for devising an approach budget – Volt contracts – and their market,” refers to the union that is most effective in begs the festivals had sponsorship 98.55 mln. This invest Produkció Kft. Fülöp subsidy of HUF would a company as a strategic partnership. question, why effort into a collective so much time and ANIKO FENYVESI

FESTIVALS AND MUSIC JULY 03, 2015 – JULY 16, 2015

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Money from fun

NEWS

Tobacco companies demand right to bid A consortium of major distributors say they are being unfairly cut out of the market by a government decision to award a national monopoly to one group – without holding a tender.

6

BUSINESS

The biggest office deal of the moment In delivering the second phase of Vaci Greens, Atenor Group oversaw a major opening in a market where top-quality office space is limited and there are few projects in the pipeline.

9

NEWS

Greek fallout: Watch bonds and the forint

Károly Gerendai decided to organize a music festival in 1993, and he now sits on top of a world−renowned empire.

In an exclusive interview, the head of Sziget talks about increasing competition in the global market. 16

SOCIALITE

As Greece’s troubles mounted, the economics minister continued to maintain that Hungary’s economy is insulated from serious fallout. Still, officials and analysts say that the forint and the bonds market could be hurt. 3

BUSINESS

SPECIAL REPORT

Some Tokaji wine goes fine with gas

Audi partners with Academy of Sciences

Last waltz? Music biz eyes comeback

It may sound like sacrilege, but the region’s Furmint grape actually has characteristics that make it ideal for producing sparkling wine. Our expert finds some winning creations by top vintners.

22

A partnership between business and academia to promote innovation is expected to create an engineering center that draws top students and scientists – from around Hungary and beyond.

8

A report analyzing the industry’s problems cites the impact of high VAT on concert attendance and bemoans the lack of musical education.

Suggested solutions include more state aid for live shows.

12

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Budapest Business Journal | July 03 – July 16, 2015

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3Special

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Report

Festivals & music

SPECIAL REPORT:

From an island festival

to an empire

Budapest’s Sziget among Festival ranks in the top contenders the highly competitive circuit. global festival part of But it is only one that a larger enterprise making is 23 years in the and has been expanding every year.

Festival timeline Sziget Festival Foundation: 1993 Date: August 10-17 arts Focus: Music and Festival Telekom VOLT Foundation: 1993 Date: July 1-4 Focus: Popular music Sound MasterCard Balaton Foundation: 2007 Date: July 8-12 music Focus: Electronic

last year.

Gourmet Festival Sziget’s Main Stage of customers at management: ANIKO FENYVESI A happy crowd Taken over by Sziget Packing them in: and foreigners 2010 apart Sponsorship, promotion secret to its success, that Date: Mid-May So what is the ten marketing campaign among the top party? from a catchy Focus: Local gastronomy Sziget is ranked according to festival managed to get and a non−stop caught “Somehow, we sells freedom, love having global festivals, Business Journal to find Sziget Gerendai, despite The Budapest director Károly smaller budget than organizers Generali Gyerek to think of the Sziget up with the festival well−oiled machine people a significantly in this category. The you Foundation: 2013 this out what keeps Festival as an experience are other contenders festivals Date: June 6-28 the top three took performing at optimum.

6.6 so they activities 2015 budget for Festival, which amount to HUF Focus: Children’s The first Sziget (as have won’t get elsewhere, in the Sziget rosterSziget’s budget being on Óbuda Island of of of place in 1993 billion with 12% was the brainchild Zene willing to travel thousands sponsorship revenues. all others since) Strand Nagyon derived from owner Károly Gerendai of course an important current majority page 16) and musician kilometers to attend.”

Foundation: 2013 Sponsorship is structure, the financing (see interview on same year was also the to component of Date: August 19-22 lending their name Péter Müller. That Festival, which would with key players VOLT as Pepsi once Focus: Popular music little profit. and first for the VOLTeight years later. Few are Balaton Sound that yields so late ’90s. “These create endeavor join the empire the U.K.’s Glastonbury, did for Sziget in the at the time to I don’t think B.my.Lake most successful marriages that aspirations existedrecognized brand, but Interestingly, course is one of Europe’s only £764,000 the kind of to the brand. Of a not which Foundation: 2014 an internationally are a detriment in Hungary that we’ve also reported the Iron Curtain an festivals, sales last year, with the fall of Date: August 19-22 criticism to this was clearly on £35 mln in ticket electronic in the we get but this does no damage so distant memory,to capitalize on a void profit article published Focus: Underground sold out says Tamás according to an in the long run,” and CEO of of last year. opportune moment music non−existent Hungarian Guardian in October was a cozy affair the brand in the hitherto director of marketing The original festival According Kádár, Management. festival market. overseen by the with only 10,000 in attendance. Kardos: Sziget Cultural sponsorship contracts József Today, the festivals company is power Although big Management Company to Sziget program director size of says. The the marketing Festival, Sziget Cultural it’s Kardos shift in quality and came dramatically boost its efforts on Spain Telekom VOLT “There was a big Pepsi its its affiliated festivals, set currently focusing include Sziget, Sound, B.my.Lake, the festival around 1996 whenThat’s when of Sziget and while increasing all international network and Australia Gyerek MasterCard Balaton sponsor. in the U.K., and Management Zene Festival, board as a major the leap to pay for the complex marketing budget Sziget Cultural Strand Nagyon Island) and Gourmet on local effort, were able to makeacts.” Simultaneous up within transformed its marketing campaigns, including the Sziget (Children’s more of a pet project we centralized international also that has Sziget adopted the “man on are organized through a is Festival was Festival, which also happens to be part bigger this, the VOLT and just as Pepsi capacities. concept at the end of the production unit in Budapest. for Gerendai who the first restaurant in to ground” grow coming of foreign visitors Festival the beginning to first promoter of the The breakdown owner of Costes, Michelin star.

Sziget, the VOLT ’90s with the which he only in terms a that was leavingjoined the Sziget empire and from Holland to buy tickets, is telling, not campaigns Budapest to win for 2014 show and acquaintances effectiveness of the local effect of Visitor numbers running organizers were merged. then sold to friends building of the but also in the remarkable appears to be the two portfolios the operation we are 25% owners back home. “A conscious word of mouth. recorded 415,000 “At the moment began about eight media and simple Volt Invest smoothly: SzigetBalaton Sound sold attend the Lobenwein via international network days the festival social course Hungarians of Sziget Kft. had with Norbert at just and these visitors, while it is in Of visitors, VOLT the Kft. And 75% ownership Gerendai and years ago, largest numbers, come in Holland as Sziget in the out with 145,000 45,000. Yet the remainder between Károly Zoltán Fülöp, is as well known HUF is split Holland, over 50%, while says Kádár.

120,000 and B.my.Lake a scant profit of Takács,” explains and Balaton Hungary,” in almost every in proportionate order from countries company reported taxes that same year, Gábor VOLT – 60 “We have promoters director of the Fülöp and Lobenwein country that handle Italy and Germany get 351 million after Western Europeanand ticket sales for France, “Somehow, we managed to as contract for Sziget festivals. with Sziget in all. despite a sponsorship to 12% of the total Sound in cooperation local promotion responsible of the Sziget Festival also also work the Strand and B.my.Lake Sziget. Every country is people to think elsewhere, Festival that amounted to marketing you won’t get and Balaton Sound an experience a state to manageunder their company Volt for devising an approach budget – Volt contracts – and their market,” refers to the union that is most effective in begs the festivals had sponsorship 98.55 mln. This invest Produkció Kft. Fülöp subsidy of HUF would a company as a strategic partnership. question, why effort into a collective so much time and

FESTIVALS AND MUSIC

BUSINESS JOURNAL BUDAPEST B

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JULY 03, 2015 – JULY 16, 2015

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Money from fun

NEWS

Tobacco companies demand right to bid A consortium of major distributors say they are being unfairly cut out of the market by a government decision to award a national monopoly to one group – without holding a tender.

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The biggest office deal of the moment In delivering the second phase of Vaci Greens, Atenor Group oversaw a major opening in a market where top-quality office space is limited and there are few projects in the pipeline.

9

NEWS

Greek fallout: Watch bonds and the forint

Károly Gerendai decided to organize a music festival in 1993, and he now sits on top of a world−renowned empire.

In an exclusive interview, the head of Sziget talks about increasing competition in the global market. 16

As Greece’s troubles mounted, the economics minister continued to maintain that Hungary’s economy is insulated from serious fallout. Still, officials and analysts say that the forint and the bonds market could be hurt. 3

BUSINESS

SOCIALITE

SPECIAL REPORT

Some Tokaji wine goes fine with gas

Audi partners with Academy of Sciences

Last waltz? Music biz eyes comeback

It may sound like sacrilege, but the region’s Furmint grape actually has characteristics that make it ideal for producing sparkling wine. Our expert finds some winning creations by top vintners.

22

A partnership between business and academia to promote innovation is expected to create an engineering center that draws top students and scientists – from around Hungary and beyond.

8

A report analyzing the industry’s problems cites the impact of high VAT on concert attendance and bemoans the lack of musical education.

Suggested solutions include more state aid for live shows.

12

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Budapest now front line in battle for gay rights The historic June 26 decision by the U.S. Supreme Court to legalize same−sex marriage affirmed what a majority of Americans say they believe: that sexual orientation should not impinge on a person’s civil rights. The majority of Irish voters had already shown they feel the same way on May 22, when they chose to legalize same−sex marriage in a national referendum, held in a country where homosexuality was a crime until 1993.

In Hungary? Budapest Mayor István Tarlós went on TV on June 5 to declare that the Budapest Pride March, part of the city’s annual LGBTQ celebration, is “repulsive”, “demeaning” and “unnatural”. As America celebrates a major victory in the fight for gay rights, the struggle continues elsewhere in the world, and in many ways Budapest is on the front line.

That is why attending Budapest Pride events of July 3−12, especially the march on Saturday July 11, may be one of the most important ways of making yourself heard on this vital civil rights issue. It is also good fun.

The Budapest Pride March is particularly important because there are very few events like it in this part of the world. Due to shootings, riots and threats of violence from homophobes, Belgrade has only successfully managed three such marches in its history, and organizers in other Central and Eastern European countries give up on similar plans due to intimidation and lack of official cooperation. Budapest Pride is also important to Hungary, because the country has its own share of intolerance that must be confronted. Along with verbal attacks by vocally anti−gay mayor Tarlós, the march has also faced physical threats from homophobes.

The Budapest event started with a gay film festival and picnic in 1993, and since 1997 the weeklong celebration has culminated in a march. The festival steadily grew in popularity, adding more films and events, and also drawing the attention of homophobes. In 2007, hateful hooligans lined the parade route, harassing participants and violently attacking people who joined the march or the party that followed.

Instead of giving in, organizers pushed on, and all kinds of people who believe in tolerance began to give their support. Since 2008, the march has been better protected

by police and better attended by celebrants. In recent years, the business community has shown strong support. Firms like Prezi and Google, along with the ESPELL translators association, have enlisted hundreds of other firms in supporting Budapest Pride, as well as in developing fair hiring practices.

These days, the march draws a diverse group of participants who enjoy an uplifting day, as the happy crowd practically dances the entire parade route through the streets of the capital. Along with having a great time, marchers send a clear message that those who do not tolerate diversity will not deter the people of Budapest.

Unfortunately, the group of local intolerants includes Tarlós, who has – mostly unsuccessfully – sought to put up barriers to Budapest Pride since he became mayor in 2010.

He has a track record on this subject as, before that, as mayor of Óbuda’s District III, he said he opposed the Sziget Festival because it hosted the Magic Mirror gay tent. In reaction to his opposition, including his June 5 comments, Budapest Pride organizers have invited the mayor to come along to the march and meet the people he considers “repulsive”.

While Tarlós probably won’t be there, anyone interested in joining a friendly group in a celebratory mood should participate in the march, and help advance the cause of LGBTQ rights here in CEE, the new front line in the battle.

The festival starts July 3, and includes a host of films, talks and parties. To join the parade on July 11, gather at the corner of Nagymező and Andrássy út before 3:30 PM, for a march across the river to Tabán. For security reasons, no one can join the parade after it sets off. For more information, see http://budapestpride.com/

Correction An article headlined “CEE countries compete for Jaguar Land Rover plant” in the June 5−18 edition of the Budapest Business Journal incorrectly attributed a statement about the automotive industry in Slovakia to Robert Ésik, President of the Hungarian Investment Promotion Agency. Ésik did not address this subject with our reporter. The BBJ regrets the error.

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Above, couples enjoy an amusement park ride at a summer fair on Óbuda island, in 1980, back when the area was called May 9 Park. At left, concertgoers enjoy themselves last year on the island, which now hosts the Sziget festival.

BBJ

1 News

NEWS

Distributors cry foul over tobacco monopoly

6

NEWS

Serb, Hungarian PMs meet, discuss border woes 5

macroscope

Greek turmoil may hit forint, bonds While officials say the economy is braced against the worst, analysts say one impact may be a premature end to the MNB’s current monetary easing.

As the world watched and waited for events to unfold in Greece, government officials said the Hungarian economy is already braced against aftershocks, while analysts said that a prolonged Greek debt crisis might bring an end to the current rate−easing cycle being pursued by Hungary’s central bank.

Economy Minister Mihály Varga said that Hungary’s “exposure is fairly limited”, but the situation could have negative impacts on the forint and other emerging−market currencies, as well as impacting the yield on state bonds. (See story on this page.)

As for the forint exchange rate, it has already seen some volatile movement. Global financial markets reacted positively to the latest news and that helped Hungary’s forint regain some strength, but basically it remains stuck near five−month lows versus the euro.

Erste analyst Gergely Ürmössy expects a weak forint until the end of this year.

He also forecasts that the National Bank of Hungary will continue its easing cycle.

“I still think the base rate will be reduced to 1.2% by the end of the third quarter of the year,” Ürmössy told the Budapest Business Journal. “However, more cautious moves are expected from July; I see a 10 basis point cut rate from then on. If inflation remains depressed, and international investor sentiment improves, it leaves room for the Monetary Council for easing again in August and September. In case the Greek debt crisis persists with prolonged negative market effects, then the Monetary Council might decide to cease the easing cycle it started in March,” Ürmössy concludes.

Lodon−based analysts agree: in a note released on June 29, they concluded that the Monetary Council might end its easing cycle if market risks deepen. However, tightening is not expected before the year−end, they said. According to Erste’s Ürmössy, the earliest possible date for raising the base rate is the second half of 2016.

Hungary’s government has built safeguards into next year’s budget against the possible impact of the Greek situation, state secretary for fiscal affairs Péter Benő Banai said on public television late on Monday (June 29). This is why the 2016 budget contains more than HUF 200 billion of reserves, and there is some HUF 130 billion left from this year’s budget, he added.

Photo: MTI/Noémi Bruzák

ZSÓFIA CZIFRA

National Economy Minister Mihály Varga addressing AmCham on June 30.

‘Limited exposure’ to Grexit, Varga tells AmCham The economics minister addressed a range of concerns and took some credit for growth.

ROBIN MARSHALL

Although much of the EU is looking anxiously on at this weekend’s Greek bailout referendum amid fears of a debt−inspired Grexit, or expulsion from the eurozone, National Economy Minister Mihály Varga told an AmCham business forum on June 30 that it would likely have little direct impact on Hungary.

“Our vulnerability and exposure is fairly limited: 0.4% of foreign trade is with Greece,” Varga said at a luncheon at the Buda Castle Hilton hotel. “What may have some implications for us is the forint exchange rate [to the euro, if emerging currencies take a hit] and the yield on state bonds. We have no Greek banks in Hungary, so the situation in Bulgaria, Serbia and Romania is not prevalent in Hungary.”

The minister was alluding to news that

broke on June 29 that Serbia’s central bank had introduced measures to limit transactions between Greek−owned commercial banks and their parent institutions in Greece.

He playfully suggested Hungarian tourists planning a holiday to Greece this year might, instead, take the safer option of a holiday on Lake Balaton or the Hungarian uplands and thus “contribute to Hungarian GDP”.

Taking credit for economic success Elsewhere in a general, if wide−ranging presentation, he criticized skeptics who “say the Hungarian economy was able to grow only because we received EU funding. If that was the case, why did the other 11 member states [who are net beneficiaries of EU money] not grow similarly?”

Looking to the future, the goal was to use EU funding even more efficiently, he said: “Sixteen percent of available funds in the recent period were used for economic growth. Now 60% of EU funds will be allocated for economic growth and increasing the number of jobs, helping the performance of the economy.”

More work had to be done on lowering the 7.1% unemployment rate, and in reforming vocational training along the German dual training model, Varga said. He added that, in Hungary, dual education efforts would be undertaken not by the education ministry, but the Ministry of National Economy and the Hungarian Chamber of Commerce.

“The future expansion of export markets is clearly always an important task for such a small and open economy,” the minister said. Similarly, the country couldn’t be reliant solely on the automotive sector, hence a need to boost other areas “like IT and new types of R&D”. Alternative energy use would also become more important, not least using the extra electricity capacities generated by the upgrade of the Paks nuclear power station.

“Electronic buses, electronic vehicles will start to appear across the country; this is important for us.”

He also had praise for the support offered by the American chamber and its members. “We are connected in many different ways. I would like to see institutionalized and closer cooperation with AmCham.”

WWW.BBJ.HU

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Budapest Business Journal | July 03 – July 16, 2015

NEWS

Health workers march

Hungary signs on for EIB loan totalling €500 mln

Parliament approves personal bankruptcy law

Hungary signed on for a €500 million loan from the European Investment Bank (EIB) on June 29. EIB Vice President László Baranyay and National Economy Minister Mihály Varga signed the agreement. Varga said the preferential credit would make cofinancing for European Union funded projects easier. Baranyay said the credit would support some €9 billion in investments. “It will help implement investments that are important for accelerating the EU convergence process and allowing Hungary to meet national strategic objectives in the areas of growth and employment, climate change and energy independence, all of which are key to achieving an increase in Hungary’s economic competitiveness and improving the quality of life of its citizens,” he said.

The Hungarian Parliament on June 30 approved legislation on introducing personal bankruptcy in Hungary, with 142 voting in favor, one against and 42 abstaining. Junior coalition governing party KDNP proposed the bill, under which insolvent Hungarians with debts – including interest and fees – of between HUF 2 million and HUF 60 mln, would be allowed to file for personal bankruptcy, exempting their assets from debt collection. Debtors and lenders will now have an incentive under the rules to first reach an agreement on repayments among themselves, the bill states, adding that the agreement could involve a restructuring of debt, an exemption from late payments or a partial discharge of debt. If debtors and lenders fail to reach agreement, a court would act as arbitrator.

PM’s Office clarifies Lázár statement on minimum wage

State purchases Budapest Bank for $700 mln

The Prime Minister’s Office, which is lead by minister János Lázár, said that a decision on a possible minimum wage rise next year is expected to be addressed by a forum of employers and unions in December. The clarification from the PM’s Office came from Lázár on June 25 when he said at his regular weekly press conference that he expects the minimum wage to rise by 5.5%.

Unions association MSZSZ said after the press conference that the increase Lázár referred to could be the starting point for negotiations, although it aims to achieve a 9% rise, state news agency MTI added.

The state-owned Corvinus Nemzetközi Befektetési has transferred the $700 million purchase price for a 100% stake in Budapest Bank to General Electric Capital Group, the Prime Minister’s Office said on June 29, according to state news agency MTI. The funding for the purchase came from forint-based market financing raised by Corvinus’ parent, the Hungarian Development Bank (MFB). Payment of the purchase price was calculated using a HUF/USD cross rate of 279.64, “which is more favorable than market rates at present”, the PMʼs office said. The purchase price will not cause state debt to rise, it added.

The government of Hungary signed a preliminary agreement with GE to acquire the bank late last year, and it got the regulatory green light in the middle of June. The process of taking over the bank will continue in the coming weeks, though the new owner plans no far-reaching changes to Budapest Bank’s operation, business strategy or management, the office said. Clients should not be affected by the change in ownership, it added.

OLAF investigates Orbán’s son-inlaw’s former company The European Commission’s Anti-Fraud Investigation Office (OLAF), which investigates fraud affecting the EU budget, as well as corruption and serious misconduct within European Union institutions, is currently investigating Elios Innovatív Zrt., a company formerly owned by Prime Minister Viktor Orbán’s son-in-law István Tiborcz, index.hu reported on June 30. The Hungarian police’s anti-corruption office also launched an investigation earlier this year of Elios regarding a series of public procurement tenders won by the company. At that time, the company was still indirectly owned by Tiborcz through Green Investment & Solutions Kft., which he sold in May 2015 to WHB Befektetési Kft. Elios Innovatív Zrt.ʼs primary area of business includes the upgrade of public lighting systems.

Environmentalists say Serb border fence could hurt wildlife The European Union could legally halt the construction of a 175 km-long fence on the Hungarian-Serbian border designed to stop the migrant influx to Hungary as the fence would hurt local wildlife by making it impossible for prairie dogs, an endangered species, to migrate, Hungarian online daily hvg.hu reported. HVG notes that the

Photos: MTI

IN BRIEF

Thousands of members of the Hungarian Chamber of Healthcare Professionals march through downtown Budapest on July 1, in a demonstration to protest low wages that they say are driving their colleagues to leave the country in droves.

They complained that the government has only made empty promises about badly needed healthcare reforms for the past five years and called for action before the ailing public health system collapses.

proposed fence would intersect a 30-40 km section that is part of the European Union’s ecological system’s Natura 2000 program, as such the EU has monitoring and legal rights over the territory.

Local environmentalists cited by HVG claim that the fence would seriously hurt local flora and fauna. Reportedly, most of the illegal migrants, 100-200 daily, pass through this area on route to Hungary, however, environmentalists say migrants have posed no threat to local wildlife.

Hungarian migrants have highest remittance per capita in the EU While a typical migrant sends home $1,700 a year, the average Hungarian living abroad transfers $5 ,500 each year back to his or her country of origin, the highest amount per capita in the EU, online news portal napi. hu reported on June 30. According to the World Bank, 20 million Central

European-born individuals were living outside of their home countries but within the EU in 2013. In 2014 , $28.5 billion was transferred back to their native countries, about 10% more than in 2013 and roughly 31% more than in 2012. While Poland and Romania receive the most funds, remittances from abroad have made an increasing contribution to Hungary’s GDP due to the growing number of Hungarians leaving the country and to their remittances being among the highest per immigrant from Central Europe, the report said.

KSH: Hungary’s factory gate prices up 1% in May Hungary’s industrial producer prices saw a year-on-year rise of 1% in May, following a decline that lasted four months, the Central Statistics Office (KSH) reported on June 29. In the first five months of 2015, domestic sales prices decreased 3.5% and export sales

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News 05

Budapest Business Journal | July 03 – July 16, 2015

prices were down 0.3% as compared to January–May 2014, resulting in a 1.4% total decrease of industrial producer prices, KSH added. In y.o.y. terms, domestic industrial sales prices decreased by 1.2% on average, prices in manufacturing fell by 0.6% and prices in electricity, gas, steam and air-conditioning supply – representing significant weight – by 2.6%, according to KSH data.

Hungary announces tender for passenger cars valued at HUF 6 bln Hungary’s public procurement directorate KEF has called an open tender for net HUF 6 billion of passenger cars in the latest issue of the Public Procurement Gazette, Hungarian news agency MTI reported on June 29. The tender is for the delivery and servicing of vehicles over a period of three years, with the possibility for an extension.

Bidders must show annual revenue from passenger car sales of at least HUF 120130 million in two of the past three fiscal years. The deadline for placing bids is August 8.

Report: Magyar Telekom to sell its media empire Magyar Telekom, the Hungarian subsidiary of telco giant Deutsche Telekom, is planning to sell its online media outlet origo.hu, Hungarian economy daily Világgazdaság reported June 29 citing a tender call the firm sent to companies that had shown interest in buying the portal in the past.

According to Világgazdaság, more than ten companies were asked for bids on the media outlet, which has long been one of the widest-read mainstream online news portals. Beyond Origo. hu, Magyar Telekom is apparently seeking to sell all of its media outlets, which are controlled by Origo Média és Kommunikációs Szolgáltató Zrt. – a firm that is 100% owned by the telecom, according to reports.

Orbán meets Serb PM, discusses border fence Other issues covered in the Budapest meeting included an improved rail connection and energy cooperation.

ZSÓFIA VÉGH

Hungary’s plan to build a fence on the Serbian border is a matter of border control, not one of human rights or foreign affairs, Prime Minister Viktor Orbán told reporters at a July 1 joint press conference in Budapest following a summit with his Serbian counterpart Aleksandar Vucic.

Asked about the human rights consequences and potential EU sanctions of fence building, Orbán said it was a step the Hungarian government was forced to take to respond to new−age migration, which is one of the greatest challenges that will shape European politics for many years.

“Those who believe that the waves of illegal migration from Africa’s crisis− stricken regions will end with the pacification of these areas are under illusion,” Orbán said. If we allow, thousands, millions or billions may come, he added.

Beyond discussing immigration and energy matters, the leaders of the two governments signed agreements on future infrastructural projects and economic cooperation. The countries

Serbian Prime Minister Aleksandar Vucic, left, and Hungarian Prime Minister Viktor Orbán at the July 1 press conference. have agreed to modernize the railway connection between Budapest and Belgrade, which would shorten the current travel time considerably – to less than 2.5 hours. Using EU credit, the Serbian government is set to start construction before yearend, Vucic said. Hungary will open an Eximbank outlet in Belgrade and 35 Hungarian companies will participate in a privatization process in Serbia.

Energy issues were also on the table.

Orbán said Hungary supported the idea of a gas network coming across Serbia to Hungary. “It would serve our interest if the gas supply, which will stop coming through Ukraine in 2019, is replaced by a strategic gas pipeline that would transport energy from Turkey to Hungary and the CEE region through Serbia.”

EU pledges €8 million to help Hungary with immigrants

Report: Fidesz prepares pro-family campaign Hungary’s Prime Minister Viktor Orbán ordered ministers János Lázár and Zoltán Balog to prepare a pro-family campaign by August 31, Hungary’s procurement gazette Magyar Közlöny reported on July 1. The reported aim of the new campaign is to gear the populationʼs mindset towards familycentric concerns, Hungarian news portal index.hu said. Information acquired by the portal suggests that the government will install “family protection” billboards, that promote the traditional family model of a woman and a man as mother and father. Although the portal’s government sources denied such claims, there is speculation that the campaign’s rhetoric could be antihomosexual. The proposed government campaign, follows a current campaign with an anti-immigrant rhetoric, and comes only a few days after the Supreme Court of the United States made samesex marriage legal in all U.S. states, and a few weeks after Ireland agreed in a referendum to legalize same-sex marriages.

Police on horseback patrol the border with Serbia near Szeged, above left. Above right, a group of migrants walking along the Serbian border.

The European Union has agreed to provide Hungary with €8 million in financial assistance to help the country manage the inflow of immigrants, European Commissioner for Migratory Issues Dimitris Avramopulosz told reporters in Budapest June 30 at a joint press conference with Hungarian Foreign Affairs Minister Péter Szijjártó.

Szijjártó said that the migratory pressure on the country is unprecedented, and will result in an extra HUF 15.8 billion in budgetary expenses in 2015.

Since January 1, 67,082 migrants have entered Hungary, out of which 66,541 came through the Hungarian−Serbian border, the minister added.

Szijjártó also said that Hungary was not in favor of the new proposal of establishing immigrant hotspots – temporary registry centers where the European Asylum Support Office, Frontex and Europol will work on the ground with frontline Member States to swiftly identify, register and fingerprint incoming migrants.

Asked about Hungaryʼs unilateral efforts to address the situation, such as plans to build a fence on the Serbian border, Avramopoulos said: “Unilateral solutions will only shift the problem to the next neighbouring country. It will not solve it.”

“This challenge can only be met if we are together,” said Avramopoulos. “But this doesn’t mean that we have the right to deprive member states from (pursuing/ adopting) their own policy.” − BBJ staff

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06 News

Budapest Business Journal | July 03 – July 16, 2015

Sole tobacco concession draws fire A consortium of neglected firms unilaterally bid for the right to distribute tobacco after the government announced the concession had been awarded without a tender.

CHRISTIAN KESZTHELYI

The government rejected a HUF 6 billion bid to distribute tobacco in the country on June 25 from a consortium of three multinational cigarette manufacturers.

In doing so, it confirmed that the number of tobacco distributors would be dramatically reduced – essentially to one consortium.

In a similar way, the government reduced the number of outlets selling cigarettes in Hungary from about 40,000 to roughly 5,000 with its 2013 tobacco law. And much like that previous reduction in market players, the latest decision to give the sole concession for tobacco distribution to a partnership formed by British American Tobacco (BAT) and Hungary’s Tabán Trafik had critics charging that the government is acting in an untransparent manner that hurts competition. The three excluded multinationals, Imperial Tobacco Magyarország Kft., JTI Hungary Zrt., and Philip Morris Magyarország Kft., noted that the concession, announced on June 11, was given without a tender, and so it unilaterally submitted a bid for the right to distribute cigarettes, which was rejected within 24 hours. The partnership chosen by the government to handle distribution is to pay HUF 600 million for exclusive distribution rights for 20 years; the rejected bidders offered HUF 6 bln and say they would not have demanded a monopoly on distribution.

The European Commission says it will be investigating the deal, as well as the

Viktor Szigetvári of the opposition Együtt party announces that his party is demanding information about the government’s decision to award the tobacco distribution concession without considering additional bids, at a June 22 press conference outside the Parliament building. law, passed in December, which made it possible.

“There are tobacco monopolies elsewhere in Europe as well, but nowhere is it so conspicuous that only companies that are in a good relationship with the government can sell tobacco,” Elżbieta Bieńkowska commissioner responsible for internal markets was quoted as saying.

On request from the Budapest Business Journal, the Commission gave the following statement: “In December 2014 Hungary again amended the system for the distribution of tobacco products in Hungary. The Commission is examining whether the newly introduced changes related to the system for the taxation and distribution of tobacco products in Hungary is compatible with EU law. In particular, the new rules should not violate the principle of the free movement of goods laid down in Article 34 TFEU. We are in contact with the Hungarian authorities to seek further information concerning

certain legal aspects of these new changes.”

Process questioned But the rejected bidders maintain that the government did not even follow the law, which stipulates three possible methods for choosing the body responsible for tobacco distribution: the state itself can carry out the activity, a reliable partner can be chosen based on criteria set in the law or there can be an open tender. “We believe none of the above mentioned processes were applied,” Imperial Tobacco Hungary’s General Manager Lóránt Dezső told the BBJ. “We believe that the government should have called an open tender for carrying out the distribution for tobacco retail in a transparent and discrimination−free manner.”

Dezső said that the companies had been waiting for the government to call the tender after the law was passed late December. But, in the end, no tender

was called, and the concession was announced on June 11.

In rejecting the unsolicited bid by Dezső and his partners, the Ministry of National Development said in a statement sent to the three companies: “It is immediately and clearly apparent that it does not fulfill the legal requirements and is unsuitable to be accepted by the Minister of National Development pursuant to Section 10/D of the Concession Act.” The ministry said it “has no choice but to return without acceptance the Bidder’s [the three companies] proposal to Bidder as invalid and uninterpretable. The ministry emphasizes that although the concession contract for the service has already been concluded with regard to the whole territory of the country, and therefore it would be forced to reject Bidder’s proposal anyway, the proposal is unsuitable for acceptance regardless of this circumstance.”

Despite the ministry’s rejection Dezső said that the consortium “stand by their offer”, adding that they “can undertake what the offer contains”. He noted that it is open for negotiations in order to establish a market model that is sustainable in the long−term.

“The decision made by the Hungarian government forces us to transfer control over the sales and distribution of our own products to another company, and to share our sensitive business information on pricing, inventories and new market activities, and eventually to let our two competitors deliver our products,” Dezső said. “This situation is unacceptable for us, therefore we ask the Hungarian government to reevaluate its decision and reopen the concession granting procedure again with the involvement of every tobacco company present in Hungary.”

Commenting on the huge difference in the concession fee that the three companies jointly offer of HUF 6 bln and the fee of HUF 600 mln by Tabán and BAT, Dezső said that the larger fee his group proposed to pay is based on “real calculations” and is “well−founded considering the current economy”. He said that, according to their calculations, the winner of the concession could make an annual profit of HUF 16 bln.

Law sets fixed fee for ad agencies, promotes transparency CHRISTIAN KESZTHELYI

A law recently passed by the Hungarian government sets a fixed publication fee of 15% for advertising intermediaries and calls for complete transparency of signed contracts, the Hungarian unit of law firm Baker & McKenzie said yesterday in a report it compiled on the legislation.

According to the report, the law defines advertising intermediaries as “companies which facilitate advertising between advertising customers and advertisement publishers.” The report adds that “advertising intermediaries are prohibited from accepting any direct or indirect bonus, rebate, gift or other

gain from the publisher or any other person” and “advertising intermediaries may agree to a discount; however, it must be passed on to the advertising customer and indicated as such on the invoice issued to the customer.”

“Companies failing to follow the prohibitions may face a monetary fine which is ten times the financial benefit gained from the violation,” János

Puskás (pictured), advertisement law specialist at Kajtár Takács Hegymegi− Barakonyi Baker & McKenzie told the Budapest Business Journal. “The bill sets an unusually high fine amount.”

Before the legislation was passed, advertising intermediaries were able to operate using any desired publication fee, however the average fee the profession applied was approximately 20%, a rate which was not required to be included in the contract signed between the advertisement intermediary and the advertiser, market insiders told the BBJ. Bonuses were granted annually to the advertising intermediaries from media outlets for bringing advertisers to the outlets.

Baker & McKenzie’s report also notes that under the law, all contractual agreements must be made fully transparent for all parties. “An advertising intermediary, acting on behalf of its advertising customer, may agree directly with the publisher about the fee to be charged. However, full transparency must be provided to the advertising customer concerning both the financial terms of the advertising and the publishing data.”

The new regulations take effect as of tomorrow, July 1. Prior to the law being passed, the profession was in an uproar as a proposed bill was put forward that would have completely cut advertising intermediaries out of the market.

GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

1ST DISTRICT

2ND DISTRICT

5TH DISTRICT

10TH DISTRICT

12TH DISTRICT

15TH DISTRICT

95 SQM – 3 ROOMS, BATTHYÁNY STREET

2216 SQM – LOT, BOGNÁR STREET

122 SQM – 4 ROOMS, STOLLÁR BÉLA STREET

143 SQM – 4 ROOMS, MARTINOVICS SQUARE

76 SQM – 4 ROOMS, BÖSZÖRMÉNYI STREET

120 SQM – 3 ROOMS, KERTVÁROS

At the bottom of the Buda Castle, this very sunny and quiet, street facing apartment has 3 separate rooms and private gas heating and it is situated in a nice period building.

This lot has beautiful panorama and there is a 360 sqm of house on it at the moment. It is located in a very quiet, green area. Good connection to public transport.

This beautiful building is situated right at the riverside, and has been completely renovated.

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This very well divided, spacious apartment that needs renovation has private gas heating and a fireplace in the living room. It is situated in a small period building.

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In the garden suburb area, this completely renovated two storey semi-detached house built on 270 sqm of lot and has terrace, balcony, sauna and parking space in the garden.

34.900.000 HUF

135.000.000 HUF

81.900.000 HUF

32.000.000 HUF

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SOLYMÁR

82 SQM – 3 ROOMS, FRANKEL LEÓ STREET

29 SQM – 1 ROOM, VÁRADI STREET

87 SQM – 2 ROOMS, ARADI STREET

200 SQM – 4 ROOMS, KŐÉR LANE

68 SQM – 3 ROOMS, DOLMÁNY STREET

325 SQM – 4 ROOMS, KATONA JÓZSEF STR.

In a beautiful period building with elevator, this spacious apartment that needs renovation has private gas heating and bright kitchen with dining room.

This bright, park facing apartment that needs renovation has balcony and it is situated in a well maintained building, in a quiet street.

Adjacent to Andrássy Boulevard, this fully renovated, sunny apartment benefits of a fully fitted kitchen and private gas heating. It is situated in a beautiful period building.

This three storey terraced house in good condition, built on 320 sqm of lot, has 2 bathrooms and garage. The house has “A” energy rating.

In a new building, this street and garden facing apartment benefits of 2 balconies, separate rooms and living room with open kitchen.

44.900.000 HUF

25.900.000 HUF

This new built, two storey family house has 3 bedrooms, 1 living room, indoor swimming pool and garage and it is located in a very quiet village, in Pest county.

24.600.000 HUF

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2ND DISTRICT

13.990.000 HUF

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29.900.000 HUF

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91 SQM – 3 ROOMS, FILLÉR STREET

268 SQM – 4 SHOPS, BÉCSI STREET

87 SQM – 3 ROOMS, KIRÁLY STREET

130 SQM – 4 ROOMS, TORMA STREET

104 SQM – 2 ROOMS + HALL, KATONA JÓZSEF STR.

82 SQM – 3 ROOMS, VÁCI STREET

In a villa house with 4350 sqm of common garden, this very well divided, garden facing apartment has big terrace, balcony and parking space in the courtyard.

These renovated 4 shops have 10 street facing shop windows all together, each shop has own kitchen, alarm system and private gas heating. It is located next to a busy road.

In a renovated period building with elevator, this high floor, sunny apartment in good condition has nice view over the very green Lövölde Square.

This two storey family house that needs renovation has 650 sqm of lot, 2 bathrooms, nice veranda and parking space in the courtyard.

In a well maintained period building with elevator, this very spacious and bright, high floor apartment has balcony.

32.900.000 HUF

49.490.000 HUF

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39.400.000 HUF

5th district: Beautiful panorama over the pedestrian Váci Street, this completely renovated apartment has 2 separate bedrooms, living room, 2 bathrooms and balcony.

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15TH DISTRICT

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120 SQM – 4 ROOMS, ALVINCI STREET

206 SQM – 6 ROOMS, ILONKA STREET

226 SQM – 7 ROOMS, TERÉZ CIRCUIT

156 SQM – 5 ROOMS, MAJOR STREET

120 SQM – 5 ROOMS, KERTVÁROS

84 SQM – 3 ROOMS, HUSZÁR STREET

Beautiful view from the 17 sqm of terrace, this well divided, bright part of a house has private garden, outdoor swimming pool and parking space.

This three storey part of a house benefits of nice panorama from the 3 big terraces, 3 bathrooms, private garden, 2 parking spaces in the courtyard and a separate studio apartment.

This apartment is situated on the top floor of a period building. Actually is used as a hostel, benefits of independent bedrooms and bathrooms.

This three storey semi-detached house in good condition has 160 sqm of lot, 4 bathrooms, balconies and garage and it is located in a quiet garden suburb area.

This park and garden facing, two storey terraced house has 150 sqm of lot and benefits of 2 bathrooms, private gas heating, balcony and parking space in the garden.

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49.900.000 HUF

59.900.000 HUF

69.900.000 HUF

46.900.000 HUF

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67 SQM – 3 ROOMS, GALOPP STREET

57 SQM – 2 ROOMS, ERZSÉBET CIRCUIT

262 SQM – 8 ROOMS, SZENTPÉTERY STREET

View over the Rose Garden of Gül Baba, this apartment benefits of 2 balconies, rosewood parquet in the rooms, granite cladding in the kitchen and marble cladding in the bathroom.

This sunny, well divided, street facing apartment has separate rooms and balcony and it is situated in a building with elevator. Good connection to public transport.

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In a quiet side street, this 2 storey family house in good condition built on 1296 sqm of lot has terrace, roof terrace, nice garden and parking space.

54.900.000 HUF

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94 SQM – 3 ROOMS, ROTTENBILLER STREET

118 SQM – 5 ROOMS, KRISZTINA CIRCUIT

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www.tecnocasa.hu CONTACT US: INFO@TECNOCASA.HU

EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

BBJ

2Business Audi, Academy of Sciences to partner on innovation A new research center is expected to help draw top talent – both foreign and Hungarian – to Győr.

ZSÓFIA VÉGH

Driverless electric cars, smart IT systems and materials to improve cars’ structure are only a few of the research areas being studied in the new innovation center Audi Hungaria Motor Kft. and the Hungarian Academy of Sciences (MTA) have agreed to open in Győr. Aside from supporting production of the cars of the future, the carmaker and the academy aim to create a world−renowned research base that attracts high caliber students and scientist from Hungary and abroad. “The cooperation will help bridge the current gap between basic research and industrial use,” László Lovász, the president of MTA told reporters at the partnership’s official announcement on June 25. It is of equal significance that students make use of their world−class knowledge, Lovász noted.

Széchényi István University in Győr.

They should be familiar with the latest methods and results of basic research as well as the challenges and solutions on the practical side, he added.

To facilitate their cooperation, MTA is establishing a new research center in

COMPANY NEWS Wizz Air building hangar, eyes BP-Birmingham route Hungary-based low-cost airline Wizz Air launched the construction of its 2,000 sqm maintenance hangar at Budapestʼs Liszt Ferenc Airport, and is expected to open the facility on September 1, a press release reported on June 26. The hangar will be located between the existing Lufthansa Technik and Aeroplex of Central Europe hangars. The total cost of the construction is approximately HUF 1 bln, financed entirely by Budapest Airport. On June 25, Wizz Air announced that it will launch a new route from Budapest Liszt Ferenc International Airport to Birmingham, United Kingdom as of September 15, offering two flights weekly.

SkyGreece to launch BudapestToronto flight Direct, nine-and-a-half hour flights between Budapest and Toronto were launched by Athens-based SkyGreece

Győr. The Vehicle Technology Research Center of Excellence (Járműtechnológiai Kutatások Kiválósági Központja, or J3K) will be based at Széchényi István University in Győr, where Audi opened its Vehicle Engineering faculty

János Fodor. The Óbuda University is a member of the SAP University Alliance Program; as such, students can participate in several international conferences and competitions.

Magyar Posta now offers personal loans

airline, the company announced in a press release on June 25. The announcement noted that the flight will arrive from Toronto, Canada to Budapest, Hungary every Thursday at 9:10 AM and after a short break will continue its journey to Thessaloniki, Greece, served by a Boeing 767-300 airplane.

SAP, Óbuda University sign cooperation agreement Óbuda University and SAP Hungary Kft., the software and solutions company signed a strategic agreement to offer carrier opportunities for university students, and to improve research and development, SAP announced in a press release on June 29. According to the announcement, SAP will make its development center available to university students for educational purposes. “This agreement will further strengthen the high-level practice-oriented courses at the university,” said Óbuda University rector

Hungarian state-owned postal company Magyar Posta has started offering personal loans, the company confirmed to Hungarian news agency MTI on June 29, following CEO Zsolt Szarka’s interview with Heti Válasz, in which he said that a personal loan product developed by Magyar Posta and FHB Bank would be offered this summer.

According to the reports, the product would become available immediately at almost 80 post offices. Approximately 30% of the postal company’s revenue comes from financial services and insurance brokering, the rates of which Magyar Posta is looking to lift further.

Uber upbeat about government decree San Francisco-based ridesharing company Uber is still evaluating the latest government decree impacting their drivers here, but they “are encouraged by the commitment of the Ministry of National Development to not create a barrier to innovative solutions,” Uber told the Budapest Business Journal on June 29. The government issued a decree on June 26 stipulating that Uber drivers

earlier this year. Research will focus on innovations that adapt to the future challenges of traffic, promote novel ICT and mathematical methods to support navigation, and help develop autonomous electric vehicles.

Negotiations on the budget are ongoing, with no final figures having been released thus far, though the parties will contribute equally to the costs of the project. There are several financing options on the table, including the expansion of MTA’s Lendület (Momentum) program, the goal of which is to renew the research teams of the academy and participating universities by attracting outstanding young professionals back to Hungary.

“We tend to complain about Hungarian researchers leaving the country. This process should rather be considered as circulation,” Lovász told the Budapest Business Journal. He explained that the new facility would also attract foreign students to Hungary.

Indeed, according to Thomas Faustmann, managing director of Audi Hungaria Motor Kft., foreign students will be sought out. “One of our targets is to take the area around Győr to a higher, international level,” Faustmann told the BBJ.

must be licensed taxi drivers. The service operates on a “sharing economy” model, under which its drivers sign up to work through the Uber smartphone app, but they are supposed to be self-employed.

The government decree, passed after local taxi drivers protested against Uber drivers undercutting their prices, could be construed as making Uber more responsible for those who use the app.

Nonetheless, Uber expressed optimism that a workable solution will be reached.

Bank of China Hungary uses €500 mln bond to finance local company The Hungarian branch of the Bank of China will use proceeds from a €500 mln bond for upgrades at local chemicals company BorsodChem, a member of Chinaʼs Wanhua Group, and the stateowned Hungarian Electricity Works (MVM) – as well as several other local businesses – news agency Xinhua said on June 26, citing the head of the branch. Chen Huaiyu said the bond issue showed the high level of confidence foreign investors have in the future economic progress of Hungary and Central and Eastern Europe.

The bond issue was deemed an important step in the implementation of the memorandum of understanding between China and Hungary on their governmentsʼ support for the establishment of the Silk Road Economic Belt and the 21st Maritime Silk Road signed earlier in June.

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2 Business

Budapest Business Journal | July 03 – July 16, 2015

09

REAL ESTATE NEWS Atenor Group delivers 2nd phase of Váci Greens Arguably the biggest office project in Budapest right now, this latest development comes at a time when office vacancies are shrinking and analysts expect top−quality offices to remain scarce.

GARY J. MORRELL

The Belgium−based developer Atenor Group has officially opened its 17,000 sqm Building C, the second phase of the 85,000 sqm Váci Greens in the ever− popular Váci út business corridor.

Arguably the biggest office project in Budapest, Váci Greens was started when the market was down but this opening comes at a time when interest in top− quality office space is growing and vacancies are becoming scarcer. While there are a limited number of projects in the pipeline, a shortage of highly sought after class “A” office space is likely to continue in Budapest for some time. Analysts say the Budapest vacancy rate could fall below 15% soon, dropping below that of its Central and Eastern European neighbors.

TIBA Architects Studio designed the Váci Greens development and Building C has an Excellent BREEAM sustainability rating. This second phase of the project is 100% let to GE; its choice of Budapest for a shared services center (SSC) and engineer training facility is regarded as a success for Hungary. Atenor made what was regarded as an ambitious decision to go ahead with a large−scale speculative office development in what was then a difficult market with debt finance either unavailable or very difficult to source in the post−2008 economic downturn environment, although Atenor “hedged its bets” by only commencing construction once a previous phase was fully let. With demand picking up and pipeline limited, the shortage of well located class “A” office floorplates could negatively impact market development, although developers are increasingly attracted to Hungary with vacancy falling.

Construction of the latest speculative stage of the project commenced at the end of 2013, with the first 16,000 sqm Building A fully leased six months after completion.

At the same time the Atenor Group is also constructing the 24,500 sqm Building B, the third phase of the project that is due for completion in the first half of next year and for which Atenor is involved in

Growing: Building C of Váci Greens is open and already 100% let to GE for a shared services center and a training facility.

“With the very low pipeline and the number of pre-lets, office projects are close to 100% preleased before delivery.”

new buildings that can offer 10,000 sqm of space in Budapest. It should be a landlord−favoring market by the end of the year as effective rents are €12− 14.5 per sqm per month,” said David Johnston, head of office agency at Cushman & Wakefield.

High vacancies expected to continue advanced negotiations. If pre−leases are achieved, the company intends to proceed with Building D. “We are at advanced negotiations and hope to have Building B fully leased by the end of the year and then we can start construction of Building D, the fourth phase of the project. The 2.5 hectare development site provides flexibility with regard to potential leases of, for example, up to 20,000 sqm,” said Zoltán Borbély Atenor, Project Director at Atenor Hungary.

Building D would extend the development to around 58,000 sqm of space. According to the plans, the multi−phased project will consist of six buildings with a possible 135,000 sqm of office space surrounding an inner courtyard. Atenor has already purchased a former industrial site adjacent to the complex that will form the site for phase six of Váci Greens, once the existing building has been demolished.

GE Healthcare will establish a European SSC and a research center for training engineers, only the third in the world after the United States and India.

By 2017, more than 2,000 people could be employed on six floors at the center according to GE. This will consist of around 80% Hungarians and 20% other nationalities. “SSCs and corporates are driving the market. With regard to availability there are only two or three

In recent years only established European developers such as Atenor, Skanska, HB Reavis and Futureal have been able to source finance and develop in the Budapest office market where debt finance is expensive and hard to source, and loan−to−equity ratios have been low. In this market environment, most speculative projects are being developed on a phased basis, with developers constructing highly specified product that attracts pre−leases.

As a result of the market environment the volume of new Budapest office supply is seen as “very limited”. The Budapest Research Forum put total Budapest office stock at 3.23 million sqm with vacancy falling for the fifth successive quarter to 15.7%. “Office vacancy could fall to 13−14% by the end of 2016; this would be below vacancy levels in Czech Republic and Poland. With the very low pipeline and the number of pre−lets, office projects are close to 100% pre−leased before delivery,” said Rita Tuza, head of research at JLL Hungary.

These sentiments are echoed by CBRE, which commented that the vacancy rate has fallen to a six−year low, and all signs suggest that this trend will continue in the coming quarters. “Rental figures for the first half of the year are extremely strong, and we are experiencing a noticeable increase in the proportion of

pre−leases,” concluded Gábor Borbély, senior investment consultant at CBRE Pipeline for 2016/2017 is put at circa 90,000 sqm, representing an improvement on post−crisis delivery levels but still significantly lower than historic highs.

Having concluded a 8,500 sqm prelease with E−On representing 65% of the project at the V17 office project in Váci út, Hungary’s Wing is due to deliver the 12,000 sqm office project in mid−2016.

Skanska Property has commenced construction on the first 6,600 sqm phase of Nordic Light, due to be completed in the first quarter of 2016. The two−phased 26,200 sqm development in the Váci út business district has been pre−certified with LEED green certification.

The Váci út business district provides a number of development sites adjacent to metro stations in a slightly out−of−center area. Váci Greens is located directly opposite the Gyönyösi út metro station with underground parking spaces and bike racks, plus showers and changing facilities. According to József Tóth, Mayor of District 13, the district has attracted 700,000 sqm−1 million sqm of office and industrial space in recent years, representing around one−third of the total investment into Budapest. The district has around 30,000 enterprises employing 72,000 people.

The Atenor Group has some 40 projects in Hungary, Romania, Belgium and Luxembourg. It is developing the phased Hermes Business Campus in Bucharest consisting of three buildings that will offer up to 75,000 sqm of office space.

In the difficult economic environment in both Hungary and Romania, Atenor has been financing its CEE projects through its own equity.

BBJ

3Special Report Festivals & music

From an island festival to an empire Budapest’s Sziget Festival ranks among the top contenders in the highly competitive global festival circuit.

But it is only one part of a larger enterprise that is 23 years in the making and has been expanding every year.

Festival timeline Sziget Festival Foundation: 1993 Date: August 10-17 Focus: Music and arts Telekom VOLT Festival Foundation: 1993 Date: July 1-4 Focus: Popular music MasterCard Balaton Sound Foundation: 2007 Date: July 8-12 Focus: Electronic music

ANIKO FENYVESI

So what is the secret to its success, apart from a catchy marketing campaign that sells freedom, love and a non−stop party?

The Budapest Business Journal caught up with the festival organizers to find out what keeps this well−oiled machine performing at optimum.

The first Sziget Festival, which took place in 1993 on Óbuda Island (as have all others since) was the brainchild of current majority owner Károly Gerendai (see interview on page 16) and musician Péter Müller. That same year was also the first for the VOLT Festival, which would join the empire eight years later. Few aspirations existed at the time to create an internationally recognized brand, but with the fall of the Iron Curtain a not so distant memory, this was clearly an opportune moment to capitalize on a void in the hitherto non−existent Hungarian festival market.

Today, the festivals overseen by the Sziget Cultural Management Company include Sziget, Telekom VOLT Festival, MasterCard Balaton Sound, B.my.Lake, Strand Nagyon Zene Festival, Gyerek Sziget (Children’s Island) and Gourmet Festival, which is more of a pet project for Gerendai who also happens to be part owner of Costes, the first restaurant in Budapest to win a Michelin star.

Visitor numbers for 2014 show that the operation appears to be running smoothly: Sziget recorded 415,000 visitors, while Balaton Sound sold out with 145,000 visitors, VOLT had 120,000 and B.my.Lake 45,000. Yet the company reported a scant profit of HUF 351 million after taxes that same year, despite a sponsorship contract for Sziget Festival that amounted to 12% of the total budget – Volt and Balaton Sound also had sponsorship contracts – and a state subsidy of HUF 98.55 mln. This begs the question, why would a company invest so much time and effort into a collective

Packing them in: A happy crowd of customers at Sziget’s Main Stage last year.

Sponsorship, promotion and foreigners

“Somehow, we managed to get people to think of the Sziget Festival as an experience you won’t get elsewhere, so they are willing to travel thousands of kilometers to attend.” endeavor that yields so little profit.

Interestingly, the U.K.’s Glastonbury, which is one of Europe’s most successful festivals, also reported only £764,000 profit on £35 mln in ticket sales last year, according to an article published in the Guardian in October of last year.

The original festival was a cozy affair with only 10,000 in attendance. According to Sziget program director József Kardos: “There was a big shift in quality and size of the festival around 1996 when Pepsi came on board as a major sponsor. That’s when we were able to make the leap to pay for bigger international acts.” Simultaneous to this, the VOLT Festival was also beginning to grow and just as Pepsi was leaving Sziget, the VOLT Festival organizers joined the Sziget empire and the two portfolios were merged.

“At the moment we are 25% owners with Norbert Lobenwein via Volt Invest Kft. And 75% ownership of Sziget Kft. is split between Károly Gerendai and Gábor Takács,” explains Zoltán Fülöp, director of the VOLT and Balaton Sound festivals. Fülöp and Lobenwein also work in cooperation with Sziget to manage the Strand and B.my.Lake festivals under their company Volt Produkció Kft. Fülöp refers to the union as a strategic partnership.

Sziget is ranked among the top ten global festivals, according to festival director Károly Gerendai, despite having a significantly smaller budget than other contenders in this category. The 2015 budget for the top three festivals in the Sziget roster amount to HUF 6.6 billion with 12% of Sziget’s budget being derived from sponsorship revenues.

Sponsorship is of course an important component of the financing structure, with key players lending their name to Balaton Sound and VOLT as Pepsi once did for Sziget in the late ’90s. “These are the kind of marriages that I don’t think are a detriment to the brand. Of course we get criticism in Hungary that we’ve sold out but this does no damage to the brand in the long run,” says Tamás Kádár, director of marketing and CEO of Sziget Cultural Management.

Although big sponsorship contracts dramatically boost the marketing power of Sziget and its affiliated festivals, it’s the complex international network set up within Sziget Cultural Management that has transformed its marketing capacities. Sziget adopted the “man on the ground” concept at the end of the ’90s with the first promoter coming from Holland to buy tickets, which he then sold to friends and acquaintances back home. “A conscious building of the international network began about eight years ago, and these days the festival is as well known in Holland as it is in Hungary,” says Kádár.

“We have promoters in almost every Western European country that handle local promotion and ticket sales for Sziget. Every country is responsible for devising an approach to marketing that is most effective in their market,”

Gourmet Festival Taken over by Sziget management: 2010 Date: Mid-May Focus: Local gastronomy Generali Gyerek Sziget Foundation: 2013 Date: June 6-28 Focus: Children’s activities Strand Nagyon Zene Foundation: 2013 Date: August 19-22 Focus: Popular music B.my.Lake Foundation: 2014 Date: August 19-22 Focus: Underground electronic music

Kardos says. The company is currently focusing its efforts on Spain and Australia while increasing its marketing budget in the U.K., and all campaigns, including the local effort, are organized through a centralized production unit in Budapest.

The breakdown of foreign visitors is telling, not only in terms of the effectiveness of the local campaigns but also in the remarkable effect of social media and simple word of mouth.

Of course Hungarians attend the Sziget in the largest numbers, at just over 50%, while the remainder come in proportionate order from Holland, France, Italy and Germany – 60 countries in all. “Somehow, we managed to get people to think of the Sziget Festival as an experience you won’t get elsewhere,

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Budapest Business Journal | July 03 – July 16, 2015

11 “We have local promoters in almost every western European country. ... Every country is responsible for devising an approach to marketing that is most effective in their market.”

‘Sziget’ means ‘island’, and the festival takes place on Óbuda Island. Shown is an aerial view of last year’s event. so they are willing to travel thousands of kilometers to attend,” says Gerendai.

It helps that the appeal of Budapest has also grown with its spas, ruin bars, striking architecture and rich history, not to mention budget airline travel.

With ticket prices increasing every year and salaries in Hungary remaining remarkably low by European standards, Hungarians often feel like they’ve been left out in the cold. But as Kádár admits, it is the foreign visitors that give Sziget a “stable base to work from”. In due time, the percentage of foreign visitors could very well exceed that of Hungarians. Out

of country visitors at the smaller festivals are considerably smaller and represent 30% at Balaton Sound and approximately 5−10% at VOLT.

Beating out the competition So you’ve got a perfect, picturesque location, within the city limits of a cosmopolitan city with an intriguing past behind the Iron Curtain; it’s still a massive undertaking to stay on top of the competition. “Of course we can’t compete with many of the Western European festivals that have three to four times our

budget,” says Kardos, adding that the appeal lies in the mixed bag offering. “Our key advantage over our competitors is that this isn’t just a music festival. There’s also theater, dance, visual arts, and everything from jazz to opera to folk music that make Sziget very unique,” he says.

Balaton Sound is also a big contender on the international festival stage, hosting some of the hottest names in mainstream electronic music on a two−kilometer stretch of beachfront that can be accessed without leaving the festival grounds, says Fülöp.

The festival’s success can be attributed to the fact that it had little competition in the

region and was in fact filling a void in the electronic music festival sphere, according to Fülöp. Since its founding in 2007, they have sold out every year even before the gates opened.

In the case of VOLT Festival, it nailed its segment a number of years ago and according to Fülöp, many 18−25 year olds have a strong connection with the VOLT brand.

That’s not to say that Sziget and its affiliate festivals are coasting on a wave of success. The Sziget Festival, for example, has had good and bad years. Having to cut back on programs after the financial crisis and reportedly coming in at a loss in 2013, it made a decent comeback in 2014. Securing the biggest acts of the moment, although not intrinsically linked with drawing big crowds, does still impact the effectiveness of a festival’s marketing campaign. And in that regard it’s hard to compete with the Western festivals.

Sziget is expecting to spend 45% of its budget on its performers. For 2015 that amounts to approximately HUF 2.115 billion which the organizers say is sometimes not enough to secure high caliber performers from a fixed pool, among a rapidly growing number of festivals. “The number of festivals has been growing constantly for years: Between 2002 and 2012 it has quintupled, while the number of visitors and performers has remained the same,” says Gerendai.

The structure of Sziget Cultural Management, however, does give more bargaining power when it comes to booking performers as they can offer multiple timeslots to a given artist depending on the artist’s tour schedule and fit them into the festival that best suits them, but it’s often not the festival that calls the shots. “Picking out the biggest stars usually depends on the stars and not on us,” according to Kádár, who says the ticket prices and budget don’t allow room to put renowned headliners on every night of the week.

“Artist fees have really gone through the roof,” says Kardos who blames a fall in record sales for the jump in attendance fees. “Musicians and their management are now trying to make a living out of concert performances during the summer festival season, and try to generate enough income to cover the rest of the year,” he adds.

Regardless of the struggles, the dramatic shift in the music industry, an expansion into the realm of gastronomic festivals and even a sell off of 76% of the company’s shares in 2010, which it subsequently bought back for one quarter of the purchase price from the troubled Econet.hu, two years later, Sziget Cultural Management has evolved with the times and come out ahead. And although the company has no intention of launching more festivals in what it considers a saturated market, it will be interesting to see where its musical aspirations takes it.

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Who turned off the music?

A report looks at the lackluster music industry in Hungary and seeks ways to reverse its decline. The country’s high VAT is singled out as one of the bigger problems.

NÓRA KROKOVAY

If Hungary’s ailing music business is ever to rise from its sickbed, there must be changes to the VAT burden on live concerts, better state sponsorship of music, new means of cashing in on live performances and downloads – and a realization that the great composers Kodály and Bartók are dead.

These are among the findings contained in a new report that looks at ways to reverse the decline of the HUF 30 billion Hungarian music industry. The ProArt 2015 report, commissioned by the ProArt Association, the main body representing the industry, contains an analysis of the obstacles to success for the industry, as well as recommendations for how to make improvements. It is the most serious single concerted effort to right an industry that has been adrift for some time.

The report puts forward six strategies for growth: Raising audience numbers; improving musicians’ incomes; increasing active interest in playing music among the population, especially among young people who make up future audiences; improving profitability in the recording sector; maintaining the efficiency of copyright execution; and increasing state funding.

“The key players of Hungary’s music business are small− or medium−sized firms, often run by a founder−and− CEO,” explains Dániel Antal, the music industry economist who produced the ProArt report. Antal tells the Budapest Business Journal that the market is small and decentralized, and thus private professional investors prevail.

“Acquisitions or growth through subsidiaries has been impossible, partly due to the lack of transparency in the sector,” he says.

Hungary’s pool of musicians and new compositions is abundant even in European comparison, especially considering that, since the Iron Curtain was lifted, artists no longer have to face the state’s muzzle. These musicians need live gigs, as fully 65% of Hungarian musicians’ incomes come from live music, the report says, but it is getting harder for venues and audiences to afford live performances, and the number of musical concerts have dropped in every genre and segment, the report shows.

“A crucial problem is that ticket prices are hit by one of the highest VAT rates in the region, making live Hungarian gigs 15−30% more expensive to visit,

The recently renovated main stage of the Liszt Ferenc Music Academy, one of the most respected music schools in the world, sits empty. The report on the local music industry found that fewer Hungarians are studying music, so interest in shows is lower.

“A crucial problem is that ticket prices are hit by one of the highest VAT rates in the region, making live Hungarian gigs 15-30% more expensive to visit, which is uncompetitive regionally.” which is uncompetitive regionally,” Antal explains.

State support sought Hungary offsets its low number of live shows with a higher number of festivals than the European average. The chance to play at these festivals can help compensate musicians for some of the money they lose on lackluster ticket sales for one−off concerts. It is therefore helpful to the industry that the state budget will provide HUF 487 million to support festivals.

Musicians and other members of the industry say they would like to see more state backing. The industry is currently watching to see what kind of support will come out of a state−run program, which is named after prolific singer−songwriter Tamás Cseh and is meant to provide funding to help bands market themselves better. “Other areas where the state may have a legitimate role is addressing some of the social needs of retired artists or artists who could not legally earn a living from their art during the communist era due to censorship,” Antal says.

But he adds that the biggest help the state could give is a tax break in the form of a preferential VAT rate for the music sector, to make live music more affordable for audiences. Industry players say the state would benefit due to the new jobs this change would create.

While live shows are a vital source of income, sales of recordings are also important to the sector. The number of active consumers of musical products is estimated at about two million, and buyers have rapidly shifted towards digital and online platforms. The share of physical records (CDs) in purchases stood at 97% in 2012, dropped to 94% in 2013, and plunged to 65% in 2014, with digital sales growing fast, the report said.

Digital sales have only just started really taking off in Hungary and paid− for downloads are yet to become popular.

YouTube and music streaming services such as Spotify or Deezer now offer their services in Hungary without the problem of unauthorized copying of content.

“These providers, along with their Hungarian equivalent, HallgassHazait, are marketing channels which make gains at the expense of TV and radio,” Antal says. “Hip−hop and some types of Roma party music have never been big on radio and fit nicely with the new digital marketing model.”

Recording and royalties While making records is one of the costliest parts of the business, and it is very hard to draw investors there, some lucrative deals can be found with the cash that spirals off music to other industries, like tourism or catering. At the same time, records can help promote other sales,

including live gigs and festival contracts, and musicians often see CD publishing as a necessary investment at the start of their career, too.

Meanwhile, CDs with nothing on them are helping the industry too. Artisjus, the main agency that collects fees for authoring rights and other royalties, is funded by several sources, including a monthly charge for bars that play recorded music and a levy on any data carriers, such as writable CDs, flash drives, memory cards – even cell phones.

The method for paying artists from the funds collected has recently come under fire from some members of the industry, who say the redistribution lacks transparency, but most players still agree this is an important source of revenue generation and some small compensation for illegal downloads. Collection societies like Artisjus need to increase efficiency and upgrade technology so that administration for big music users is as cheap and simple as possible, according to Antal.

As for the future supply of audiences and musical talent, that was one of the more surprising findings of the study.

In a country where, about a century ago, composers Zoltán Kodály and Béla Bartók developed a sophisticated music education system, which was later supported by the state, there is less interest in music than might be expected. Data from the ProArt report shows that only 5% of Hungarian adults sang in the past 12 months and even fewer, 2.8%, played an instrument, compared to European averages of 12.5% and 8.1%, respectively. Along with indicating a reduced supply of musicians, it also indicates a limited interest in music.

“This takes its toll on music consumption,” Antal warns.

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World music industry descends on Budapest

Photo: Yannis Psathas

Womex in October will attract record companies, booking agencies, music exporters – and musicians giving shows.

NÓRA KROKOVAY

For Budapesters, it will be an opportunity to see some great world music acts, but the real action will be backstage.

The world music industry will descend on Budapest from October 21−25 for the 21st World Music Expo, or Womex, an annual gathering where future recording deals, tours, and festival dates are sealed. This is the first time the event will be held in Central and Eastern Europe, and organizers want to make sure it is a love−at−first−sight encounter with the region’s rich culture and music scene – a local commodity that many feel is under−marketed.

“There is strong demand globally to see more music from this region,” Womex program director Balázs Weyer tells the Budapest Business Journal. Until now, the world music scene from CEE was

Ethiocolor at last yearʼs Womex in Spain. only highlighted at regional fairs and expos. As Womex is the big annual event that attracts all the big players from the industry, Weyer said he is hoping to “free up energies that can fuel creative cities, regions or countries”.

After the 2011 Womex in Copenhagen, where Hungarian music was the theme of the opening event, Budapest applied to host the expo itself, in the hopes that the Hungarian capital could be a musical hub for the region, says Weyer. “We thought the first time we apply would be a learning experience, like when you first apply to host the Olympics. But we won first time round,” he recalls.

Womex’s main organizers have expressed a desire to expand throughout the region, and Budapest wants to be the gate through which music from CEE reaches global markets, according to Weyer. He acknowledges that such a goal is a challenge, because the region is very diversified in terms of its music, culture, and even languages, so it can be hard to represent everything together.

Key players More than 3,000 foreign participants are registered to attend, and an additional 320 artists from 90 countries are coming to the event. Representatives of 1,260 organizations are expected to come and seek deals against the backdrop of Budapest’s lively music scene. Key players will include: record labels, who want to both buy and sell; booking agencies; big venues, such as festivals and concert halls; and national music export offices, which promote their country’s talent.

State subsidies for music export offices often go to support world music, because the genre is generally clearly recognizable as coming from a specific culture. Hungary has not had a music export office since 2009, which sets brand building back a lot, says Weyer, adding that state subsidies are part of the

sweetening package that any big festival considers when it recruits musicians.

“A Hungarian band is that much more expensive to invite somewhere, for instance, because the state does not help with travel expenses, which are a massive part of the bill,” he explains. This lack of infrastructure means Hungary’s otherwise rich musical talent pool rarely reaches the global stage. “Music in this genre just grows like a wild flower. We hope Womex can change this,” Weyer says.

While they may not support band export, the Hungarian government’s Human Resources Ministry did provide HUF 327.2 million to help put on the show, which will center around the Palace of Arts (MŰPA), the A38 concert boat and the Bálna (Whale) shopping and recreation center.

Even with better support, the world music business does not feature the big− level deals that can be seen in the pop and rock business. Womex is more likely to host specialized record labels and management teams in a very “person− based” atmosphere, although Sony, Warner and other big players will also attend, Weyer says. “It’s a low−budget genre,” he explains, but adds that this also means marketing and technical and show−effect costs can also be kept to a minimum compared with bands in the pop or rock field.

Don’t Let the Party Knock You Out

Survival guide to summer festivals A few days of unadulterated fun at a summer festival might leave you ill for a few weeks. Not quite the afterparty you had in mind. See what we can do to prevent the usual ill effects of the party crowd.

Preventive measures are probably not your priority when you are going out of your way to make sure you’re having a good time. That’s exactly the problem: whatever you do, you probably overdo it and that’s what makes you ill. Standing in the sun for long hours, queuing up for tickets or for getting a drink, let alone raving in front of a stage. Feeling a little bit dizzy and sick even on an empty stomach? Shivering in the heat?

Sunstroke is right on its way to give you a stiff neck, sensitivity to light, loss of appetite and overall fatigue.

The reason behind these unpleasant symptoms is that our head got overheated, the meninges got inflamed and swollen, exerting pressure on several parts of your brain. Wearing a good hat and drinking plenty of water are effective preventive measures against sunstroke. If you weren’t that clever, you can alleviate the symptoms with frequent cold showers, cold fomentation and rehydrating with plenty of water.

particularly to the eardrums. According to a recent survey by the World Health Organisation 40 percent of the young generation are in danger of hearing loss when attending concerts and sports events. Music played at the average noise level of street traffic – 85 dB – is safe to listen to for eight hours. Raising the level by just 3 dB will halve the safe listening time. By the time you reach the 100 dB mark – the noise level of someone shouting close to you – the impairment threshold is down to a mere fifteen minutes!

We are born with roughly 17 thousand hair cells inside the cochlea and we keep losing a few each time we are exposed to excessive noise. Once they are gone, hair cells will never replenish and over time their gradual loss leads to noticeable hearing impairment. An easy and invisible way to protect your ears at a loud concert is wearing plastic or flexible earphones.

Singing along with your favourite star is a sure way to get a sore throat or even Inflammations of all kinds vocal cord inflammation by the gig is up.

Loud music is harmful to the ears, Cold drinks and the dust that the crowd

kicked up makes things even worse.

There is effective medical treatment for throat infection but never underestimate the power of rest and silence.

It’s not over yet!

Having one glass too many is the usual collateral damage of the ‘drink now, regret later’ philosophy, which inevitably ends with hangover. Losing control and overeating could also be taxing on your stomach, just as forgetting to wash your hands frequently. The best cure for hangover is prevention is moderation.

Make sure you have copious amounts of mineral water between your drinks, to “dilute” alcohol. There are good medicines to tackle gastritis but a few days on a diet wouldn’t hurt either.

Days of relentless partying is physically exhausting, especially when you throw in some extreme sports just for the fun of it. Think twice about bungee jumping, especially if you are having health issues. Also be nice to your feet. If you have fallen arches or other orthopaedic issues make sure you are wearing the proper shoes and weigh the odds of

heavy legs, terrible pain and cramps at night when deciding between raving in the front row and a comfy sitting spot a bit further away.

If you tried hard but didn’t quite manage to prioritise preventive measures at a festival and need medical help call us or visit our web site for expert help.

You can use your health fund or travel insurance policy to cover the costs of our medical services.

TEL: (+36) 1 377-6737 WEB: www.drrose.hu ADDRESS: Széchenyi square 7/8, 1051 Budapest

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

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Sponsors keep festival goers in beer and food Corporate backers and food and beverage vendors can bring in some revenue, but their biggest contribution may be the amenities they provide to keep customers happy.

LEVENTE HÖRÖMPÖLI-TÓTH

There’s more than one way to make money off of a music festival.

Corporate sponsors can pay handsome fees to have the Sziget Festival’s expected crowd of close to a half million people exposed to their product. And beer and food sellers pay big commissions for the chance to cater to those visitors, who get thirsty and hungry from spending a day on the festival grounds.

The reality is that 75% of the festival’s income comes from entry tickets, organizers say. Vendors’ commissions only bring in about 12% of the revenue, but vendors are important because things like food and drink keep festival goers happy. And, while sponsors bring in only a little more – 15% of the revenue – they also provide essential services.

For instance, this year the one kind of brew you can buy on the island will be that of the official beer sponsor, Dreher.

“A single supplier is important as that is the way we can meet the exclusivity criteria for our sponsors perfectly,” according to the Sziget press office. “On the other hand, it serves logistics purposes: On−site loading and product distribution could not be handled otherwise. If every bar transported their own drinks, it would require 100 extra vehicles.”

Leave your cash at home This year, Sziget sponsors are also contributing to the cashless payment system. MasterCard is a major sponsor of the Sziget Festival and they also promote the Sziget organization’s festival at Lake Balaton, which is now called MasterCard Balaton Sound. This year, MasterCard is providing contactless payment throughout the festival as a means of promoting its new system.

Another payment system available is being provided by Magyar Telekom, also a major sponsor of Sziget, including their VOLT Festival in Sopron. The Magyar Telekom system lets festival goers use their cell phone as a bankcard.

All you need is a compatible handset and SIM card, a relevant app and an OTP MasterCard Mobile PayPass virtual card.

Some 10,000 have already downloaded the Magyar Telekom MobileWallet app, and the company deems the popular festival as the perfect place for promoting its cashless solution.

Along with sponsorship, these companies provide the service of helping to keep the Sziget Festival cashless, so that purchases of everything on the

A bar at the Sziget Festival: Eat, drink and pay digitally! festival grounds, from food to T−shirts, can be done electronically. This system allows for accurate tracking of sales, making it possible for more precise, and fairer, commissions from vendors, and it is something that the Sziget management has sought to do with all its festivals for several years now. Since last year, the system was handled by Hungarian company Cardnet Zrt., through their Festipay card.

“Festipay is needed because not everybody has a contactless bank card.

We also wanted our guests to keep the freedom that, in case they come with cash, they could use it for payment purposes as well,” the press service of Sziget tells the Budapest Business Journal. By going to cashiers around the festival, people can pay cash to have their cards topped up.

Before it became the official payment provider of Sziget events, including Balaton Sound, VOLT and Gourmet Festival last year, Cardnet’s solution had proven its expertise at nearly 20 festivals. Festipay’s popularity is further shown by the fact that it will be used in several events abroad this summer, starting with Delta Festival in Marseille at the end of June.

A newly debuting app aims to make its use even more convenient. Users can

keep track of their spending and block the card in case it’s lost or damaged. The remaining balance can be carried over to a new card.

That balance at closing time, however, fuels an urban legend, according to which a large chunk of festival revenues come from unused money on those cards. As the myth has it, visitors are too tired or loaded to bother to collect the cash due back.

But the myth is not true, according to the service provider. “In 2014, festival goers left HUF 245 on average on their card, which only covers its production costs,” Cardnet PR executive Júlia Dávid notes.

Fairer vendor payments One of the big advantages of cashless payments is that every transaction can be electronically recorded, allowing vendors who sell food, beverages, clothes or other items to precisely report their income and pay a percentage commission on that income.

Until last year, a fixed fee was charged for those offering any goods and services besides alcohol. As a result of a new policy, every vendor contributes a certain percentage of their revenues. Recording sales precisely is not a problem anymore thanks to the cash−free environment.

Festipay cards are the coin of the realm at the Sziget festival.

“This scheme reduces vendors’ risks.

The scope of gastronomy services is diversifying, since even places with smaller turnover can operate at a cost level that is affordable and can be planned,” the Sziget press office says.

The diverse offerings are an important way to please concertgoers, and in the end, it is those concertgoers who really bring in the money. More money is needed, Sziget organizers say, as the budget to pay bands has soared from €4−5 million in a year as musicians take advantage of growing festival rivalry.

According to Károly Gerendai, the mastermind behind the Sziget brand: “It is about a ten−year−old phenomenon that substantial revenue hikes can be produced only by drawing in greater audience numbers and selling the tickets for more.”

The Sziget Festival has already achieved half of that formula, raising the cost of a daily pass from HUF 15,000 last year to HUF 18,000 this year. As far as bringing in higher audience numbers, last year Sziget had a record 415,000 visitors, and this year they say they have high hopes to match or beat that number.

Those visitors should have plenty to eat and drink, as well as several ways to pay for their sustenance.

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Budapest Business Journal | July 03 – July 16, 2015

Man behind Sziget tracks the trends Károly Gerendai, co−founder and current owner of the Sziget Festival, created the biggest musical event in the region and used it to launch an entertainment empire. Here he talks about growth and future plans for his flagship festival on Óbuda Island.

“I firmly believe Sziget Festival’s success in 2014 was not just sheer luck, but instead the result of previous developments that had ripened.”

Q

Have you been targeting new countries with your marketing this season?

A: We are running campaigns in roughly the same number of countries we did previously, though we have shifted the emphasis on some more than others. For example, we are focusing more on Spain and Australia, and spending a bit more on the U.K. – in countries where we see more untapped potential. These, however, are not huge bumps in spending: We dedicated a €12,000 marketing budget this year for Australia, where previously this item came from our local partner’s ticket revenues. Traditionally, we have the strongest markets in the West.

It has been on my agenda for some time to focus more on Russia and Ukraine. The political and economic situation now prevents us from growing there considerably. I still believe it makes sense to ramp up marketing in the East, and to count on these markets, as there is much potential in them. I have just looked at ticket sales figures and, compared to the same period of last year, the number of tickets sold in Russia and Ukraine has grown, which tells me it is worth expending more effort there.

ZSÓFIA VÉGH

Q

Following a series of festivals with dropping revenues and declining visitor numbers, last year’s Sziget posted a good profit and hit new visitor records. Given these trends, what are you expecting as you plan for the 2015 festival?

A: It is a question of how unique that instant was – whether it was the result of better programs or our moving the date of the event a week later. More responsible thinking would probably suggest that we wait and see how this year’s festival works out and decide on future developments only afterwards.

However, precisely because the previous years did not see progressive growth – in fact, the number of visitors declined – and we had to postpone several developments, after last year’s success, I told my colleagues to dare to dive, increase the budget significantly and accomplish what we could not afford earlier.

Q

Q

So you are not playing it safe?

A: I firmly believe Sziget Festival’s success in 2014 was not just sheer luck, but instead the result of previous developments that had ripened. I am convinced that last year was a trendsetter in the Sziget Festival’s life.

Q

What improvements can you now afford to finance?

A: Some of them are infrastructural ones we have been struggling with for years. We had three hectares of forest land in a poor and unusable state restored, resolved water drainage issues in the most problematic areas, had the electricity network assessed and made road network repairs. There are innumerable programs that give the Sziget Festival authenticity, from circus acts to fine arts to opera and classical music, and the budget for those we froze years ago.

We simply could not increase spending in those areas; sometimes we even had to cut it. This year, though, we have increased their budget by 25%.

Károly Gerendai at the bridge that acts as the main entry to the Sziget Festival.

Q

What about spending more on star performers?

A: Last year it accounted for somewhat more than one−third of the festival’s overall budget. Stars costing more are a global trend, so this year we calculated at more than 45%. International festivals spend more than half of their budget on star performers, but they usually have less additional programs. Sziget Festival’s

programs are far more colorful than those of other European, U.K. or U.S. festivals. Half of our budget covers program costs, 70% of which goes on performers. We have increased the remaining 30% as well as the spending on performers. We upped last year’s HUF 3.65 billion overall budget to HUF 4.7 bln in 2015, but after last year’s 45% increase we haven’t modified marketing costs much.

Are you featuring more Eastern performers in the line−up?

A: We have invited many performers from CEE in the past few years. Part of Sziget Festival’s uniqueness for a Western visitor comes not only from its colorful programs, but also from the fact that here they see performers they wouldn’t see at a Western European festival. A Dutch person is less likely to come here only to listen to the same music they can get at home. It is more the programs built around concerts that attract them. It strikes me, too, that someone from Australia would travel here. Somehow, we managed to get people to think of the Sziget Festival as an experience you won’t get elsewhere, so they are willing to travel thousands of kilometers to attend. Fortunately, Budapest is becoming ever trendier with its spas, ruin pubs, etc. – we of course mention these traits in our communications.

Q

Are you also trying to expand your presence in the East?

A: Given the political situation in Ukraine and Turkey, the countries we held negotiations with, these attempts have come to a halt. We tried to organize an event in Vienna knowing the market was already saturated,

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Budapest Business Journal | July 03 – July 16, 2015

Sziget Festival budget in 2015 TOTAL: HUF 4.7 billion (HUF 3.65 billion in 2014) Programs: HUF 2.115 billion Infrastructural developments: HUF 130 million Improving user experience, service: HUF 100 million (approx.)

Advertisement tax: HUF 30 million (approx.

HUF 55 million for all Sziget Kft. events) Reaching the masses: Hungarian President János Áder, left, Károly Gerendai, center, and his partner in the Volt Festival, Norbert Lobenwein, at a June 6 press conference on Budapestʼs Castle Hill. The president thanked the two organizers for agreeing to promote the need to address climate change at the various festivals they operate.

and we failed. In Croatia, during our lengthy search for partners, locals launched festivals that have grown so popular we stopped looking.

Q

Have you ever considered buying up established festivals abroad?

A: We don’t rule out this option, but acquisitions are not a priority right now – maybe in three or five years’ time. Two years ago, even our Hungarian presence was shaky, now we can take a break after last year’s results, so we would rather develop here.

Q

How do sponsors react to a loss−making festival?

A: Sponsors are less sensitive to that: They may see a slight drop in sales, but they still sell a lot. Depending on the sector, there is more competition among, for example, beer makers. In other segments, like banking or the car industry, sponsorship is dependent on a relevant product they wish to advertise.

Sponsorship revenues constitute about 12% of Sziget Festival’s 2015 budget.

I assume sponsorship money in the Hungarian events market doesn’t exceed HUF 2 bln per year. Since our three main festivals receive slightly more than HUF 1 bln of this, we cannot really expect to raise more.

“Competition is tougher for performers. There are fewer bands that can fill stadiums, and at the same time ever more organizers try to invite/ secure them.”

Q

Why did Sziget Festival receive funding from the state last year?

A: For many years, we hadn’t applied for funding: We were proud to be able to operate relying on our sources.

Unfortunately, we had become loss making by 2013 and decided to ask for help from those who benefit from festivals, namely the state. We asked for money to run an even more effective international campaign, as this results in additional revenues, guest nights, etc. for the state as well.

The subsidy accounted for 2.7% of the 2014 budget – just enough to cover more developments. We will apply again this year to cover some of the extra spending we have to bear due to changes in the law. People tend to forget that, in Hungary, half of the budget of all festivals and 25−30% of

those of bigger festivals are financed by public money. Some were still astounded by our 2.7%. Sziget Festival has been featured in the ten best global festivals for many years. Yet when it comes to our budget, we are not even among the first 25.

Q

Is it more difficult to run a festival today than it was ten years ago?

A: Competition is tougher for performers. There are fewer bands that can fill stadiums, and at the same time ever more organizers try to invite/secure them. The number of festivals has been growing constantly for years: Between 2002 and 2012 it has quintupled, while the number of visitors and performers has remained the same. As everyone wants to get the same performers, they keep increasing the fees they offer. Ever since the record industry crashed, bands have tried to live off festivals and live performance fees, so the bidding actually comes in handy for them.

Unfortunately, Japanese and other European festivals have rearranged their calendars again. Last year we moved Sziget Festival to avoid overlapping with overseas events and to adjust it to European ones when bands are in Europe. It can be that there is hardly anyone who is free this week,

Extra spending on National Ambulance Service: HUF 28 million Additional cost arising from changes in law regarding security guards minimum wage: HUF 20 million

and their fees are higher if they travel to Europe only for this event. A week later we could have come up with a different line−up.

Q

With such a large−scale event, can you set trends or cultivate tastes?

A: If you feature new performers in a trendy and well−liked environment, visitors will take them as trendy. But you shouldn’t go overboard with it.

Some people question why we don’t feature only the newest, and trendiest acts. They don’t understand that you need established, mainstream bands to attract the masses. Many festival organizers come here to borrow ideas from us, and we also incorporate best practices from other festivals. But again, you have to be careful with that. If you want to be a trendsetter, you can’t afford to follow the others only. You have to take risks by always adding elements visitors haven’t seen elsewhere.

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Budapest Business Journal | July 03 – July 16, 2015

Managing Szigetʼs entertainment portfolio Sziget is their oldest and best−known festival, but as company CEO Tamás Kádár explains, Sziget Kulturális Menedzser Iroda (Sziget Cultural Management), the country’s leading festival organizer, owns and operates several other popular events. Kádár spoke to the Budapest Business Journal about his company’s entire portfolio, and the festival business here in Hungary.

Tamás Kádár, CEO of Sziget Cultural Management. At right are image’s of the firm’s latest event, the Gourmet Festival.

ZSUZSA SZABÓ

Q

The Sziget Kulturális Menedzser Iroda is well known for running the Sziget Festival, though other upcoming festivals also belong to the company, like Balaton Sound and VOLT. How many festivals are managed by the company altogether?

What is the latest “acquisition”?

A: We manage five festivals, and “help to manage” another two. Our festivals are: Gourmet Festival, Gyerek Sziget (Children’s Island), Telekom VOLT Festival, MasterCard Balaton Sound, and the Sziget Festival. We also take part – as a contracted partner – in the organization of the Strand Nagyon Festival and B.my.

Lake Festival. The latest project we have is the Gourmet Festival.

Q

Your company traditionally handles music festivals, but you have gone in a different direction with the Gourmet Festival, a gastronomic event. Why this new approach?

A: Gastro−festivals are on the rise, and in the last couple of years, the number of these types of festivals has exploded. We wanted to create a top−quality festival in this segment and shortly after the fifth Gourmet Festival organized by Sziget, we can say that we have reached our original goal. There is great potential in this area, not just from the business point of view, but also due to the desire to bring high− class gastronomy closer to those who are not eating out regularly in Michelin− starred restaurants. Furthermore, the fine dining topic itself is getting very popular.

You only have to look at the TV: almost every channel has its own dining show, so we really believe in this segment.

Q

How profitable are Sziget’s “smaller” festivals?

A: If “smaller” means for example MasterCard Balaton Sound or

VOLT Festival, then we can say that they are fairly profitable. These two together have a net turnover of €9.5 million, so in that sense they are not small at all.

Q

Speaking of turnover, what are your expectations for all your events this year?

A: We expect a growth of 7−8% in our turnover, so this should influence our profit positively but this depends very much on a lot of things that are very hard to control, like the weather for example.

Q

Revenue−wise, how much money is generated from the “Sziget Card”, the card− based payment system that is used at Sziget and other festivals?

A: The festival cards do not generate direct income for the festivals; they are only a tool for easier and quicker payment.

In fact they cost money for the organizer.

The revenue for the organizer is generated from the food and beverage turnover, but this has nothing to do with the cards.

Q

VOLT and Balaton Sound are organized outside of Budapest. Do foreigners visit those festivals, as well? What is the percentage of audience split?

A: It is mainly Hungarians – from all over the country – who visit the Telekom VOLT Festival; only about 5% of the audience comes from abroad, mainly Austria and Slovakia. MasterCard Balaton Sound is widely known in Europe; almost 30% of the visitors come from abroad, mainly Western European countries like Belgium, Holland, Austria, etc.

Q

What makes these music festivals attractive to foreigners? Why do they come to this part of Europe for a show?

A: In the case of Sziget Festival it is probably the very special atmosphere of the festival, which is created by our unique approach. We believe that a festival

“Gastro-festivals are on the rise, and in the last couple of years, the number of these types of festivals has exploded.” should not consist only of the line−up of the main stage. It needs a diversity of all kinds of cultural experiences mixed with the feeling of freedom and liberty. That is why we call Sziget the Island of Freedom.

It is also very important that Sziget is in the heart of a great and beautiful city, providing a festive holiday for our visitors. This mixture is very hard to find in any other festival.

Q

How many people visit these festivals each year?

How long does it take for a festival to start achieving profitability?

A: Telekom VOLT Festival had visitor numbers of 120,000; MasterCard Balaton Sound had 145,000; and Sziget Festival 415,000. There is no exact figure for the investment period and profit period of festivals; it is very hard to tell how long a concept needs to be developed to reach profitability.

Q

How do you find sponsors, or do they approach you?

What kind of arrangements do you seek – for example in the case of MasterCard?

A: We approach most of the sponsors, and the content of these agreements might be very different, related to the given sponsor’s goals. There are partners who only want to be listed with their products in the bars; there are others who want to advertise their brands with special on−site activities. The cooperation with MasterCard has a four−year history.

Our festivals were the main platforms for the education of contactless payments (PayPass) and we are now working on projects to implement special e−wallet

solutions in our festivals. So it is a very special and very diverse cooperation.

Q

So many new festivals have been launched recently. Is there room in the market for more? When do you expect the circle will close?

A: I believe that the circle is closed already. Because the music industry has changed a lot in the last 5−10 years, bands are getting their income mainly from live performances, which has led to a rapid increase in artist fees in the past few years. This means that the “entry point” of investment for the big festival market is at a very high level. And as I said before, the line−up of the main stage is only a part of a good festival, but far from the sole key to success.

Q

What are your long−term expectations for Sziget Kulturális Menedzser Iroda Kft. in Hungary and abroad?

A: We believe that we are able to extend our brand in Europe in two ways: selling evermore tickets for our festivals (until we reach full capacity) and also in setting up new projects outside of Hungary. We have been here for 23 years, so I think we will go on for a while!

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Budapest Business Journal | July 03 – July 16, 2015

FOO offers countryside alternative to big festivals The Fishing On Orfű Festival (FOO), featuring lots of top Hungarian bands, positions itself as an alternative to mass−appeal festivals elsewhere in Hungary.

Building an emotional bond with visitors is part of the branding.

LEVENTE HÖRÖMPÖLI-TÓTH

Day 0, Sziget Festival, 2014. The fact that the only Hungarian you heard was from staff wasn’t only because the day’s top feature, Blink 182, doesn’t have much of a Magyar following. Foreign visitors had primacy mostly since the price level of weekly passes had long surpassed the pain threshold of locals with nine out of ten weekly tickets being bought abroad. Since day zero is normally for the festival’s weeklong residents to settle in, it’s little wonder that it was the languages of the top

The scale is a lot less grand.

The four-day-event’s maximum daily capacity of 6,500 is dwarfed by that of Sziget at 85,000. three groups of nationalities visiting Sziget, Dutch, Italian and French, you could hear mainly.

Day 0, FOO Festival, 2015. The leafy camping site near Pécs, a neat town in the south of Hungary, is packed with music fans, but you come across foreigners only by accident. Selling out ever faster by the year, the FOO Festival, staged for the eighth time this June, has managed to create a die−hard following by successfully differentiating itself from standard rock events.

To be sure, the scale is a lot less grand than that of Sziget. But that’s the whole point. The four−day− event’s maximum daily capacity of 6,500 is dwarfed by that of Sziget at 85,000, so a Hungarian is likely to bump into old college friends with the same taste in music. FOO is also wallet−friendly: a four−day−pass costs less than entry for a single day to its gigantic counterpart.

Beyond the Kispál factor FOO spokesman Péter Egyedi agrees that the event was warmly welcome by fans this time in terms of both music and so−called “off programs”. A water stage debuted among others and in order to serve the families present in big numbers, quality shows for kids were

Scenes from FOO, a truly alternative Hungarian festival. inserted into the schedule. “It’s relatively quiet out there till late in the evening and many programs are expressly family− friendly,” Egyedi notes.

The festival is very much about promoting local values. Accordingly, you can sign up for a handcraft beer or premium wine tour led by your favorite lead singer and nothing should hold you back from exploring the woods around by bike, either.

But what sells the whole thing in the first place is still Kispál és a Borz, an iconic alternative rock band.

Although officially they quit in 2010, last year they decided to do one single gig per year in Hungary (and a few more abroad).

As to the rest of the line−up, the organizers work always hard to present a mixture of veteran bands with a decade−long anthology and the latest YouTube heroes. Strong slam poetry performances, trendy rap bands, and Wellhello, a formation specializing in ‘80s retro, spiced up the menu this

time. The result is to have the cream of crop of the domestic alternative music scene at one place.

One standard feature stunned visitors, however: a drone appeared out of nowhere taping concerts and their audiences as part of an enormous program: the festival recorded all of this year’s gigs with video and sound.

“Let the purpose behind that remain a secret for now though,” Egyedi adds mysteriously.

Drones weren’t the only novelty.

Winemakers selling quality bottled wine came up with a sensational special offer: Festival goers could have plastic bottles of up to 2 liters filled with wine and sparkling water, thus supplying them with large amounts of fröccs for an extremely reasonable price.

It’s called FOO identity This surely adds to the phenomenon many call the FOO identity. “We are happy if such a thing exists, and

“Tickets sell out ever faster. ...

We dreamed about creating an event that breathes on its own and that people love for its atmosphere.” apparently it does: Those overnighting in Orfű book for next year right away.

Our reputation is improving and tickets sell out ever faster,” Egyedi says. “We dreamed about creating an event that breathes on its own and that people love for its atmosphere. This may be the reason why most buy their four− day−pass without knowing next year’s concert agenda.”

It is high time for expats to discover the magic for themselves and mingle with Hungarian fans against the leafy backdrop of Orfű. But if they only go for a good fröccs, it’s worth it already.

BBJ

4 Socialite

PLAY ON: Charismatic dancing violinist Lindsey Stirling

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WHAT’S

ON Ludovic Thiriez and Rogerio Mesquita July 2−August 29, Brody Art Yard The artistic duo, Ludovic Thiriez and Rogerio Mesquita, exhibit a series of paintings layered over photographs that explore issues of identity and culture. For years Rogerio photographed top models in Brazil, mostly for advertising campaigns

Fun things to d o in Budapest for the nex t t wo weeks.

and fashion magazines. His portraits for this series examine the central theme of beauty within the fashion industry, and are are given a tropical feel through Ludovicʼs brush strokes, which integrate symbols, sensations and experiences from his two years spent living in Brazil. brodyartyard.com

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Budapest Business Journal | July 03 – July 16, 2015

Budapest Pride

Szentendre Beer Festival

July 3−12, various venues This year’s parade is preceded by a week of festivities in honor of the event’s 20th anniversary. Catch film screenings, workshops, yoga and dance classes, concerts and parties to celebrate the local and international LGBTQ community. In a time of rising intolerance, the Pride Parade in Budapest has seen great opposition and this year is not expected to be any different except for the growing support of the community bolstered by the recently passed legislation in the United States legalizing gay marriage across the nation. This year’s party is expected to be the most epic to date with an opening celebration at Fogas Ház. The central parade kicks off at 3:30 PM on July 11 from the corner of Nagzmező and Andrássy út, and crosses the river into Tabán. budapestpride.com

July 3−5, Szentendre, Danube waterfront Escape the city for the weekend to the quaint historical town of Szentendre and sample from over 50 craft beers many among them Hungarian, with a handful of Belgian and Czech varieties.

The festival atmosphere is enhanced by concerts and family−friendly programs and of course local culinary specialties that are a perfect match for your brew.

Derby and Gastro Angel Festival July 3−5, Kincsem Park This festival is an combination of three events: the 101st Hungarian Trotter Derby, the 93rd Hungarian Derby and a set of culinary programs all held at Kincsem Park, Budapest’s horse race track. The festival is intended to be a revival of an old tradition that combined the thrill of the horse racing with the pleasures of local gastronomy. www.magyarturf.hu

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Cohen who met after their music studies in Israel. Their music is a mix of deep and nostalgic vocals, heart−on−the− sleeve−lyrics and Middle Eastern guitar melodies. They released their debut in 2014 under leading indie label Anova and broke onto the international scene through exposure on the festival circuit. a38.hu

Kobuci Blues Festival

Lindsey Stirling

July 8−10, Kobuci Kert This weekend blues festival at the city’s premium outdoor folk, jazz and blues music venue, features top players of the genre from all over Europe and as far as Mexico. Sir Oliver Mally, Victor Puertas, Raphael Wressnig Trio, Igor Prado, Little G Weevil’s International Allstars, Ripoff Raskolnikov Band, Marcos Coll Band, Jimena Segovia and Daryl Taylor are just some of the names on order. Three−day festival passes are also available. kobuci.hu

Budapest Pride.

July 4, Papp László Budapest Sportaréna Behold the dancing violinist Lindsey Sterling, who has a knack for dazzling crowds with her fancy footwork and energetic playing style. Rising to fame through the internationally broadcast talent show “America’s Got Talent” and augmenting her exposure through her heavily visited YouTube channel, Stirling first became know as a hip− hop violinist but has expanded into folk and rock territory. Her quirky, multidisciplinary stage show is sure to engage even the most skeptical spectator. jegy.hu/program/

in the jazz world with his mastery of multiple instruments. His latest release “Afrodeezia” (2015) is also his debut on the Blue Note label and was inspired by his work for UNESCO Artists for Peace. It is a reflection of the transcontinental rhythms and melodies that have moved through the bodies and spirits of African slaves who were transported around the world. Their impact on contemporary jazz and R&B is undeniable. Miller has worked with many musical greats including Miles Davis and Dizzy Gillespie. budapestpark.hu

Marcus Miller

Lola Marsh

July 5, Budapest Park Award−winning, composer−producer Marcus Miller has made his mark

July 6, A38 Indie folk band Lola Marsh was formed

by Gil Landau and Yael Shoshana

Manu Chao La Ventura July 13, Budapest Park Two years ago, singer−songwriter Manu Chao put on a sold out show at this very spot with a 2.5−hour set of infectious, socially conscious party tunes. The outdoor stage at Budapest Park welcomes the return of the man and his band La Ventura for an eclectic mix of punk, Latin and reggae beats budapestpark.hu

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Sziget Festival 2015: The Island of Freedom

Photo: Gábor Mozsi

Florence + The Machine, Martin addition, Colosseum, built entirely Garrix, Ellie Goulding, Kasabian, by pallets, will host underground Alt-J, Limp Bizkit, Foals and many electronic acts as Dixon, Gui Boratto, more. The A38 tent always hosts the Ellen Alien, Apollonia and many fresh bands, so this year Interpol, others. The always colorful venue Ella Eyre, Gaslight Anthem, Jungle, of world music, the MasterCard Milky Chance, MØ, Paloma Faith, World Music Stage, will focus this Passenger, Selah Sue and many year on gypsy music bringing iconic more will play an unforgettable gig bands from all over the world, as the Sziget is special because it offers in the huge tent. When it comes to Dhoad Gypsies from Rajasthan, much more than music. Naturally electronic music, two venues will Taraf de Haïdouks, Goran Bregović stages hosting the biggest acts can accommodate the fans. The giant Wedding and Funeral Band, Boban be found at Sziget as well. Among tent of Telekom Party Arena will have I Marko Marković Orkestar and the biggest stages we can find the Alesso, Nervo, Sander Van Doorn, more. Besides the gypsy focus many Main Stage with performers this Blasterjaxx and other prominent genres from the world music scene year as Robbie Williams, Avicii, members of the EDM community. In will be represented.

Photo: Sándor Csudai

Photo: Sándor Csudai

Sziget Festival is the reigning ‘Best European Major Festival’ award winner and aims to keep this title with its original program and unique atmosphere.

When “Szitizens” (Citizens of the Festival in Szigetish) go through the legendary bridge they arrive to an island with extraordinary visuals and decorations. We can easily describe the location as ‘a great place to get lost’ as visitors can choose from more than 50 program venues with around 1000 programs at the weeklong event.

Photo: Sándor Csudai

Sziget Festival, recently crowned as the Best Major European Festival, will be as colorful and diverse as the audience expects it to be for 23 years now. The weeklong festival holiday in the heart of Budapest will be the place to be this summer between 10-17 August on the beautiful green island in the Hungarian capital.

sziget.hu

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Budapest Business Journal | July 03 – July 16, 2015

Wine: Tokaj sees a sparkling future traditional method sparkling wine in the Henye vineyard. Despite its Champenoise connection, the Dereszla Sparkling Methode Traditionnelle, with its crispy green apple and citrus fruit notes actually reminded me more of the Spanish (mainly – but not exclusively – Catalan) Cava, but a classy one at that. It had a nice touch of yeastiness.

Hungary’s most famous wine region joins others in going bubbly.

ROB SMYTH

With the dry wines of Tokaj approaching the finished article after more than a decade of trial and error, it is now the turn of sparkling wines to add extra color to the increasingly broad Tokaj palette. This was the subject of one of the masterclasses at last month’s Nagy Pezsgők Kóstoló at the Corinthia Hotel Budapest.

The Furmint grape, the cornerstone of Tokaji Aszú, one of the world’s finest sweet wines, has shown its versatility in making dry wine of serious pedigree. With its high acidity and somewhat neutral character – prized for conveying individual vineyard characteristics in dry wine rather than putting the grape itself in focus – Tokaj vintners, and also Kreibacher in Somló (more on this winery later), have cottoned on to the fact that it could be just the ticket for crafting sophisticated sparklers.

Now, anyone can just add bubbles via the bicycle pump method, which tends to escape soon after opening, and this is the method behind ZZ Furmint Habzó 2013 from Tállya Wines, from the exciting upcoming

Significant investment

Hands up if you like bubbles!

The masterclass at the Corinthia.

Tokaj town of the same name, which is a straight and pure wine with good acidity and savory character making up for the quickly dissipating bubbles.

However, the traditional method of sparkling winemaking is a much more intricate and detailed process, involving a second fermentation in the bottles with the developing wine interacting with the lees picking up a complex range of toasty, yeasty and brioche flavors as part of this process known as autolysis.

Dereszla, the Tokaj winery owned by the D’Aulan family from Champagne, is taking its fizz very seriously and has even built a winery exclusively dedicated to

Zoltán Demeter is another who has made a significant investment to bottle traditional method sparkling wines at his winery. He believes that sparkling wine can play a similar role to dry wine in moving Tokaj onwards and upwards. His Brut Nature 2011 was linear, clean and serious with tight acidity and a bit of white bread crust yeastiness alongside the lime zest. What it lacks in complexity it makes up for in terms of structure. Perhaps a bit more lees contact could give it that extra bit of cojones to make it stunning. This is zero dosage, which means that it wasn’t sweetened with the addition of sugar syrup mixed with wine when the yeasty plug that gathered at the neck of the bottle was disgorged by slowly tipping the bottle Gróf Degenfeld’s Furmint Pezsgő had probably the most in the way of Tokaj and Furmint character about it with the grape’s characteristic quince notes coming through on the nose and palate and certainly can’t be

accused of trying to be something else. But there’s no harm in benchmarking yourself against the best.

Sauska’s Tokaj Pezsgő Extra Brut Rosé, a blend of Furmint, Hárslevelű, Chardonnay and Pinot Noir aged on the lees for nine months, dazzled with its energy and pristinely pure fruit. I find it hard to get excited about sparkling traditional method rosé, but this one has lots going on. The Pinot Noir element was added as red wine.

One notable absentee was Királyudvar, which had led the sparkling wine revolution in Tokaj, thanks in part to the great savoir− faire from the Loire region of Vouvray, where Királyudvar’s Anthony Hwang also owns Domaine Huet, whose Vouvray Petillant is a great and more reasonably priced alternative to vintage Champagne.

From Somló, one of the highlights of last year was the launch of Kreinbacher’s Future Classic quartet of traditional method sparkling wines, of which the Prestige Brut is the flag bearer. While many sparkling wines seek to impersonate champagne, few get anywhere close, but these wines at least conjure up the champagne experience with Furmint providing that über crispy, structure−building acidity you expect from Champagne, for a very reasonable HUF 3,200−4,300 price range. They are made with yeast from Champagne and have become my go−to traditional method sparklers.

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Budapest Business Journal | July 03 – July 16, 2015

WHO'S NEWS Gabriella Szentkuti was appointed CEO of Microsoft Hungary from July 1, replacing István Papp. She has been with the firm for four years, working as a strategic director. In her former position she played an important role in setting achievable goals for the Name GABRIELLA SZENTKUTI firm and reaching them.

She has nearly 20 years Current company/position experience in business MICROSOFT HUNGARY development, sales and marketing.

KFT./CEO

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Send information to research@bbj.hu

László Marton has been appointed corporate director at Invitel Hungary Zrt, responsible for coordinating the company’s financial, energy and infocommunication sales.

Earlier, Marton filled a business developer position at Invitel, and has been working in Name info-communications LÁSZLÓ MARTON for almost ten years.

Before Invitel, he worked Current company/position at IBM and at Grepton INVITEL HUNGARY ZRT./ Zrt. as commercial and DIRECTOR FOR LARGE business leader.

The Norwegian born Ole Bjørn Sjulstad has been appointed the new CEO of Telenor Hungary Zrt. He has been working for the company since 2000, and before that spent ten years in the oil and gas industry.

After joining Telenor Hungary, he was the deputy chief of Telenorʼs Name Asian regional office.

OLE BJØRN SJULSTAD In 2004, Sjulstad joined Telenor Norway as Current company/position senior vice president. In TELENOR 2009, he was appointed MAGYARORSZÁG ZRT./ to lead the office center CEO of Telenor Moscow. He has engineering and business diplomas.

Anita Mekler has been appointed tax director at PwC Hungary. She started her career in 1998 in the tax department of PwC Hungary, and has extensive experience in all aspects of local and international taxation. She spent two years at PwC Zagreb and was seconded to New York, to work on Name international transfer ANITA MEKLER pricing projects. Before joining PwC, she worked Current company/position for Nissan Sales Central PWC HUNGARY/TAX & Eastern Europe Kft. In DIRECTOR the newly created role, she will be responsible for leading PwC Hungary’s tax department.

László Radványi will be primarily responsible for PwC Hungary’s business development activities in both the Budapest and Győr offices. He is one of the leaders of PwC Hungary’s Corporate Responsibility Group and he has an international auditor’s degree. He Name has experience in LÁSZLÓ RADVÁNYI transformation-related engagements, and joined Current company/position PwC Hungary in 2003.

Péter Kováts has been appointed mid-enterprise chief executive officer at Invitel Hungary Zrt. Kováts has 25 years of experience in information technology, primarily in the area of marketing, sales and business development.

Before joining Invitel Name Hungary, he filled PÉTER KOVÁTS leading positions at G2Mglobal Advisory Current company/position Services, Microsoft and INVITEL HUNGARY CE On-Demand.

Szilárd Bolla was appointed vice president at the Hungarian Investment Promotion Agency (HIPA), where he will be responsible for further strengthening customer-oriented operations. Previouslly, Bolla worked for HewletPackard as an infocommunication software Name and hardware sales SZILÁRD BOLLA manager. In 2011, he became Hewlet-Packard’s Current company/position consulting manager in HUNGARIAN South East Europe. Bolla INVESTMENT received his MBA from PROMOTION AGENCY/ James Cook University, VICE PRESIDENT Australia.

ENTERPRISES AND GOVERNMENT SECTOR

Antal Kerekes is one of three new partners recently appointed at PwC Hungary. He started his career implementing ERP systems, and since 2008, has been working as a certified management consultant. He specializes in IT strategy Name and has experience in ANTAL KEREKES enterprise performance management and Current company/position process management.

PWC HUNGARY/LEADER He joined PwC Hungary in 2011.

OF TECHNOLOGY ADVISORY AND ENTERPRISE PERFORMANCE MANAGEMENT.

23

PWC HUNGARY/ PRIMARILY RESPONSIBLE FOR BUSINESS DEVELOPMENT ACTIVITIES

ZRT./DIRECTOR FOR SMALL AND MEDIUM ENTERPRISES

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Eger Bull’s Blood festival celebrates fine wine, food “This landscape lives above time and history; when the Turk’s encamped here, bull’s blood mixed with human blood. A lot of blood was shed on this landscape. But the ground, the hill keeps the secret, this noble and thick intoxication: the bull’s blood” –Sándor Márai

T

he beautiful, historic City of Eger will celebrate its most famous wine at a fourday festival of wine and gastronomy on July 9-12. This will be the 19th time that Eger holds the Egri Bikaver Festival around the feast of St. Donat.

The event, which is held around the feast day of St. Donat, the patron saint of wine growers, will include special gastronomic offerings from top restaurants, including many dishes that will only be available that day. Along with Hungarian food, there will be a variety of other culinary offerings – even a separate vegan tent offering raw food.

It is all part of a celebration of Bikavér, a full-bodied red wine with a name that translates as Bull’s Blood. It takes place around the feast day of St. Donat, which is on the second weekend in July. This season is very important for Bull’s Blood, because the grapes of Eger are known to ripen best in hot weather.

Along with spectacular wine and food offerings, there will be an exciting lineup of varied musical entertainment. Gerasol,

popular classical music performers, will open the event on the main stage, followed by “The Three Divas”, Margit Bangó, Andrea Szulák and Kati Rácz, and then the popular rock/electronic band Intim Torna Illegál. On Saturday, after the Intermezzo Latin Club and the Super Starsky band, Benkó Dixieland Band will give a concert. On Sunday, after accordion artist György Molnár, the award winning Band Of Streets closes the program for the weekend.

The Crescent Moon small stage, serves as the venue for light shows, a variety of concerts, DJs, and a wide range of other performers. Acts scheduled for that stage include Neofolk, Antonia Vai, Zanzinger, Gustave Tiger, The Somersault Boy, lime crush, Szeder, Moven, DeNo, Noémi Barkóczi , Moody Clouds and Ilkka. http://bikaverunnep.hu/

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