Budapest Business Journal 2713

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 13

JULY 5 – JULY 18, 2019

SPECIAL REPORT Tourism

SPECIAL REPORT

Tourism Industry hit Hard by Labor Crisis Higher wages and more flexible conditions could help ease labor shortage problems in the hospitality industry, according to experts the Budapest Business Journal spoke with. 11 SPECIAL REPORT

Hotel Sector Attracting new Investors With positive indicators in the Hungarian and CEE hotel and hospitality markets, more institutional European investors such as Deka and Invesco are looking at the possibilities in the sector. 17

Accidental Expat Manager

SOCIALITE

At Last, off to see the Hungarian Sea This will be the summer David Holzer finally gets to Lake Balaton. It’s a place that intrigues him. In the United Kingdom, the freshwater lakes are puddles compared to what is all but an inland sea, and they’re certainly not central to any sense of identity. 22

NEWS

MNB Stays Dovish, but not Everyone is Convinced The monetary council of the National Bank of Hungary left the base rate unchanged at 0.9%. The council argued a cautious approach was needed in light of a “dichotomy” of likely future developments impacting inflation. 3

NE BUSI

SS

Germany’s Jörg D. Schmidt, the outgoing head of commercial and passenger sales for Mercedes-Benz in Hungary, reflects on his life as an expat manager (he has moved seven times in 19 years) and his next stop, which will take him even further afield, to Australia. 6 BUSINESS

Optimizing Company Valuation via Cost of Capital In their latest investment column, Les Nemethy and Sergey Glekov look at the cost of capital, an area often overlooked by mid-sized firms. 8

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Budapest Business Journal | July 5 – July 18, 2019

BBJ

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester

TOUTING FOR TOURISM IN A GROWN-UP WAY

Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Eszter D. Kovács, Gary J. Morrell, Robert Smyth, Zsófia Végh.

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Tourism is taking on an increasingly important role in Hungary’s economy. There is nothing particularly revolutionary in the idea of that; successive governments have tied to court the tourist dollar in all sorts of ways. What has been different is that this government, especially in its second and now third-successive term, has achieved a degree of success earlier cabinets never got near.

It wasn’t always so. Between the world wars, Hungary was not an uncommon stop on the European Grand Tour of the wellto-do and the well healed. In the 1930s, Budapest enjoyed a reputation built on its traditions in the hospitality trade. World War II, however, and the interregnum brought about by 40 years of finding itself on the wrong side of the Iron Curtain, put an end to all of that. By the late 1980s and early 90s, I am told, a waiter was more likely to be interested in making a quick buck from a diner than in preserving the traditions of Hungarian hospitality.

In part, at least, the return of the tourist and the resurgence in tourism has been down to timing. Hungary is simply better known internationally than it was ten or 15 years ago, and certainly much more so than when I first arrived here in 1998.

There has also been an element of serendipity, something the government could not plan for, though it has certainly tried to take whatever credit it could from the situation. At exactly the time Hungary was gaining traction as a destination, terrorist attacks in much better known tourism hotspots enabled it to play the safety card, something it has done often and loudly.

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It is a fool’s errand to try and draw many logical conclusions from the thought processes of a religious fanatic, but it seems not unreasonable to assume Hungary does not come up on the radar of many jihadists; the country is simply too small for an attack here to have the global impact of those in Brussels, London, Manchester, Nice or Paris; what, in the distasteful lexicon of the Irish Republican Army RA during the early 1990s were called “Spectaculars”, attacks that, as the Irish Times put it, “were of no military effect but which provided a large media spectacle”. I have no wish to tempt fate, but a tragic accident was probably always more likely here than a terror attack, although that makes the shock and horror of the collision, capsize and sinking of the “Hableány” (“Mermaid”) sightseeing boat last month no less heartfelt for all that.

Where this government has seemed different to its predecessors is in having a joined-up plan for what it wants to achieve in the sector. The Hungarian Tourism Agency has focused not on individual events or spaces, but on themes, whether it be Budapest and the countryside, wellness and spas, or wine and, yes, hospitality. As ever, you can grumble about the specifics, whether money dedicated to U.S. TV spots, for example, was well spent, but at least there has been a plan in place.

The government certainly does not get everything right.

Hungary misses out on maximizing conference tourism to its fullest extent, and will continue to do so long as sports stadia are prioritized over a national conference center capable of holding multiple thousands of delegates, a long-standing complaint of this column. Based on record tourism figures for 2018, the dream of seeing 16% of GDP derived from the tourism sector might appear ambitious, but not breath-takingly so.

Robin Marshall Editor-in-chief

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Join the Love Revolution!

Seven days and nine headliners on the Main Stage, where Dr. Jane Goodall will speak and Al Gore will send Szitizens a video message as part of the Love Revolution. Sziget runs from August 7-13.

“Sziget Festival’s budget exceeded HUF 10 billion in 2018, and the company together with all of its other closed a successful year, with HUF 1.5 billion in profit. This year we’ve significantly increased the budget of the festival, especially for performers, but we also want to improve the quality of services,” said Tamás Kádár, CEO of the festival, kicking off the 27th annual press conference.

“This year’s Main Stage line-up is outstanding for several reasons,” stated Kádár. “On one hand, following the previously launched growth strategy, we increased the amount allocated to main acts by half a billion forints, thanks to which we were able to bring nine headliners to perform across the seven days of the festival,” the CEO detailed.

There will be two days during the festival this year when visitors will be able to see two headliners perform after one another, such as the last day when Twenty One Pilots will precede the

Foo Fighters or on Saturday with The National and Macklemore “combo.”

“We are delighted that we were able to bring such top-notch world stars to the festival this year, who have a wide variety of fans in different genres. Just think Post Malone; Ed Sheeran; Foo Fighters,” said the CEO, adding that the latter band will be coming to Sziget with a two and a half hour set.

Kádár also highlighted that, for the first time, Sziget will host a new program meant to strengthen the Love Revolution campaign. Special speakers will take over the Main Stage including Dr. Jane Goodall, UN Messenger of Peace and environmentalist, Emi Mahmoud, poet, activist, and UNHCR Goodwill Ambassador, and Al Gore former U.S. Vice President and founder of The Climate Reality Project, will let us know his thoughts on climate change through a video message.

“We’d like to draw attention to the most important issues of the Love Revolution in our own way and we sought out ‘influencers’ in these

fields. Although a festival is usually determined by world stars, Sziget stands out from the international field, as there is so much beyond the Main Stage. We offer a variety of diverse programs that everyone’s excited about,” Kádár added.

He also discussed that, due to the outstanding programs, there is a great deal of interest in this year’s Sziget.

Hopes are that it will be able to draw in the same amount of visitors as last year’s record number.

Attendees can pay with their entry wristband once again, but organizers have made top-ups through the app, which was a huge success last year, even easier this year. It will also be possible to pay with a contactless bank card or a cell phone. New to visitors this year is the Festival Account, which provides a digital solution to use for all Sziget events. This will, for example, make it more convenient and faster to shop online and top-up wristbands ahead of festivals.

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News///macroscope

MNB Stays Dovish, but not Everyone is Convinced largely because “we are less sanguine on the inflation outlook than the MNB”.

The monetary council of the National Bank of Hungary (MNB) left the base rate unchanged at 0.9% at its monthly meeting on June 25. The council argued a cautious approach was needed in light of a “dichotomy” of likely future developments impacting inflation, with weakening external demand expected in the second half of the year counteracting buoyant domestic demand running through the first.

KESTER EDDY

In a statement, the central bank emphasized that inflation data for the second half of the year would be “decisive” as it sees large, if symmetrical (i.e. counterbalancing) risks.

The decision was largely in line with analysts’ expectations, although some had predicted an adjustment upwards of ten basis points in light of inflationary concerns.

“Since the MNB last adjusted monetary policy three months ago, the world has changed a lot. The Fed and the ECB [European Central Bank] have turned more dovish; it is difficult for the Hungarians to aggressively buck this trend,” Nigel Rendell, economist with Medley Global Advisors in London, tells the Budapest Business Journal.

“Yesterday’s liquidity adjustments were no more than a ‘snugging’ – a very minor tightening – that policymakers believe will be sufficient for the coming three months,” he adds, referring to the MNB’s announcement that it would reduce the average surplus liquidity in the interbank market from HUF 300 billion-500 bln to HUF 200 bln-400 bln.

One day after the council’s meeting, Márton Nagy, MNB deputy governor, said that despite Hungary’s continuing strong

economic performance and wage growth, the risk of overheating was very low because of booming investments and the current account surplus.

Speaking to Reuters in an interview, Nagy argued that there is a “very fine line” separating what he termed a “high-pressure economy” from an “overheated economy”.

Low Risk?

Overheating would be on the cards “if we had a twin deficit problem and the investment rate started to drop,” but the risk of that was “very low”, he told Reuters.

Not all agree, though. Liam Carson, emerging Europe economist with Capital Economics in London, is particularly bearish on the Hungarian outlook given what he terms the MNB’s “ultra-dovish” stance.

In his analysis of June 25, following the rate setting decision, he reasoned that the “post-meeting communications suggest that the ongoing weakness in the eurozone economy tipped the balance in favor of leaving policy unchanged”.

Most notably, the statement asserted that weakening European activity has “disinflationary effects”.

“Against this backdrop, vice-governor [sic] Márton Nagy used the post-meeting press conference to argue that ‘all decision options

Labor Costs

MNB Deputy Governor Márton Nagy. are on the table’. In other words, the MNB is hinting that the next move in interest rates could even be down,” Carson said.

He believes that further monetary tightening is inevitable in the coming quarters,

Capital forecasts inflation for 2020 of 3.8%, as opposed to the 3.4% of the central bank, the difference in part down to higher labor costs being passed on to consumers.

Moreover, the loose monetary stance is likely to ensure that domestic demand remains strong in the coming quarters.

“With the economy already operating beyond its potential, this will leak into imports and cause the current account position to deteriorate,” he says.

Carson is also far from convinced on the current account performance, noting that the surplus has narrowed from 6.2% of GDP in late 2016 to a barely positive 0.1% of GDP in the first quarter this year.

“We see it shifting into a deficit of over 3% of GDP by end-2020,” he states, making the forint vulnerable to weakening investor sentiment.

“As the MNB becomes increasingly wary about losing the trust of financial markets, this is likely to prompt tighter policy,” he says.

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Unemployment Sinks to 3.4%, Likely to Result in Increased Investment In a further indication of the tightening labor market, the average unemployment rate over the threemonth period of March-May slipped to 3.4%, down from 3.6% one year earlier, the Central Statistical Office (KSH) announced on June 27.

The number of employed in the 15-74 age group rose 43,300, a 1% increase, to total 4.5 million, although this figure also includes 115,500 commuting to work in the near abroad, up from 108,000 year-on-year.

The number employed on public works schemes shrank by 48,000, a 30% decrease, to 113,600, and in the key 15-64 age group, the employment rate inched up by 0.8 of percentage point to 69.6%.

Noting that Hungary now has the fourth lowest unemployment rate in the European Union, Győző Eppich, senior economist with OTP Bank, warned that the latest figures would inevitably increase pressure on salaries, and exacerbate problems caused by the labor shortage, particularly in industry and the construction sector.

“The very tight labor market has a clear effect on wage growth, which has remained in double-digit territory in the private sector in 2019,” he told the BBJ. Companies are seeking to counter the manpower shortage through “labor substituting investments, which certainly contribute to the very high investment rate and rising productivity,” he added.

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Budapest Business Journal | July 5 – July 18, 2019

Mellow Mood Hotels Complete Párisi Udvar The hotel has been designed by architectural studio Archikon, with rooms decorated by the Hungarian artist Agnés Tóth with Gothic, Moorish and Oriental inspiration. The original facade, staircases and decorative tiles have been preserved.

The complex includes the Párisi Passage Cafe & Brasserie, an evening cocktail bar and Zafir Spa and 24-hour fitness club. The hotel provides five 160-person meeting rooms or events spaces along with retail space in the passage way. Further, the complex has the capacity for up to

The Hungary-based, Jordanian-owned hospitality developer and hotel operator Mellow Mood Hotels is due to officially open the longawaited, Párisi Udvar Hotel in Ferenciek tere, in the historic center of Budapest.

160 guests

in the hexagon-shaped Párisi Salon & Brasserie in addition to the Budapest Salon on the mezzanine floor overlooking the passage.

GARY J. MORRELL

Párisi Udvar Hotel Budapest has now officially joined the Unbound Collection by Hyatt. The Chicago-based brand includes up-scale and luxury hotels including resort and urban boutique hotels. The franchise agreement is the first Hyatt Unbound Collection in Budapest.

Both Zuhair Awad and Sameer Hamdan, managing directors at Mellow Mood Hotels, emphasize that the interior design of the hotel reflects the location and the history of the listed building.

“The Hyatt Unbound Collection by Hyatt always focuses on unique locations.

It primarily targets travelers who like immersing themselves in the local culture, and instead of ordinary buildings they prefer extraordinary, exclusive accommodation with an intriguing history, while they demand perfect and high quality service,” the managing directors say.

The Art Deco Párisi Udvar building, also known as the Brudern House, dates back to the 19th century. The 110-guest room,

18 suite

and two presidential suite project was purchased by Mellow Mood in 2014 and has been under development for

Bringing Buildings Back to Life

several years. As such, it is an exemplar for the difficulties associated with the redevelopment of historic, listed buildings in the heritage protected town center, due to the need to preserve the original architectural features.

Emblematic Building

“The conversion of the former Brudern House was not an easy task since we are talking about an emblematic building in the City Center; the hotel has received intense attention from the beginning,” says Sameer Hamdan.

The large number of historic buildings in key central locations does provide the opportunity for their redevelopment into boutique and medium-sized hotels, providing a use-value and an opportunity for the renovation of often run-down turn-of-the century listed buildings.

Párisi Udvar, for example, is a former retail arcade and housed cafes and, at one time, Budapest’s central bank. Although the project has been ongoing for longer than originally planned, such developments are seen as preserving and enhancing the classic Central European feel of the historic center of Budapest. Thus the private sector is aiding cash-strapped city authorities who are committed to upgrading the infrastructure of Budapest and making the city more livable for both the local population and visitors. A possible solution is for the development of boutique hotels and offices that also provide street-front public amenities.

Lack of Suitable Product Puts Brake on Investment Volume Development and liquidity in Central European markets continue to be hampered by a limited supply of investment grade product.

GARY J. MORRELL

Although both international and domestic funds are looking to make acquisitions in Hungary, investment volume for the year is predicted to be slightly lower than for 2018 according to JLL. Poland remains the leading

investment market with a predicted EUR 6 billion investment for the year, followed by Czech Republic with a forecast EUR 2.25 bln and Hungary with an estimated EUR 1.5 bln.

The more than EUR 13 bln invested in Czech Republic, Hungary, Poland, Romania, and Slovakia recorded last year represent an 11% increase in investment volume on

CEE Yields (%) Country Czech Rep. Poland Hungary Romania Slovakia

Office 4.5 4.75 5.75 7.25 6

Retail/SCs 4.85 4.9 5.75 7 5.5

Industrial 5.5 6.5 7.25 8.25 6.85 Source: JLL

the previous year according to JLL. “We have seen the most significant volume increase in Poland in 2018 with EUR 7.2 bln traded, a substantial uplift in volumes over previous years,” says Mike Atwell, head of CEE capital markets at JLL. “For 2019, we expect continued, strong interest for product in CEE markets, although perhaps not quite matching the spectacular levels seen last year. Our current forecast for the full year suggests that CEE regional volumes will total around EUR 11 bln for 2019,” Atwell adds.

JLL expects further yield compression in most Central European markets in the office and industrial sectors. Hungary provides a 100-125 basis point premium on Czech Republic and Poland in the office and retail markets. Romania, in turn, provides a 125150 basis point yield premium on Hungary.

Prime yields have broken the psychological barrier of 5% in the Poland and Czech office and retail sectors and reached new lows in the logistics sector. This sets new benchmarks for core assets and opens a door for some yield

CEE Investment Volumes (EUR billions) Czech Hungary Poland Romania Slovakia

2018 2.5 1.84 7.2 0.95 0.82

2019 2.25 1.5 6 1.2 0.75 Source: JLL

compression for non-core assets and locations.

Some transactions in the office sector have closed at around 4.7-4.75%, while in the retail sector they have been as low as 4%.

In general, the markets are in a healthy position with more domestic and crossborder capital looking to make acquisitions than there is available supply. Hungary and Czech Republic have a fairly high proportion of domestic capital making acquisitions while in Poland it is only around 4-5% of total volume, Atwell told the recent Prague Investment Forum by Portfolio.

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WHO’S NEWS

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

Ritz-Carlton, Budapest Names Revenue Management Head

The Ritz-Carlton, Budapest has announced the appointment of Daniel Kusch as its new director of revenue management, responsible for the hotel’s overall revenue management activities.

The hotel said that one of Kusch’s main objectives Daniel Kusch will be to track and achieve the financial target and goals with The Ritz-Carlton brand in Hungary.

Kusch, who officially joined the hotel in May, brings a decade of professional experience to the management team. Recently relocated from Nur-Sultan (formerly Astana), Kazakhstan, he has worked for marketleading hotels such as The Jaffa, a Luxury Collection Hotel in Tel Aviv.

Before joining The Ritz-Carlton, Budapest, Kusch gained experience at The St. Regis Astana, where he led the reservation team during the pre-opening and opening period, and at the Aloft Abu Dhabi, where he was tasked with the coordination of strategic planning

activities, and creating the sales strategy for the hotel, which has more than 408 rooms, five F&B outlets, and three meeting rooms.

“I feel honored to join The Ritz-Carlton, Budapest, which is a real icon in the hotel industry all around the world,” Kusch says. “It is a true professional challenge to contribute to the outstanding service of The Ritz-Carlton, Budapest, both for foreign and local audiences.”

Klikkmánia Appoints Operative Director

Hungarian search engine optimization (SEO) agency Klikkmánia has announced the appointment of Ferenc Dudás as its new operative director.

Dudás has been working at Klikkmánia, the first Google Partner certified agency in Hungary, since 2015, where he has been responsible for the Hungarian and international client relations of the firm’s London and Budapest offices. The Ferenc Dudás appointment has been in effect since spring 2019.

The expert gained qualifications in economics and business development at Corvinus University of Budapest, Gábor

Dénes College, and Óbuda University. He has 13 years of digital experience and has worked at several digital agencies in management positions.

He says his aim, in cooperation with partners and others, will be providing clients with up-to-date solutions which can serve changing business needs and help companies in opening up towards domestic and international premium brands, while considering market conditions.

PR Association Picks Head of Crisis Communications

Dániel Gergő Pintér has been elected to head the crisis communications department of the Hungarian Public Relations Association (MPRSZ).

Pintér is the founder and CEO of Media 2.0 Communications, head of MTA SZTAKI communications, and a lecturer at Budapest Metropolitan University (METU) and the Independent Media Education Center (IMEC).

In the past ten years, Pintér has been responsible for brand building, strategic PR and crisis advisory tasks for dozens of SMEs, public institutions, NGOs and startups. He regularly publishes in international journals, appears as a guest speaker at conferences and business events, and often speaks to the media as an invited expert. The aim of the crisis communications department is to increase recognition of the field of crisis management. Pintér says he considers it a top priority to

News | 5

support research and education in the discipline, and to develop longterm collaboration with international professional development organizations, representatives of cooperatives and key corporate actors.

“Based on the approved work program, our main goal is to continue the journey started by the founder of the department, Dániel Gergő Pintér Kornél Bőhm, and provide the opportunity for everyone to develop and participate in the work,” Pintér says.

“In the future, we will try to place greater emphasis on bridging the gap between the for-profit sector and the training side, identifying false stereotypes about our profession, and raising awareness of the ethical background of PR and crisis management.”

In addition to value creation and social responsibility, Pintér says he would also like to draw attention to the importance of a crisis prevention approach and comprehensive preparation.

“As we believe that communication plays a key role in the sustainable development of companies, we feel it is our duty to support those who are looking for a competitive solution to the challenges of technological development and changing media usage,” he adds.

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Business

Daimler’s Accidental Expat Manager on the Move Again

What started in 2000 as a threeyear plan to gain some international experience has resulted in a 17-year career as an expat manager for Daimler stalwart Jörg D. Schmidt, who has run commercial and passenger sales for Mercedes-Benz in Hungary since 2016. His next stop will take him even further afield.

ROBIN MARSHALL

“I have been with Daimler for 31 years, having joined MercedesBenz in 1988,” Schmidt tells the Budapest Business Journal in an exclusive interview.

“In February 2000 I went to Egypt and signed a three-year contract, thinking I would most likely come back [to the Daimler HQ in Stuttgart] right after, only it never quite happened,” he recalls with a laugh.

He says serendipity in career moves is essential, whether it is in terms of personal or career growth on the individual’s part, or the business needs of the company on the other, and later what is right for the family.

It is a question of matching the timing with the possibilities.

Those possibilities have taken Schmidt from Egypt to Singapore, South Africa, Russia, and Hungary. “In the past

19 years

I have spent just 24 months in Germany,” he says.

From August, the family base will be in Australia, and while that is a long way from Germany, it is much closer to home for Schmidt’s wife, a New Zealander

Jörg D. Schmidt. Photo by Árpád Pintér/BBJ. he met while in Cairo, where she was working for PwC. “It is an exciting time, for us all. I’m starting a new job; the kids are getting excited about being nearer their Granny.”

Schmidt’s new role is as Sales Director for Mercedes-Benz cars, with responsibility for both Australia and New Zealand. His wife must be pleased, I suggest.

“There will be some business trips to New Zealand, for sure. She can’t come along, but I will have some fun,” he jokes.

Market Size

One obvious difference between Hungary and Australia is market size, both in terms of people and geography. The estimated the last official census, in 2016, recorded a population of 23.4 million.

Famously, though, there is a large disconnect between population (it is the 55th largest nation in terms of head count) and landmass (it is the sixth largest country in the world). That will present some challenges for Schmidt, who will be based in the country’s second city, Melbourne (home to 3.9 million people), on the southern coast.

“From Budapest, if I want to drive around all the dealers I can do it in about two-and-a-half hours. In Australia, I will have to fly for a few hours. [….] If we were to call together all the dealers in Hungary, we would have a group of about 20. In Australia, it is going to be closer to 100. It means there will be a difference in how we communicate. I won’t be able to spend as much time with each dealer, plus there are the longer distances.”

The market itself is more developed in Australia, built on the back of

27

years

of uninterrupted economic growth, albeit there are signs it may now be slowing down.

But while the markets may be different, the business model won’t change. It is based on a partnership between MercedesBenz, which provides the brand, the product, the marketing, and the quality control, and the dealer network, which is largely responsible for the sales.

“It works very successfully here in Hungary, but I have also seen it in operation in the Arab world, Southeast Asia, Africa, Russia; the model works in all areas. It is in the mutual interests of Mercedes-Benz and the dealer body to develop the business in the same direction: it is clearly a partnership and a cooperative model.”

Trust is Key

The key element, Schmidt says, is trust, which has to be built up between the dealer body on one side, and the sales director on the other. That requires personal face time, and honoring commitments made. “If we want the dealers to invest and be ambitious in their plans, you need that personal trust,” he says.

But while Schmidt is the point man for building that trust, it is far from a oneman operation that has seen sales double compared to 2015.

“I am very proud of the team we have created here. It is a nice mix of the young

and the more mature, some of whom have been with us 20 years. Those that have been with us between zero and two years

make up

40%

of the workforce, but you need both, those who know the history and the brand and are very loyal to it, and also those who are open, who bring a fresh approach and ideas.”

That team has grown alongside rising sales. One of the major projects Schmidt oversaw in his time in Hungary is the move of Mercedes-Benz Hungária Kft. to its Nordic Lights offices on the Váci út corridor, partly driven by the need for space per se, and partly by the need for something more modern, more in keeping with the brand.

One way or another, moving has been a large part of his career, and Schmidt is keen to point out the importance of the support of his family, and especially his wife, of course. But he says he has no regrets about spending so much time outside his home country.

“We need to encourage people to travel.

I flew for the first time when I was 13, to England on a school exchange – I still have some contacts from then – and it has not harmed me in any way. It is important people meet people from other parts of the world, experience other flavors and cultures, because only then can we understand ourselves. I think that is one of the biggest benefits expats bring to businesses. People always want the same thing: a safe and prosperous life for themselves and their families, and good opportunities for their children.”

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Business | 7

Lost in Vinification KESTER EDDY

Helped by generous state and European Union funding, Hungary’s wine sector and associated tourism is booming. In particular, the story of how Villány winemakers have developed their region into a center of viniculture excellence and visitor hotspot (see Page 12) is unparalleled. But amidst the success, some basics are being forgotten.

Sometime in 1994, the winemakers and grape growers of Villány and Siklós got together. Times were hard; Hungary was still very much struggling with the transition from communism. In these villages, far to the south of Budapest and within walking distance of Croatia, people felt they had, as we say in the vernacular, to pull themselves up by their own bootstraps.

Confident that they could achieve more together than alone, they established their own wine route association – a first in Hungary – dedicated to promoting their wineries and the then nascent tourism sector.

As even the casual visitor to the area could not fail to notice, 25 years on, the progress is spectacular, especially in Villány.

Outside the village, large, modern wineries are surrounded by manicured vineyards, while along the main street, panziós and traditional cellars sit cheek-by-jowl, bustling with tourists on a summer evening.

The effects are everywhere, and as in more developed parts of Hungary, rural Villány reports a shortage of capable workers.

Spurred on by success, the wine route association, combining with local authorities, has worked hard to provide a variety of events, tastings and festivals to maintain visitor interest throughout the year.

Crucially, the association has also fostered innovation in wine marketing by developing the concept of “community brands”.

Spurred on by success, the wine route association, combining with local authorities, has worked hard to provide a variety of events, tastings and festivals to maintain visitor interest throughout the year.

Now winemakers are an individualistic bunch, immensely proud of each vintage and variety, which they market individually and typically sell in bottles adorned with uniquely designed labels.

This is all well and chest-thumpingly good, but it costs money.

Compromise

Why not, some thoughtful vintners reasoned, make a compromise: we each make our own wine, from a specific grape, accredit it through peer tasting, and then market it as a common project?

The pioneering venture was branded as Villány Franc, premium quality wines made from the Cabernet Franc grape within a set of agreed tasting parameters, all carrying a common designer label on the front of the bottle, with another from the winemaker on the back.

The result? Easier identification for punters, who know (within reason) what they are buying regardless of the vintner, who in turn maintain his or her own wine’s unique characteristics while incurring lower marketing costs.

As a follow up, a group of ten Villány winemakers have launched REDy, a Portuguiser-based cuvée appealing to the younger end of the market as a light, drink-any-time, party red.

So – providing labor can be found – is life in this sliver of southern Hungary all set for unabated success? Probably, but perhaps complacency is also setting in.

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HERITAGE

TRADITION anno 1935

THE BEST DOBOS CAKE SZAMOS GOURMET HOUSE BUDAPEST 5TH DISTRICT DEÁK FERENC STREET 5. /// www.szamos.hu

Researching this story, your correspondent sent out enquiries for accommodation and interviews. Of 11 such emails, a mere three elicited timely responses. Two bounced (address unknown) and five remain unanswered at the time of writing.

For a community built on wine and now reliant on tourism (and publicity), this is not a good indicator.

Barring catastrophe, the wine will surely flow and merriment continue in Villány.

But it will need sobriety and renewed attention to basics (i.e. responding to an email enquiry) to ensure everyone makes the party.

The Bottom Line is a monthly column written by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest Business Journal.

To comment on this column, or on anything else in the BBJ, email the editor at robin.marshall@bbj.hu

8|2

Business

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Optimizing Company Valuation via Cost of Capital In their latest investment column, Les Nemethy and Sergey Glekov look at the cost of capital, an area often overlooked by mid-sized firms.

Our firm recently performed two valuations on a pharmaceutical company two years apart. The owners were surprised by the unexpectedly large jump in value, far larger than performance improvement might have justified.

We of course reported back to him in some detail, and the answer lay in the change in capital structure; namely the company had layered on a significant amount of very cheap debt (interest rate in the range of 2%). In a Discounted Cash Flow valuation, this affects weighted

average cost of capital (WACC), the discount rate applied to valuation of future cash flows.

Optimizing capital structure involves achieving and maintaining an optimal debt/equity ratio that maximizes a company’s market value, while minimizing

cost of capital. Capital structure must also take into account the need to create an adequate liquidity cushion, to face a possible downturn and scarcity of funding.

A company needs to choose between a variety of financing instruments, addressing multiple needs, including

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credit impact, accounting impact, and shareholder dilution.

The cost of capital is based on a company’s capital structure (debt vs. equity, or hybrid instruments) and the cost of each component. A company may minimize its cost of capital by lowering

2

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Budapest Business Journal | July 5 – July 18, 2019

Business | 9

A stylized balance sheet of a non-financial firm

Bank loans

kd

Bonds

Cash

WACC

ROA

Assets

ke

Equity

2nd district Source: Deleveraging, Investing and Optimizing Capital Structure by Stefano Gatti and Carlo Chiarella

the cost of debt or equity or via capital restructuring, namely changing debt and equity as it appears on the balance sheet.

In the above stylized balance sheet, on the right side we see sources of funds (various types of debt, equity, hybrid instruments, etc.). Equity may come from capital injections, retained earnings after payment of dividends, etc.

On the left hand side, we see the uses of those funds. Optimizing cost of capital involves restructuring the right hand side of the balance sheet, namely the source of funds.

Theoretically, debt offers the lowest cost of capital due to lower risk levels than equity, and in most jurisdictions, tax deductibility. To a certain point, increasing a company’s debt ratio reduces its cost of capital. However, too much debt increases financial risk, hence increasing the return on equity required by shareholders.

Thus, in theory, a company needs to find the optimal point at which the marginal benefit of debt equals the marginal cost, which is illustrated in our second chart, where the cost of capital happens to reach its lowest value at a debt/total capital ratio of 40%.

Cost of debt is the market interest rate that the firm has to pay on its borrowing.

It will depend upon three components: a) The general level of interest rates b) The default premium c) A firm’s tax rate Theoretically, in other words, whenever there is a change in interest rates or tax rate, capital structure should be revisited to assure optimization.

Cost of equity is the required rate of return given a company’s level of risk.

Therefore, if a company can implement a risk mitigation strategy, cost of equity should also decline.

In our experience, most owners of mid-sized companies do not give sufficient consideration to issues of capital structure prior to raising capital or putting a company up for sale.

This may, in fact, result in leaving quite a bit of money on the table.

When private equity owners invest in a company, this type of “financial engineering” is part of their value added.

However, there is no reason why company owners should not give attention to this matter prior to bringing on board any investor. Indeed, it should be periodically reviewed independent of any transaction.

Why pay more than necessary for capital?

Lowering Costs

Besides optimizing capital structure, a company may also reduce its cost of capital by lowering the costs of debt and equity. On the debt side, this may involve creating competition among banks to reduce debt costs, replacing bank debt with debentures, etc. On the equity side, it might involve creating a class of preferred shares or some other hybrid instrument.

Hypothetical Debt Ratios and Weighted Average Cost of Capital (WACC)

12.0% 11.5%

2nd district

89 sqm – 3 rooms, Hankóczky Jenő street

95 sqm – 2 rooms, BUday lászló street

Close to the Mammut shopping mall, this very quiet apartment in good condition has separate rooms and balcony. It is situated within a very nice condominium with elevator.

Beautiful panorama over the Buda Hills, this very sunny apartment in good condition has sepa­ rate bedrooms, private gas heating and parking space. It is located in a quiet and green area.

Beautiful view over the Parliament, this very sunny apartment in good condition benefits of separate rooms and private gas heating. It is lo­ cated in a quiet and green area.

42.500.000 HUF

73.900.000 HUF

84.900.000 HUF

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

270 sqm – 8 rooms, Hűvösvölgy

200 sqm – 6 rooms, endrődi street

545 sqm – 7 rooms, PestHidegkút

In a green area, a few minutes from the centre, this terraced house has unique atmosphere, big garden and garage. This newly refurbished prop­ erty benefits of large spaces and huge windows.

Beautiful panorama over the Buda Hills, this three storey, very spacious and bright, well di­ vided, garden facing, luxury apartment benefits of 3 bathrooms, sauna and two parking spaces.

Close to French School, this panoramic, luxury detached house has 1376 sqm of lot, huge ter­ race, balcony, solar panel and private gas heating, beautiful garden, swimming pool and garage.

190.000.000 HUF

205.000.000 HUF

389.000.000 HUF

+36.1.376.6080

3rd district

+36.1.376.6080

3rd district

+36.1.376.6080

3rd district

58 sqm – 3 rooms, rómaiFürdő

89 sqm – 2 rooms, rómaiFürdő

99 sqm – 3 rooms, rómaiFürdő

This very sunny apartment benefits of a living room with open kitchen, 2 separate bedrooms, terrace and garage. It is situated within a new building with swimming pool in the garden.

In a very green area, this bright, luxury apart­ ment has closed balcony and garage. It is situa­ ted within a condominium with swimming pool in the common garden.

Panoramic view over the Danube, this very spa­ cious apartment has living room with open kit­ chen, 2 separate bedrooms, huge terrace and garage. Swimming pool in the common garden.

59.900.000 HUF

89.900.000 HUF

109.000.000 HUF

+36.70.669.5350

5th district

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

2nd district

50 sqm – 2 rooms, Fény street

+36.70.669.5350

6th district

+36.70.669.5350

6th district

74 sqm – 2 rooms, molnár street

76 sqm – 2 rooms, király street

117 sqm – 4 rooms, szív street

In the city centre, close to the pedestrian shop­ ping street, Váci Street, this completely renova­ ted, very bright and elegant, street facing apart­ ment benefits of private gas heating.

In a renovated period building with elevator, this bright, spacious, street facing apartment in good condition has private gas heating and it is located close to the Teréz Circuit.

This completely renovated, very spacious apart­ ment has living room with open kitchen, 3 sepa­ rate bedrooms, 2 bathrooms and wardrobe room. All of the furniture is included in the price.

77.900.000 HUF

52.900.000 HUF

99.000.000 HUF

+36.70.414.7759

7th district

+36.1.351.0446

11th district

+36.1.351.0446

11th district

65 sqm – 2 rooms, Hevesi sándor sqUare

25 sqm – 1 room, Bartók Béla street

110 sqm – 3 rooms, lágymányosi street

This very sunny, street facing apartment, that needs renovation, has separate rooms and private gas heating. It is situated within a well maintained period building with elevator.

This completely renovated, bright, street facing, high floor apartment benefits of a balcony. It is located near Feneketlen (“Bottomless”) Lake and Kosztolányi Dezső Square.

This well divided, bright, cosy and spacious apartment, that needs renovation, benefits of 5 separate rooms. It is situated within a building with elevator and common garden.

37.500.000 HUF

29.900.000 HUF

77.500.000 HUF

+36.1.351.0446

+36.70.337.2319

+36.70.337.2319

WACC

11.0% 10.5% 10.0%

11th district

9.5% 9.0% 0%

20%

40%

60% D/(D+E)

80%

100%

Source: Finding the Right Financing Mix: The Capital Structure Decision by Aswath Damodaran

13th district

13th district

135 sqm – 4 rooms, lágymányosi str.

87 sqm – 3 rooms, kádár street

71 sqm – 3 rooms, visegrádi street

This well divided, bright, cosy and spacious apartment in good condition has 4 rooms and 2 balconies. It is located near Móricz Zsig­ mond Circus.

This completely renovated, street facing apart­ ment has living room, 2 separate bedrooms, sleeping gallery and private gas heating. It is situa­ ted within a beautiful, renovated period building.

In an Art Nouveau style period building with ele­ vator, this completely renovated, street facing, high floor, luxury smart home benefits of a fully fitted kitchen and 2 bathrooms.

85.900.000 HUF

59.900.000 HUF

82.900.000 HUF

+36.70.337.2319

+36.70.414.7759

+36.70.414.7759

grUPPo t.F.m. kFt. 1068 BUdaPest, király U. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

10 | 2

Business

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Company ///news Adient Inaugurates HUF 1.3 bln Expansion

Photo by catalina.m/Shutterstock.com

U.S.-owned car seat maker Adient Mezőlak inaugurated a HUF 1.3 billion production hall, expanding production capacity at its base in Mezőlak (169 km west of Budapest).

Plant manager András Nagy said the investment had increased the firm’s total production area by 2,000 sqm to more than 10,000 sqm, including the company’s two other bases in Hungary. He said the new unit provided capacity until 2021, adding that the structure of the building allows

for further expansion. Adient Mezőlak had revenue of HUF 69.5 bln between October 2017 and September 2018, public records show. Adient employs more than 3,700 workers in Hungary at its bases in Mór (84 km west of Budapest), Mezőlak, and Kecskemét (92 km southeast of Budapest).

AVL Building HUF 12.5 bln Development Center in Hungary

Austrian engineering company AVL laid the cornerstone of a HUF 12.5 billion regional

development center in Érd, some 30 km on the outskirts of Budapest, autopro.hu reported. Hungary’s government is supporting the investment with a HUF 3 bln grant, Minister of Foreign Affairs and Trade Péter Szijjártó said. The center will create 350 jobs, including 253 highly skilled positions, autopro.hu added.

Lafarge to Invest HUF 2 bln at Cement Plant Lafarge Cement Magyarország, the local unit of French LafargeHolcim, announced on July 1 HUF 2 billion in investments it will make by the first half of next year at its cement plant in Királyegyház (261 km southwest of Budapest), state wire service MTI reported. The investment will boost the share of secondary fuel Lafarge uses at the plant from 60% to 80% and reduce CO2 emissions by 10%. Lafarge inaugurated the

HUF 4.7 bln Mozzarella Plant in Komárom Hungarian-owned agribusiness Komáromi Mezőgazdasági Zrt. is building a HUF 4.7 billion mozzarella plant on the outskirts of Komárom (93 km northwest of Budapest), CEO Gábor Marczali told mfor.hu. The plant will turn out 12 tonnes of mozzarella a day from 100,000 liters of milk, Marczali said. Its entire production will be exported to Italy at the

start, but the company is also weighing the launch of its own brand, he added. The development is getting HUF 1.5 bln in European Union grant money. The company milks 1,200 cows, producing almost 40,000 liters of milk a day.

Most is exported to Italy through Hungarian traders. The firm had revenue of HUF 2.5 bln last year, mfor.hu reported.

HUF 72 bln cement plant in 2011. Last year, it generated revenue of about HUF 19 bln.

Medical Startup Gets HUF 340 mln Hungarian corporate healthcare startup Fitpuli has received HUF 340 million in investment from Solus Capital Zrt. and Arete Zrt., hvg.hu reported. The first digital healthcare program launched by the company in Hungary is based on scientific research and has undergone professional development since its start. It collects data from various digital applications and accessories and connects it with medical parameters, thus providing personalized medical feedback for users. Solus and Arete are responsible for Hiventures (Hungarian) and JEREMIE (European Union) funds.

Thanks to the recent investment, Fitpuli will see further developments, hvg.hu said.

Inzi Controls to Invest HUF 14.8 bln South Korea’s Inzi Controls is investing HUF 14.8 billion in building a battery plant for electric vehicles in Komárom (93 km northwest of Budapest), infostart.hu reported, citing Minister of Foreign Affairs and Trade Péter Szijjártó. Speaking at a press conference in Budapest, Szijjártó added that the government is providing HUF 1.63 bln in funding for the project as the plant will create 122 workplaces.

Szijjártó said Inzi Controls would be opening its first European plant with the investment, infostart.hu added.

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Europa Design Hosts Introductory Party of New Herman Miller ‘Cosm’ Chair Comfort A cocktail party was hosted in Budapest by Europa Additional What adds additional comfort to this latest design is the elastic element, which Design to introduce the new Herman Miller builds up most of the structure and was “Cosm”, a chair that has been named a “milestone developed for “Cosm” specifically.

Another characteristic of the product is in the seating industry”, according to a press the continuity of the frame as the seat and the backrest are not separated, allowing release sent to the Budapest Business Journal. more support for the spine, while still being flexible during movement.

ESZTER D. KOVÁCS

The VIP guests and professionals attending the event were informed about the product’s specifics by Herman Miller’s head of seat and collaborative furniture department Mike Roven, the company’s regional manager Zak Borivoj and Ottó Feuertag, the founder and owner of Europa Design, the oldest Hungarian Herman Miller distributor.

At the entrance of the WellPoint office building and event center, where the cocktail party was held, two iconic objects greeted attendees. One of these was Time Magazine’s “seat of the ’90s” winner, the Herman Miller “Aeron” chair, and the other was one of the most classic sports cars of all time, the 1960s Jaguar E-Type.

Guests who submitted photos of themselves with these icons could enter a draw to win a new “Cosm” chair in fiery red color.

Roven shared the main reason behind the chair’s creation, which is

the increasing movement around offices because of collaborative projects. He outlined how nowadays employees are much more mobile, moving from chair to chair.

Due to lack of time and motivation, they might not adjust their seats each time, but with “Cosm” they won’t have to. The design automatically adapts to the person’s body and weight, helping employees to sit and therefore work more efficiently.

The development of “Cosm” started 20 years ago, when Herman Miller assigned one of its design centers, Studio 7.5 in Berlin, with creating “a flying carpet”, which it described as “a chair in which we forget we are actually sitting”, according to Europa Design’s press release.

The product of this project was the “Auto-Harmonic Tilt”, where the springs adjust to the sitter’s weight automatically and only the chair’s height need be adjusted to either low, medium or high setting.

Moreover, with the leaf armrest option, the chair also provides optimal support for the elbow, especially while writing or typing at a desk. “Cosm” is available in six colors, with three back and four armrest options.

At the Hungarian introductory event, Feuertag outlined how the new Herman Miller chair is a part of the American company’s Living Office concept, in which it aims to keep up with the constantly changing office space of the 21st century in innovative ways.

To do so it considers not only context but also function when designing a product. Cosm embodies this mentality as it wishes to meet all the new needs of the workplace, Feuertag said.

3

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Special Report Tourism

Tourism Industry hit Hard by Labor Crisis Higher wages and more flexible conditions could help ease labor shortage problems in the hospitality industry, according to experts the Budapest Business Journal spoke with.

Alternate Careers

ZSÓFIA VÉGH

Summer heat and summer holidays are again throwing the spotlight on hotels and restaurants which, often filled to bursting, are struggling to find and retain workforce.

A constant problem that has become even more acute recently, the labor shortage comes down to a number factors.

Lately, the number of new facilities, especially hotels, have increased in Budapest and the countryside, which creates significantly greater demand for staff, Csaba Baldauf, general vice president of the Hungarian Hotel and Restaurant Association (MSZÉSZ) tells the BBJ. The addition of new facilities has also outpaced the closing of older ones, he adds.

Salary levels are very low, making working in the hospitality industry less attractive. “This is not country-specific, in Western Europe it is also less popular due to different and longer working hours, or weekend work, especially for the young”, Baldauf says.

Training the Next Generation “For a long time, hospitality jobs have been perceived quite negatively; not too many have looked at them as serious professions,” Andrea Lugasi, dean of the Budapest Business School tells the BBJ. “What we hear from our business partners is that they have a hard time finding both skilled and qualified workforce,” she adds.

“Yet with the rise of gastronomy and the arrival of new global trends, this mindset is changing. Many of our students – though they earn a degree – are interested in manual jobs such as chefs,” Lugasi notes.

Labor costs are continuously rising but it is difficult to determine an average as it varies with position and category.

“The wages of chefs, house maids, waiters are all rising. A housekeeper could see a 10-12% rise this year,” Flesch says.

A further complication is that neighboring countries that offer more competitive wages have been filling their own vacancies with Hungarian workers.

“If we could pay 75-80% of what they do, migration could be reversed and we could also employ people from other countries,” Baldauf says. Yet, as long as a waiter in Austria can earn

net

EUR 1,500

(about HUF 450,000) as opposed to HUF 250,000 here that is not likely to happen, he says.

Whitening the Industry

This doesn’t mean that one cannot earn better in Hungary, but they are likely to be employed off the book. The whitening of the industry has started but there are still a high number of employers who avoid taxes.

The solution? “We need to raise wages, that is the burning interest of the industry,”

One also needs to understand working in this industry is hard work, both physically and mentally, which also makes it less attractive for many.

“A student of mine who waits tables as a side hustle told me one day he walked [a total of] 28 kilometers during one shift.”

Most students who return from their mandatory internship have already been offered a position. No wonder: once they know what they can expect, they are more likely to stay as a permanent worker.

Attendance Rising One bright prospect is that, while the labor shortage is acute, the

Baldauf says. The planned VAT-reduction on commercial accommodation from 18% to 5%, expected to come into effect next January (if approved in the upcoming budget) can be a source of pay raise. At the same time, a

Talking about migration of workers, Flesch highlights the poaching effect of other industries as much as countries.

“A shelf-stacker in a hypermarket chain can earn more than a house maid. And working as one is far less hard and stressful than working as a housemaid,” he explains.

With rising labor costs, profitability declines. Once again, exactly how much depends on the category, but all areas see their profitability drop.

“Since labor and related costs make up a third of overall costs, no one is spared,” Flesch says. The expert also sees part of the solution in the VAT-reduction for hotels.

In terms of quality of workforce, both representatives of MSZÉSZ underlie the need to return to longer internship periods. This is already in the pipeline and will increase the current period to two months, Flesch says.

4%

tourism

contribution will be introduced in the sector.

But working conditions also need to be improved in order to attract more young people. “We need to provide them with, for example, service homes and more flexible working conditions,” the expert says. The same applies for the workforce already working in the industry. They need to be “cherished” in order to be retained, Baldauf adds.

Bad as it is, in Budapest the shortage is not as acute as in the countryside. “In the capital, there is workforce, it just costs more,” Tamás Flesch, president of MSZÉSZ tells the BBJ.

number of students applying to hospitality faculties has actually been increasing in the past few years, Lugasi says.

“Following a setback in 2012-2013, we have seen their number rising constantly. Last year, we recorded about a 10% increase compared to a year earlier.”

The Budapest Business School Faculty of Commerce, Hospitality and Tourism runs both Hungarian and Englishlanguage bachelor courses, plus a higher educational vocational training in Hungarian (that does not award a degree). Overall, it has more than 700 students enrolled at the beginning

Csaba Baldauf.

Photo by turizmus.com.

of the new semester, 60-70% of whom finish their studies.

Regarding the quality of training, there is a gap between secondary and higher level education. For many reasons, the former has not yet been able to follow the changes in the industry and much of the equipment used and material taught is outdated.

“Here at the university, we try and incorporate the most recent knowhow, providing our students with state-of-the-art equipment, and collaborate with the industry.

We invite them to hold lecture and also visit them at their facilities.

This mindset helps us stay up to date,” Lugasi says.

12 | 3

Special Report

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Hungarian Wine Makers Strive to Mature the Tourism Market On its webpage, the Villány-Siklósi Wine Route Association is quick to note it was the first of its kind in Hungary.

Established in 1994, still a time of great economic upheaval, its members can look back with satisfaction at developments, with both southern settlements attracting thousands of visitors on summer weekends.

KESTER EDDY

Such guests are not only ideal from a social aspect: the Geres sell some 10% of their annual wine production of

400,000 bottles

from their panzió, including their premium and limited edition wines.

The Geres, believing the human touch is crucial to their wine business, have begun offering evening meals this year to ensure visitor satisfaction.

“In recent years we see guests need a more complex [experience], wine, food, accommodation and other [activities],” says Zsolt.

Villány – and its viniculture – has proved so popular with Magyar and foreigner alike that more than two dozen wine-accommodation operations, ranging from simple one-room jobs to high-end hotels, have opened since the turn of the millennium.

“Guest nights have doubled in the last ten years,” says Boglárka Kovács, who heads both the wine route association and a tourism development company from her nearby Siklós office.

It’s 8 a.m. and breakfast time at the Gere Tamás & Zsolt Diófa Panzió in Villány, the focal point of Hungary’s most southerly wine region.

In the dining room, a group of Germans exchange words with Viktória Gere, who runs the hostelry, then rise, keen to enjoy local attractions before the temperatures soar under the summer sun.

“This group has been coming every year for five, six years,” Viktoria tells the Budapest Business Journal.

Zsolt, her brother and the family winemaker, adds: “They sit and talk with my father in the evenings.

They buy wine from us and bring beer from Germany. It’s all very friendly.”

Immense Impact

True, the 58,000 guest nights recorded in 2018 would scarcely be noticed in Budapest, but the impact on Villány, with its population of around 2,300, is immense.

In terms of services, at the forefront are establishments founded by two of Villány’s most renowned wine makers, the Crocus Hotel of Attila Gere (a family

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Budapest Takes on the Colors of Shanghai The “Dynamic Shanghai” city promotion event has been held in Budapest. The Information Office of Shanghai Municipality is collaborating with the National Bank of Hungary, Shanghai Museum, Fudan University, Shanghai International Cultural Association and other institutions to help celebrate the 70th anniversary of the establishment of diplomatic relations between Hungary and China.

From June 18-August 11, a series of three exhibitions have been staged in the House of Wisdom in Buda’s District I. The first, “The Journey of the Coins-Hungary and China on the Silk Road”, displayed 190 Hungarian and Chinese coins, among which, King Stephen’s Denar and Chinese copper coins. During the exhibition, visitors will have the opportunity to learn about the evolution of coins and the related events in terms of economy, art, culture, history and finance digitization.

The second exhibition, “The Elegance of Shanghai”, is a creative cultural product exhibition of the Shanghai Museum and brings two series of creative cultural products

including “The Classics of Shanghai Styles” and “The Elegance of Shanghai”. Following the idea of “let the Museum be with you”, Shanghai Museum will display lamps, bags, table runners and other products during the exhibition.

The “Dynamic Shanghai” photography exhibition was displayed for a week from June 18 in celebration of the sixth anniversary of Shanghai and Budapest becoming sister cities.

The exhibitions were proceeded by the “Opportunities, Challenges, Reciprocity”Hungary-China economic forum on the morning of June 18, which featured Lin Yifu, Chinese economist and former Chief Economist of the World Bank, and Zhang Jun, President of School of Economics at Fudan University, along with two Hungarian economists. The forum focused on the challenges and opportunities in the economic development of cities along the Silk Road.

3

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Budapest Business Journal | July 5 – July 18, 2019

generally available in Villány, including the Diófa Panzió.

Yet, says Gábor Sipos, head of marketing for Bock’s hotel and winery, there is a proven need “for higher quality”: the Ermitage sells out every weekend.

And the provision of a conference center ensures steady demand from corporates, even in the winter.

Naturally, guests can enjoy wine tastings and cellar tours that include the spectacular underground rotunda chapel.

Bock’s business is similarly spectacular: his winery now produces one million bottles annually, and the Ermitage employs between 40 and 50 staff.

Magnificence

Zsolt Gere relation of Zsolt and Viktória) and József Bock’s Hotel Ermitage.

Both boast spa treatments and fourstar status, and with rooms that start from around HUF 20,000 rising to HUF 50,000 for deluxe apartments, both are large by Villány’s standards; Bock’s

31

rooms

and apartments can comfortably accommodate some 84 guests.

While such prices are good value in Budapest, they are a far cry from the more modest lodgings

But does not the size and magnificence of such quarters lose out to the simple charm and humanity of small winery-panziós?

Fearing precisely a loss of personal engagement, Zsolt and Viktória Gere shun further expansion of their family operation.

“We work very hard, and we have more things to do, but we don’t want to be so big we lose this relationship. It gives energy if you talk to people, and they say what you do is good, you’re on the right way,” says Viktória.

Even in the relative opulence of the Ermitage, Sipos insists his boss has not lost the common touch.

“This week the family is on holiday, but normally József Bock sits here and speaks with everybody. People like this,” says Sipos. “We have many guests who

come ten times a year. They like the staff, because everyone knows the wines, they can all speak with them.”

Perhaps though, even Bock has reached his limits in tiny Villány?

Well, almost, it seems. Though he is currently building a new bottling

Special Report | 13 facility, Bock has indeed declared a stop, says Sipos.

“We don’t want to get bigger. Every year he [Bock] says: I don’t want to build anything else,” Sipos reports, before laughing: “But every year, every year we build something new!”

Tokaj Expands its Tourism Portfolio On the second Sunday of every month, 30-40 artisans erect stalls and welcome guests in the grounds of the Sárga Borház, the classical restaurant adjacent to the Disznókő Winery on the western edge of Tokaj, Hungary’s flagship wine region.

Some sell foodstuffs, such as honey, jams, cordials and cured meats, while others proffer carpets, jewelry and ceramics, all products of local kitchens and cottage industries. If there is not a wine stall available, it is only a short walk to the Disznókő tasting room.

“People come from Miskolc and Nyíregyháza, even Slovakia and Poland,” Katherine Chapman, a translator from nearby Sárospatak who helped set up the market some seven years ago, told the BBJ. The market is a community effort designed to broaden Tokaj as a

tourist destination for wine and other local produce, while helping local businesses.

“Wine tourism in Tokaj is certainly very important for the region.

Joining the UNESCO World Heritage [list] was one important message back in 2002,” says Samuel Tinon, a French winemaker who has worked in Tokaj for 25 years.

In that time, much effort has been put into expanding the tourist offering, both in terms of accommodation, wine programs and festivals, he says.

“Wine tourism is a complex subject because it is at the junction of two professions, producing wines and producing services in very competitive markets,” says Tinon. “Both activities need long-term investment with up-to-date offerings in terms of the wine range, wine programs, accommodation standards and value.”

PRESENTED CONTENT

Telenor Offers Extended 4G+ Coverage Around Lake Balaton The Budapest Business Journal asked Telenor Hungary chief network strategist Tamás Csaba about the company’s plans for tackling summer peak traffic around Lake Balaton.

BENCE GAÁL

BBJ: What challenges does the sudden summer increase in traffic pose?

Tamás Csaba: The number of mobile users increases five- to sevenfold or in the most popular areas, even to more than tenfold in the Balaton region during the summer season. At this time of the year, more than 10% of Hungary’s nationwide mobile traffic is generated in this region.

During summer months, a specific area may have up to 20 times more users than on an average day and major festivals have 50,000 to 60,000 visitors per day. These factors obviously generate increased mobile network traffic. It is already visible that Telenor’s 4G network in the Balaton region had about 60% more

data traffic this June than in the same period in 2018. As a result, the summer season requires careful preparations from mobile operators. We support increased traffic demand with temporary capacity expansions, retuning some existing base stations and the installation of temporary mobile base stations. Its landscape, nature conservation areas, protected buildings and the Balaton Law setting stringent requirements for tower construction make the lake a special area for network development. Another important aspect to consider is that the huge capacity supporting summer traffic lies idle in other parts of the year which makes costeffective operation a challenge.

BBJ: How is 4G+ better than regular 4G? TCs: By the start of this season, we installed 13 new base stations around Lake Balaton, and the aggregation of more frequency bands (4G+) is in operation on more than 200 cells. As a result of our network development efforts, more users can connect to the network at a higher bandwidth and in a larger coverage area than ever before. The latest 4G+ developments enable two-three times higher download data speed compared to last year, reaching 500Mbps-600Mbps in practice as the maximum in some places.

Although this speed applies to the capacity of an entire cell, we can also provide more bandwidth to individual users connecting to a specific base station, of course.

BBJ: At which festivals will capacity expansions happen?

TCs: Summer is the peak season of the year when 80% of temporary base station installations and 66% of capacity expansions take place. Every year, Telenor serves about 400 to 500 events attracting more than 4,000 to 5,000 people each, including Balaton Sound, a festival with several tens of thousands of visitors, and Sziget Festival. At Sziget, where users are scattered over a large area, we will install radio transmitters of varying capacities at 17 points, while at Balaton Sound where visitors are concentrated into a much smaller area, seven additional temporary base stations will be set up in addition to enhanced overall network coverage. We will also install temporary base stations at other popular festivals attracting a large number of visitors in the Balaton region, including the Open Road Fest in Alsóörs, Everness Festival, Paloznaki Jazz Picnic, the STRAND Festival, Valley of Arts, the Zorall Beer Olympics in Alsóörs and Boglári Szüreti Festival.

BBJ: Outside the main season, what kind of benefits do the stations provide?

TCs: Early in the history of mobile technology, we used to deinstall equipment in the Balaton region in early fall to reinstall them at other sites such as the Budapest Christmas Fairs or use them for overall network capacity expansion.

Technology growth has changed this practice. Equipment providing additional capacity not needed out of season is now automatically switched to a special idle mode, keeping their power consumption to the minimum. Next summer, when their capacity is needed again, they will automatically wake up to active mode.

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Pax and Cargo Continue to Grow at Budapest Airport Handling more than 15 million passengers in 2018, Budapest Ferenc Liszt International Airport has seen its biggest traffic to date. That growth is likely to continue: with new destinations added to existing ones, and summer in full swing, figures will probably improve this season as well.

ZSÓFIA VÉGH

How the airport has been able to handle such traffic is a different story. The airport received a four-out-of-ten ranking from customers on Skytrax, a United Kingdom– based consultancy which runs an airline and airport review and ranking site.

(It should also be noted that Budapest Airport won Skytrax’s best airport in Eastern Europe award, which is also in part based on customer reviews.)

The airport’s Facebook page, too, has a lot of negative comments criticizing the overcrowded check-in and security area, the rudeness of staff or the lack of cleanliness in the toilets.

Many of these travelers might have just been unlucky to land on a very busy day but, based on the comments, these problems occur regularly. The operator, Budapest Airport, started a number of developments at the beginning of this year – many aimed at improving the passenger experience.

“I haven’t seen any significant changes that would have left me impressed,” says Szilárd Szilágyi, an entrepreneur who regularly commutes between Spain and Hungary. “A new toilet was added to one lounge, but the area itself has not become bigger,” he says.

Security Checks

He did not notice the two new lanes which were added to the security check area either as “security check here still takes the longest compared to most airport”, he claims.

Despite being highly criticized, the barn-like area where low-cost airline passengers have to wait has not changed either.

Asked about these specific complaints, László Kurucz, a spokesman for Budapest Airport, tells the Budapest Business Journal: “Currently there are ongoing infrastructure developments that will

Budapest Airport’s largest retail partner, Heinemann Duty Free, has launched a payment initiative to allow Hungary’s growing number of Chinese visitors to benefit from their preferred providers, Alipay and China Union Pay. Photo by Budapest Airport. greatly improve the passenger experience.

Budapest Airport will provide information on these in the near future.”

If it seems there is much to improve, some developments have already been undertaken in the past few months. Billboards showing the airlines’ logos outside the terminals have been replaced by digital screens showing flight details for check-in.

New public transport ticket machines have been added to speed up ticket

René Droese, executive director in charge of property, cargo and business development, speaking at the Cargo City topping out ceremony on June 27. purchases for the shuttle bus. Toilets are said to be cleaned more often and customer feedback machines have been placed in them. The time it will take to pass through security is now displayed on screens.

Beyond the general public, Budapest Airport is purposefully placing more emphasis on Chinese travelers. It does so to better serve the increasing volume of passengers from the Asian giant, the number of whom this year could well

reach

300,000,

up from 256,000 in 2018, in part as a result of a new direct flight launched between Shanghai and Budapest in early June.

The airport has introduced two payment methods popular in China (Alipay and China Union Pay) in its duty-free shop. It is planning to place Chinese passenger information displays later the year.

Cargo Developments

The airport’s cargo hub is also under development. “Budapest Airport is reaching the upper limit of its cargo handling capacity, and therefore, in addition to the development projects already announced, further investment will be required,” said Zsolt Veron, head of the supervisory division of the Ministry for Innovation and Technology at the Air Cargo Day Hungary conference in May. Nine months after it was started, builders had completed the construction of the structure of the largest building in Budapest Airport’s dedicated freight terminal, BUD Cargo City at the end of June.

The logistics base, a HUF 15 billion (approximately EUR 46 million) project, is being fully financed by the airport operator. The facility, scheduled for completion by the end of the year, will make it possible for companies involved in handling and transporting air cargo to cooperate more effectively.

Being constructed on the Vecsés side of the airport, Cargo City will consist of a

21,600 sqm warehouse

hall and office section, another 11,200 sqm facility close by, intended for forwarders, and a 32,000 sqm concrete apron.

This apron will provide additional parking positions for the simultaneous handling of two Boeing B-747-8F type aircraft, enhancing the airport’s cargo

apron capacities. These “Jumbos” are able to transport up to 130 tonnes of cargo.

“The current international trade conflicts undoubtedly pose challenges for the representatives of the industry, but we are confident, as the volume of

“The current international trade conflicts undoubtedly pose challenges for the representatives of the industry, but we are confident, as the volume of air cargo handled

by Budapest Airport is characterized by stability in 2019.” air cargo handled by Budapest Airport is characterized by stability in 2019,” said René Droese, Budapest Airport’s chief property and cargo officer (and also its business development director as of July 1), at the topping out ceremony.

“We believe that with all the efforts and steps to create an ideal home for air cargo at BUD, we will attract much more cargo from our catchment zone in the future than today,” he added.

Budapest Airport Management Changes Budapest Airport, the operator of Ferenc Liszt International Airport, replaced its development and communications directors from July 1, state wire service MTI reported.

René Droese, the executive director in charge of property and cargo, will also take on the duties of business development director, replacing Stephan Schattney. Droese has worked at the airport for more

than a decade and has more than 25 years of experience in property and airport development.

Budapest Airport has also replaced communications director Mihály Hardy and government communications director Gábor Szarvas, with the combined role going to Katalin Valentinyi, a former journalist and communications consultant.

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News///in brief

Foreign Visitors to Hungary Stay Longer, Spend More

Foreign visitors to Hungary stayed longer and spent more in the first quarter of this year than in the same period of 2018, a summary of data compiled by the Central Statistical Office (KSH) shows. Foreign visitors spent 2.1 days on average in the country, with the average stay of those on longer trips rising to 5.1 days in Q1 from 4.7 days in the same period a year earlier.

Foreign visitors spent a combined 26 million days in Hungary during the period, up 14% from 2018. Spending by foreign visitors rose 14% to HUF 405 billion during the period. Foreigners made 8.8 million day-trips to Hungary, up 15%, and the number of longer visits was up 3.9% at 3.3 million. Most foreign day-trippers came from Austria, Romania and Slovakia, ksh.hu reported.

Hungarians Make 5.5 Million Foreign Trips Hungarians made 5.53 million trips abroad in Q1 2019, 15% more than in the same period last year, according to data compiled by the Central Statistical Office

(KSH). Some 3.63 million trips were oneday trips and 1.89 million were for a longer period. Hungarians in total spent 14.66 million days travelling, with an average trip taking 2.7 days. The total time spent travelling was up by 25% compared to the same period of last year. Hungarians spent HUF 183 billion on travelling abroad, 7.5% more than in the base period. Around 36% of the spending was for purchasing food stuffs and goods, 24% on accommodation and catering services, 11% on travel and fuel costs and 5% on culture and sports services. Austria was the most popular destination, with 2.13 million of the total trips going there. Slovakia was also popular, attracting 1.1 million trips, followed by Ukraine at 431,000, Romania with 375,000, Germany with 297,000 and Croatia with 107,000.

Shanghai Airlines’ 1st Direct Flight Lands in Budapest The first scheduled direct flight connecting Shanghai-Putungi and Budapest landed at Ferenc Liszt International Airport on June 10, tozsdeforum.hu reported. The Shanghai Airlines aircraft was given a water salute after landing a little before 6 a.m. Budapest Airport CEO Jost Lammers, Ministry of Foreign Affairs and Trade state secretary Levente Magyar, Chinese ambassador

Kisfaludy Program Extended to Danube Bend The latest edition of the so-called Kisfaludy program, a scheme that aims to boost the number of new guest houses, will be extended to some 47 settlements in the Danube Bend (71 km north of Budapest, where the Danube River forms a U-shaped loop) according

to pénzcentrum.hu. The program has concentrated on the area around Lake Balaton to date. The new phase offers HUF 750 million in state funds for the creation of new guest houses.

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to Hungary Duan Jielong and China Eastern Airlines Group Deputy General Manager Tian Liuwen spoke at the ceremony. The flight from Shanghai will operate three times a week. Chinese tourists are increasingly important for Hungary; last year some 256,000 visitors arrived here, 12% more compared to the year earlier, tozsdeforum.hu noted officials as saying.

Candidates should complete the investment within three years, should be open for 360 days a year and obtain a rating of three- or four-stars, pénzcentrum.hu said.

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From the History of Pálinka to Sweets and Selfies Whether you like it or not, selfies are a thing. Hardly anyone who has a smartphone is spared and, for many, it seems it can become a daily routine. People’s fascination with their self-portraits has created a new fad – selfie museums. And since the beginning of this year, Budapest has one, too.

ZSÓFIA VÉGH

Co-founder, co-owner Balázs Koltai, who opened the museum with his partner and co-owner Lilla Gangel, has already a few successful businesses under his belt. He is the creator and owner of PániQ-Room, live room escape games which now number 15 sites.

The Museum Of Sweets and Selfies seems to be a winner; three months after it opened in January, the HUF 35 million investment had already been recovered, he says.

“I am always on the lookout for experiences/services that are popular. I am following foreign markets, what’s on, and try and establish them in Hungary,” Koltai tells the Budapest Business Journal.

He is also fast to react. Though PániQRoom was the second of its genre in Hungary, it was early enough to take advantage of an unsaturated market. The same goes for the selfie museum – there are a handful around the globe, but none in Europe, apart from the one in Budapest.

The location of the facility (close to the Opera House) and its uniqueness attracts a lot of foreigners. For the first time in

Museum Of Sweets and Selfies.

June, foreign visitors surpassed those of Hungarians. This, and the unexpected popularity of the museum may be the reason why Koltai is planning to open another one abroad.

He won’t disclose too much at this stage, but it is going to be much larger-scale. So much so that for the very first time, the creators will involve an investor. “We could finance it ourselves next year but we want to take advantage of the current hype that may fade with time.”

The second selfie museum is also targeting the young Instagram community and is expected to be ready by the end of this year. Until then, keen selfie-makers can enjoy the vividly-painted rooms and trendy elements such as unicorns, flamingoes or bananas in Budapest.

helped the drink find fresh markets and customers. “It was also when Rézangyal, a pálinka brand, made a strong appearance at festivals and at franchise partners.”

In parallel, ever better distilleries appeared with high quality spirits at upper class locations. The limited selection of previous years was gradually replaced by a range of quality pálinka in a variety of flavors. “One could [now] drink good pálinka,” Almási says. “Drinking it also became more chic.”

This was when Almási started to think about the potential in pálinka. “I realized that pálinka is world famous – in Hungary.

We are so proud of being the only nation to be able to produce it. No other Hungarikum

is like that. Still, we are unable to appear on global markets equal to its potential and importance,” Almási notes.

As he researched the topic more thoroughly, he decided what was needed was education. For some, pálinka tends to have a pejorative notion recalling bad memories of home-made spirits of inferior quality. For most foreigners, it is utterly unknown.

The idea of making it popular by exporting it abroad is wrong according to Almási as the “essence” of pálinka is that is made from fruits grown in Hungary, which is limited. Hence Almási’s idea of “reverse export” and the Pálinka Museum.

“Hungary, or rather Budapest, has seen more tourists in the past five years than ever before. So instead of trying to put pálinka on the world map, we should first put it on the Budapest map, riding the momentum of the large number of curious tourists.

Tasting pálinka is on their bucket list, and if they can taste something good, they will keep coming back for more,” Almási adds.

The Pálinka Museum is combination of a bar and an events location, an actual museum and a shop. Beyond the traditional bar, which offers different flights of pálinka selected by Almási, who regularly visits distilleries in the country, guests can go over the history of the spirit, entering a truly original museum.

Interactive and digital displays guide visitors through the evolution of the drink from the beginning. “The history of pálinka runs parallel with the history of Hungary, from medieval times to bourgeoisie, to communism, allowing visitors to get to know the country a bit better.”

Taste of Hungary

Not far away, opposite the main entrance of Gozsdu Court, a quite different museum awaits tourists and locals. It offers a taste of something truly Hungarian: the traditional fruit brandy pálinka.

Founder and owner Gábor Almási says he had long been toying with the idea when he finally opened the place last fall.

“It was around 2010 when the pálinka ‘revolution’ started to become more visible,” he recalls. On the one hand, new legislation favoring quality pálinka

Pálinka Museum.

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THE JACKSONS Paloznak, Hungary

1st August 2019

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Special Report | 17

Hotel Sector Attracting new Investors With positive indicators in the Hungarian and CEE hotel and hospitality markets, more institutional European investors such as Deka and Invesco are looking at the possibilities in this sector.

GARY J. MORRELL

Hotel is no longer regarded as a Cinderella to the more established and increasingly competitive office and industrial markets. Hotel and tourism offers continued growth according to most studies, in contrast to concerns about the long-term health of the retail sector.

Ever-more sophisticated products are needed to meet the needs of guests and more travelers see the Central European region as a tourism destination. A growing number of investors are employing hospitality experts and consultants in reaction to the perceived complexities of the hotel sector in comparison with, for example, office where established investors tend to have more experience and expertise.

From the perspective of hotel operators, they are able to sell off the real estate and concentrate on operations. As with Hungary, the trend is for the larger funds to make acquisitions in the CEE capital cities. However, all markets in the region have a common drawback: a limited supply of investment grade assets of the required ticket-size.

“Hotels are currently moving from alternative to mainstream investments as investors get increasingly comfortable with the CEE becoming a maturing hotel market,” comments Bořivoj Vokřínek, head of hospitality research for EMEA at Cushman & Wakefield.

In the latest investment transaction, the Hungarian-American owned investment manager Indotek has purchased the Art Nouveau,

230-room Gellért Hotel

overlooking the Danube.

The fund plans to refurbish the landmark building and upgrade the hotel from its current 4-star status to 5-star, for which the new owner is looking for an international luxury branded hotel operator. Indotek has diversified investments across the different market sectors, notably in the redevelopment

The Hotel Gellért, photo by maziarz/Shutterstock.com. of value-add investments. The Gellért thermal baths is not part of the deal.

CEE Foothold

Last year the established cross-border investor Starwood Capital purchased the Sofitel Budapest Chain Bridge for EUR 75 million. Starwood see the “sale and management-back transaction” for the 360-room hotel as providing a foothold in the CEE hotel market.

According to Marius Gomola, managing director of Horwath HTL Hungary, the major problem with the development of the hotel investment market is the limited availability of investment grade stock to meet the growing needs of investors. As a consequence, the number of transactions has been relatively low in CEE in comparison to the potential in the hotel and hospitality sectors.

“Despite this low availability of investment grade assets, established European investors such as Deka and Invesco have become increasingly active in the hotel sector to the background of growing tourism visits and concerns regarding the retail sector,” Gomola said at the HOTCO - Hotel Investment Platform CEE & Caucasus conference in Budapest earlier this year. The annual event is organized by Horwath HTL Hungary. Gomola estimates that there were 520 hotel investment transactions between 2009-2018.

Frank Hildwein, head of hotel acquisition and sales at Deka Immobilien, explains: “We are core investors and it is not too easy to find the right assets in CEE of EUR 30 million-35 mln upwards, and we concentrate on stable jurisdictions such as Poland, Czech, Hungary and the Baltics.”

David Kellett, senior director of hotel transactions at Invesco, sees the best options in assets of

EUR 50 mln-

100 mln plus,

of which, again, there is limited availability. The company is concentrating on the key CEE cities of Budapest, Prague and Warsaw.

“Hotels are currently moving from alternative to mainstream investments as investors get increasingly comfortable with the CEE becoming a maturing hotel market.”

Budapest is regarded as part of a Central European “golden triangle” of BudapestPrague-Vienna by many hotel investment analysts. Further, the positive hotel market data and the large pipeline is expected to provide opportunities for investors.

Significant

In a notably significant CEE hotel transaction the Prague Intercontinental has been purchased for EUR 235 million, which means that its value has tripled in the last 12 years. Gomola described this as the largest ever single asset transaction in CEE at the Prague Property Forum by Portfolio.

In Bucharest, the Lithuanian Apex Alliance has received three concrete

bids from Middle East investors for the Hilton Garden Inn, which is being offered for a reported EUR 43 mln.

An initial interest in the project came from as many as

30

companies.

This income from the deal represents double the initial investment in the project that was completed 18 months ago according to the vendors.

“There are still large amounts of capital looking for healthy returns and hotels in CEE offer superior yields over many other regions in Europe, or indeed other asset classes,” comments Vokřínek.

Cushman & Wakefield estimate the CEE hotel investment volume for 2018 at EUR 800 mln. This figure remains relatively modest due to the limited supply of investment grade product to satisfy growing demand from cross-border institutional and listed investors.

“It is exciting to see the evolution of the CEE hotel market with a growing number of sophisticated investors and arrivals of new brands tailoring their concepts to the needs of new generations of travelers: affordable life-style hotels, soft-brands, new generation of hostels and innovative serviced-apartments concepts,” says Vokřínek.

“The relatively low brand penetration across the region provides space for expansion of innovative products and therefore present a tremendous opportunity for the CEE hospitality market to propel itself into a leading position as the most progressive market in Europe,” he adds.

According to the spirituality of the Rule of Saint Benedict, the Benedictine community of Pannonhalma has always been very open to engage with people who visit the Hill of Saint Martin.

The experiences of past years show that the natural environment, the cultural values and programs, the places helping engagement address Christians and those of other faiths, believers or nonbelievers.

Building upon the traditions and values of the place, the experiences and spirituality arising from the life of the monks, we would like to invite every inquirer visiting Pannonhalma to receive impulses for self-reflection, for individual or joint thinking, for retrospection or future planning, for personal or constitutional life.

The Pannonhalma Archabbey, which has a history of more than a thousand years, has been part of the World Heritage List since 1996; looking back on this history, the spiritual richness and traditional hospitality provide an enchanting atmosphere, which shapes the time spent here into the most pleasant experience.

Have you ever thought about holding a meeting with your partners in a teahouse after a walk in an Arboretum, or closing your event with an organ concert? It is all possible here. Thanks to the developments in the last few years, the Archabbey is an excellent location for business conferences, partner meetings and events and, of course, a limited number of church weddings or civil ceremonies, providing high quality hospitality and a wide variety of programs personalized to special requests.

Unique venue, Everlasting experiences The classical library is the home of the largest European monastic book collection. Containing some 400,000 books, it offers a setting for marvelous and memorable events, for groups of limited numbers.

The multifunctional event hall is an excellent location for conferences, partner meetings, chamber orchestra concerts or smaller theater performances. The hall has a capacity of 268 people.

The Viator Restaurant is continuously voted among the top ten countryside restaurants. Under the sun shade sails of its terrace, guests can become one with the landscape helped by the glass windows of the restaurant.

An evening reception with the view of sunset can be perfect. The tasting terrace of the Abbey Winery is one of the coziest afternoon or evening meeting venues. The stylish community space scooped into the side of the hill is regularly used for events such as jazz concerts and civil ceremonies.

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Strong Guest Demand Attracting Hotel Developers, Investors Developers, investors and hotel operators therefore see strong potential for hotel development against a background of positive tourism supply and demand indicators: CBRE have estimated a pipeline of 23 hotels with 3,200 rooms in Budapest due to be delivered by 2022.

GARY J. MORRELL

However, due to the complex development process and labor issues, delivery dates are very difficult to estimate and completions are slipping back.

Commercial property developers such as Wing and Horizon Development and Redwood Real Estate Holding have ongoing hotel projects, while DVM is working on the construction of a project for a regional hotel developer. Further, major hotel brands such as Hilton, Hyatt, Marriott and Accor Hotels have planned hotel projects.

Another top-end hotel historical reconstruction by the Turkish Özyer Group, Matild Palace is scheduled to deliver the first Marriott The Luxury Collection branded hotel in Budapest. The 130-room and suite project, located in the historical District VI, is a redevelopment of a classic Central European building dating from the 19th century.

In the mid-range segment of the hotel market, Germany’s Deutsche Hospitality is developing in conjunction with the B&L Group the 300-room and six conference room, 3-star InterCity Hotel Budapest, its first CEE InterCity Hotel, at the Keleti Railway Station.

Key Locations

The company has the policy of developing the brand at what it sees as key train stations and airport locations, and the Budapest project is scheduled to complete in 2020. A contract with DVM Group has been agreed for the design and construction management of the development.

Also at the medium level of the Budapest market, a group of Hungarian developers has delivered the 3-4-four star, 6,500 sqm Meininger Hotel Budapest in Csarnok tér, directly opposite to the Nagycsarnok (Great Market Hall) food market. The hotel is being operated by Meininger based on a IntercityHotel Budapest.

“Although we experience significant shifts in completion dates throughout the capital and regional cities, development activity remains strong across the country, with an expected delivery of circa 2,000 rooms in 16 individual hotel schemes until the end of 2019,” says Gábor Borbély, director of business development at CBRE Hungary.

“Budapest accounts for 75% of the overall pipeline volume scheduled for the year, remaining the most targeted region within Hungary,” he adds.

When it comes to performance indicators, the occupancy rate

rose to

78%

according to CBRE. Further, Budapest had an ADR (average daily rate, price per hotel room) of EUR 135 for 2018; this puts the city in a strong position compared to its Central European competitors, with EUR 110 for Prague and EUR 111 for Warsaw.

“Budapest remains an extremely affordable city. We see this as positive for both leisure and business demand in the city,” the consultancy explains.

Four-star

Hungary’s Central Statistical Office has traced an estimated Budapest stock of 202 hotels with close to 20,000 rooms as of 2018. Of this, the four-star level constitutes the largest segment.

As of the turn of the year, another 23 hotels were at the planning stage or under construction.

“Budapest remains an extremely affordable city.

We see this as positive for both leisure and business demand in the city.”

Horizon Development is redeveloping a listed 1870s building in the historical center of Budapest into a 150-room luxury hotel in partnership with KKH Capital & Property Europe SL. Attila Kovács, managing partner of Horizon Development, says the project sees his company transferring the skills learned from the development of such projects as Eiffel Palace to the hotel sector.

Hungary’s Accent Hotel Management has delivered the 4-5 star, 214-room Hilton Garden Inn Budapest Center in District VI. Accent Hotel Management has agreed a franchise agreement with Hilton Hotels, and the complex is located

100 meters

Hilton Garden Inn interior.

from the Hungarian State Opera.

The Hungary-based, Jordanian-owned hospitality developer, Mellow Mood is due to officially open the long-awaited, 110guest room and 18 suite Párisi Udvar Hotel in the historic center of Budapest. A franchise agreement has been concluded with Hyatt Unbound Collection.

20-year lease.

The 184 rooms and 750 beds project has introduced the hotel/hostel concept to Budapest.

Wing has agreed a forward development contract to develop a hotel in Boráros tér in District IX for the French hotel chain, B&B Hotels. This is a reconversion of a former office building with a view overlooking the Danube. Wing delivered the 145-room Ibis Styles Budapest Airport Hotel in 2017, which is the only hotel with direct access at Budapest Ferenc Liszt International Airport, and the company has also developed a hotel project in Székesfehérvár.

The Hungarian developer, Redwood Real Estate Holding has agreed a management contract with Hard Rock International for the operation of the 140-key (including suites) Hard Rock Hotel Budapest in Nagymező utca in District VI, due to be completed in the fourth quarter of the year.

The 4-5 star “life-style” hotel located in a party hub in Budapest reflects the growing sophistication of the hotel market and the need for different models of hotel development. The hotel and leisure complex, designed by the Hungarian Studio 100 Architects, will include a Hard Rock Café restaurant with a seating capacity of up to 120.

“Hotel operation is a completely different skill to office operation and therefore we are developing the project and upon completion by the end of the year the hotel will be operated by Hard Rock International,” comments Bálint Erdei, founder & CEO of Redwood Holding.

Tourist Numbers Continuing to Rise Hungary registered more than 40 million guest nights for 2018, representing an increase of around 6% on the previous year. Overall there was a growth rate of about 3% in tourist visits across the CEE region last year.

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Five-stars hotels in Budapest total net Revenue in 2018 (Huf mln)

single Rate (euRo/Rate) double Rate (euRo/Rate)

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inteRnet in Rooms

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oWneRsHip (%) HungaRian non-HungaRian

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1994 2019

– CEE Property - Invest Inmobilien GmbH (100)

arne klehn John Majosi János Parti

1052 Budapest, Apáczai Csere János utca 4.

(1) 486-5000 budapest.ays@marriott.com

5,540

209–509 209–509

✓

✓

–

✓

✓

✓

✓

✓

✓

–

2002 2019

– International Hotel Investments Plc. (100)

Jean pierre mifsud Csaba Pálos Alexandra Kazakova

1073 Budapest, Erzsébet körút 43–49.

(1) 479-4000 budapest@corinthia.com

402 603 26 13

8,030

250–600 270–630

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

1981 2018

– Al Habtoor Group (100)

Claus geisselmann – –

1052 Budapest, Apáczai Csere János utca 12–14.

(1) 327-6333 budapest@ihg.com

367 450 56 17

6,433

230 258

–

✓

✓

✓

✓

✓

✓

–

✓

–

1982 2017

– (100)

René angoujard Titanilla Sélley Dana Janigova

1051 Budapest, Széchenyi István tér 2.

(1) 266-1234 h3229@sofitel.com

351 702 35 10

8,545

400 400

✓

✓

✓

✓

–

✓

✓

✓

✓

✓

1989 2019

Kempinski Hotel Budapest Zrt. (100) –

stephan interthal Zoltán Schubert Alexandra Schmidt

1051 Budapest, Erzsébet tér 7–8.

(1) 429-3777 hotel.corvinus@ kempinski.com

25

3,425

Ÿ Ÿ

–

✓

✓

–

–

✓

✓

–

✓

✓

Danubius Hotels Zrt. (100) –

peter knoll – Daniella Géczi

1014 Budapest, Hess András tér 1–3.

(1) 889-6600 info.budapest@hilton.com

310 620 8 14

2,616

265 265

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

1991 2018

– Corinthia Investments Ltd. (100)

mark agnew – –

1036 Budapest, Árpád fejedelem útja 94.

(1) 436-4100 info@aquincumhotel.com

185 185 30 11

7,384 (2017)

390 440

–

✓

✓

✓

–

✓

✓

–

✓

–

2006 2019

– Varde Group (100)

oliver Hutten Gergely Pajor Gréta Szuromi

1073 Budapest, Erzsébet körút 9–11.

(1) 886-6111 customer.nypalace@ dahotels.com

179 358 19 6

8,520

335 335

✓

✓

✓

✓

–

✓

✓

–

✓

–

2004 2018

– (100)

yves giacometti – –

1051 Budapest, Széchenyi István tér 5–6.

(1) 268-6000 budapest.pbx@ fourseasons.com

tHe Ritz-CaRlton, budapest / adRia palaCe kft.

171 222 29 5

4,438

370 390

–

✓

✓

✓

–

–

✓

–

✓

✓

2015 2016

– Al Habtoor Group LLC (100)

Hugo lecanda Dmitri Mihailov Meda Vasiliu

1051 Budapest, Erzsébet tér 9–10.

(1) 429-5500 budapest@ritzcarlton.com

neW yoRk ResidenCe / neW yoRk palaCe kft.

7,384 (2017)

250 250

–

✓

✓

–

–

✓

✓

–

–

–

2011 2018

– Varde Group (100)

oliver Hutten Gergely Pajor Gréta Szuromi

páRisi udvaR Hotel budapest / páRizs pRopeRty kft.

138 269 13 8 –

1073 Budapest, Osvát utca 2–8.

(1) 424-4700 customer.nyresidence@ dahotels.com

110 230 18 4

Ÿ

438 498

–

✓

✓

✓

✓

–

✓

✓

✓

–

2014 –

Párizs Property Kft. (100) –

tamás fazekas Edina Bólya –

1052 Budapest, Petőfi Sándor utca 2–4.

(1) 576-1600 info@parisiudvarhotel.com

maRRiott exeCutive apaRtments / duna szálloda zRt.

108 216 – –

7,354 (2017)

160 160

–

–

✓

✓

✓

–

✓

–

–

✓

1969 2018

– CEE Property-Invest Immobilien AG (100)

arne klehn John Majosi János Parti

1052 Budapest, Piarista utca 4.

(1) 235-4888 budapest.reservations@ marriott.com

mysteRy Hotel budapest / mysteRy Hotel budapest kft.

82 215 7 4

Ÿ

Ÿ

363

–

✓

–

✓

✓

–

✓

✓

✓

✓

2018 –

(100) –

nikoletta kovács Márta Gazdag Viktória Berényi

1064 Budapest , Podmaniczky utca 45.

(1) 616-6000 mystery@ mysteryhotelbudapest.com

ibeRostaR gRand budapest / ibeRostaR HungaRy kft.

50 124 3 1

762 (2017)

Ÿ Ÿ

–

✓

–

✓

–

–

✓

–

✓

–

2011 2017

– IBEROSTAR Hotels & Resorts (100)

antonio montoro – –

1051 Budapest, Október 6. utca 26.

(1) 354-3050 grand.hotel.budapest@ iberostar.com

aRia Hotel budapest / ik Hotels kft.

49 52 5 2

1,773

350 350

–

✓

✓

✓

✓

✓

✓

–

✓

–

2015 2015

IBE Kft. (50) Henry Kallan (50)

zoltán kecskeméthy Dorottya Drén Katalin Moór

1051 Budapest, Hercegprímás utca 5.

(1) 445-4055 stay@ariahotelbudapest.com

st. geoRge ResidenCe all suite Hotel de lux / st. geoRge apaRtmanHáz kft.

26 52 26 2

71

129–269 139–279

✓

✓

✓

–

–

✓

✓

✓

✓

–

2007 2017

– (100)

gábor Jusztin – –

1014 Budapest, Fortuna utca 4.

(1) 393-5700 info@stgeorgehotel.hu

Company / name of opeRating Company Website

budapest maRRiott Hotel / duna szálloda zRt. www.marriottbudapest.com

CoRintHia budapest / iHi magyaRoRszág zRt. www.corinthia.com/budapest

31 28

inteRContinental budapest / inteRContinental Hotels gRoup / mansion danube HungaRy kft.

www.budapest.intercontinental.com

4

5

sofitel budapest CHain bRidge / sof-11 sb opeRatingCo kft. sofitel.accorhotels.com/gb/hotel3229-sofitel-budapest-chain-bridge/ index.shtml

kempinski Hotel CoRvinus budapest / kempinski Hotel budapest zRt. www.kempinski.com

6

7

Hilton budapest / danubius Hotels zRt. www.budapest.hilton.com

tHe aquinCum Hotel budapest / tHeRmal Hotel aquinCum zRt. www.aquincumhotel.com

8

9

neW yoRk palaCe, tHe dediCa antHology / neW yoRk palaCe kft.

www.dahotels.com/new-york-palacebudapest/

fouR seasons Hotel gResHam palaCe budapest / sas magyaRoRszág Vagyonkezelő kft. www.fourseasons.com/budapest

10

www.ritzcarlton.com/budapest 11

12

www.dahotels.com/new-york-palacebudapest/residence

www.parisiudvarhotel.com 13

www.marriottbudapest.com

14

15

www.mysteryhotelbudapest.com

www.iberostar.com 16

17

413

Ÿ

2

3

seRviCes

no. of Rooms no. of beds no. of suites no. of meeting Rooms

Rank

Ranked by number of rooms

www.ariahotelbudapest.com

www.stgeorgehotel.hu

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

333

Ÿ Ÿ

1976

Ÿ

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

This list was compiled from responses to questionnaires received by July 11, 2019 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

4

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Socialite At Last, I’m off to see the Hungarian Sea This will be the summer I finally get to Lake Balaton. It’s a place that intrigues me. In the United Kingdom, we have freshwater lakes.

But they’re puddles compared to what is all but an inland sea that Hungarians call simply the Balaton and they’re not central to our sense of ourselves.

Sunset over the picturesque town of Tihany, with is twin-towered abbey, on the northern shore of Lake Balafon. Photo by Ádám Polgár/Shutterstock.com.

DAVID HOLZER

There are 231 square miles of Lake Balaton, which runs for 48 miles and is nine miles across at its widest point. It became a place for the wealthy to take vacations in the 19th century. In the 20th century, landowners whose vineyards had been decimated by the phylloxera epidemic that began in Britain and swept across Europe built summer homes and rented them to the growing middle classes.

Large-scale tourism really took off when the southern railway arrived in 1861, followed by the northern line in 1909. By the 1920s, around 50,000 tourists were vacationing at resorts on both shores of the lake. In the summers immediately before World War II, this number had grown to 200,000.

When the war ended, the communist government confiscated the private villas that had belonged to landowners. They also built holiday homes for trade unions, many of which are now private hotels.

Under communism, Balaton was one of the few places Hungarians could enjoy a degree of freedom. In the 1960s and 1970s, it became the vacation destination of choice for ordinary Magyars.

Lake Balaton was also popular with other people who lived in the Eastern Bloc.

East Germans in particular came in large numbers. The reason wasn’t necessarily the charms of the lake. It was a place where families and friends who had been abruptly separated by the building of the Berlin Wall in 1961 could meet.

This, I’ve been told, is why you still see so many signs proclaiming “Zimmer Frei!” – rooms available – in the area. It’s presumably also why so many Balatonians speak German.

Still They Come

After the Wall came down in 1989 and the Soviet Union collapsed in 1991, there was no burning reason for members of other Eastern Bloc countries to trek to Balaton. But this hasn’t stopped the Germans and Russians from coming to the Hungarian Sea. In 2013, according to the website We Love Budapest, 72,000 Germans stayed in hotels and the like at Balaton, and 28,000 Russians. I wonder whether this is purely because of the undoubted charms of Balaton, or whether nostalgia also plays its part. The Dutch also come in reasonable numbers, but no-one seems quite sure why.

The number of Hungarians who head for the hotels and other forms of accommodation at Balaton seems to be rising all the time. In the years between 2003 and 2013, again according to welovebalaton.hu, it roughly doubled from 567,614 to a little over a million. In the summer of 2018, 1.5 million alone took Balaton trains.

It’s not surprising, then, that the Hungarian national rail company MÁV has put on more trains to meet summer demand. The journey takes around two hours and, throughout the summer, trains leave from Delí Station in Buda roughly every two hours.

To me, there’s something deeply symbolic about the fact that Hungary looks inward to its sea. But I can also understand why Hungarians might be reluctant to get on planes and schlep to the Mediterranean or wherever. The delights of Balaton are clearly many and various.

Being of a certain age, I’m drawn to the north side of the lake. The southern side is, I’m told, where all the resort towns are, and the water is shallower. I’m curious to observe Hungarians on holiday in their natural habitat. But I don’t want to swim in a vast expanse of tepid bathwater and be forced to listen to night after night of thumping techno. Much as I love lángos (deep fat fried dough) and hekk (the saltwater fish hake) and fries, I’d rather not eat them every day, and I know I’ll succumb.

Going back to symbolism, I can’t help but wonder whether the reason Hungarians love hekk so much is that eating it reminds them of back when they had a proper sea, before the breakup of Austro-Hungary.

And the Hungarian love of the sea is a mighty powerful thing. Whether it’s the Mediterranean or the murky North Sea, the ocean sends my Hungarian partner into raptures.

Heading North

No, I’ll be taking the ferry from the south side of Balaton to the Tihany Peninsula on the northern shore. The jewel of the peninsula is baroque Tihany Abbey, pictured here, which, I’m told, has the best view of the lake.

The village of Tihany itself looks positively Mediterranean and utterly beautiful. So it’s not surprising that it’s supposed to have the highest housing prices in Hungary. The 2011 rumor that Brad Pitt and Angelina Jolie were contemplating renting the former summer home of Hapsburg Archduke Joseph on the peninsula helped send asking prices soaring.

No-one, other than Brangelina, can confirm whether the story is true. In any case, I prefer my myths and legends to be more colorful and ancient. I’ll be looking for the “The Shouting Girl” stone. This commemorates a princess with goldenhaired goats whose pride caused her to be cursed by the king of the lake. According to legend, her goats vanished into the Balaton and only their nails remained. These have been washed up on the shore ever since.

Apparently, selling “goat nails” to tourists was a profitable business for the children of the area between the wars.

What they were hawking was really the triangle-shaped corners of prehistoric clams. A fine example of Hungarian ingenuity, and also gullibility.

My source for much of the factual content of this article was the excellent website welovebalaton. hu. Before you plan your trip to Lake Balaton, I suggest you head to the website first.

4

www.bbj.hu

Budapest Business Journal | July 5 – July 18, 2019

Socialite | 23

House of Parliamentary Wines The wines that have been judged fit for presenting to visiting foreign leaders and dignitaries represent a fairly complex cross-section of Hungarian vinification. Fortunately, they are also available to the rest of us.

ROBERT SMYTH

2019 is the third consecutive year when local wine experts have blind tasted domestically produced wines over the course of two days to select the top examples in a number of categories that represent the best of Hungarian wine, including key grape varieties and wine styles.

Some 203 wines were entered for Országház Bora 2019 from 21 of Hungary’s 22 regions, up from 17 last year. The wines were divided into eight categories with a top three selected and the number one wine being the one that will be served to VIP visitors.

The Olaszrizling grape has come a long way in the last few years as winemakers have paid more attention to it, rather than treat it only as a bulk wine-producing workhorse.

Szöllősi Pincészet’s Olaszrizling 2017 from the Neszmély region was named as the best Olaszrizling at Országház Bora 2019.

It is very balanced and the oak doesn’t dominate whatsoever, letting the fruity and floral notes do the talking, while adding a bit of body. It captures the region’s aromatic appeal but isn’t lightweight. It is a bargain at HUF 1,750 from the cellar.

It saw off some stiff competition, such as Figula’s impressive Száka Olaszrizling 2017, from the Balatonfüred-Csopak region, which claimed third place.

Flagship Grape

Furmint is without question Hungary’s flagship grape variety. Grand Tokaj’s zesty yet classy and generous Kővágó Furmint 2015 (HUF 5,740 from wineloverswebshop. hu), with its varietally pure quince, green apple, pear notes and grapefruit and touch

of salty minerality, became the top wine in the Furmint category. It was fermented and aged in new five hectoliter barrels and kept on the fine lees until the April following the harvest – the oak use is spot on.

State-owned Grand Tokaj, by far the Tokaj region’s largest producer, has been transformed in recent years as it moved from the decaying Tokaj Kereskedőház to its modern state-of-the-art incarnation,

Some 203 wines were entered for Országház Bora 2019 from 21 of Hungary’s 22 regions, up from 17 last year. with Károly Áts at the winemaking helm.

Royal Tokaji, who Áts was previously the winemaker for, claimed third place.

The third dry white wine category was a best of the rest indigenous white wine grapes, in which Hungary is blessed.

From Badacsony, Istvándy Pincészet’s distinctive and lively “Kékderű” Kéknyelű 2017 came top. For me Kéknyelű is one of those grapes that gets much better with age, with layers of complexity emerging after a tartly acidic youth. This is HUF 3,650 from istvandywebshop.hu.

Among the reds, Kadarka can be really hit and miss, and the wines tasted reflected that (I was judging), but its character is quite unique in the world of wine. Indeed, Kadarka can be very rewarding when it’s good, but just don’t expect a big, muscly red. János Németh’s Szekszárdi Kadarka

2017 (HUF 3,540 from Bortársaság) is suitably playful, fragrant and peppery with crispy red fruit and rose hip aromas. A great summer red that can be a little chilled and a very worthy winner of the category.

Bull’s Blood

A few percent of the aromatic Kadarka is a key component in Bikavér blends down in Szekszárd and is increasingly making it into the Bulls Blood in Eger, too. Bikavér category winner, Sebestyen’s Ivánvölgy Bikavér (HUF 6,250 from Bortársaság) is composed of Kékfankos (50%), Merlot (28%), Kadarka (a high 12%) and Cabernet Franc (10%). It underwent controlled fermentation in open vat, then was aged for 15 months in second-, thirdand fourth-fill Hungarian, French and Austrian oak barrels.

It exudes both red and black fruit fused with subtle spiciness to bring real complexity, with great juice, serious body and ideal balance. The brother and sister Szekszárd team of Csaba and Csilla Sebestyén consider their Iván-völgy Bikavér to be their most important wine.

The best Kékfrankos, Hungary’s most planted grape (and also the core of Bikavér), comes from Etyeki Kúria and the 2015 vintage via its vineyards in Sopron (HUF 4,650 from Bortársaság). It has a fabulous potpourri of aromas and a juicy sour cherry palate with great structure.

Cabernet Franc is the only foreign grape to be granted its own category and, not surprisingly, the powerful but very polished Heumann Trinitás Villányi Franc 2015 (HUF 8,460 from Borbolt.hu) was number one.

Grand Tokaji also scooped top spot in the Aszú category for its 5 puttonyos 2013 with its fresh, fruit-forward and ultrapopular interpretation of the botrytized

wine whose production method has largely been unchanged for centuries. That is, save for the advent of modern technology, which Grand Tokaj has utilized to the full, to put the emphasis on freshness, fruitiness and lightness of touch.

While the base wine is 100% Furmint, the aszú berries that were added to the fermenting base wine and left to soak for 24 hours before pressing were mainly Furmint and Hárslevelű but also comprised Zéta, Kabar, Kövérszőlő and Sárgamuskotály (Yellow Muscat, Muscat Blanc or Muscat Lunel). It was fermented in tanks and aged for around 18 months.

It costs HUF 5,670 from borkereskedes.hu.

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2019. 05. 08. 13:57