Budapest Business Journal 2815

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 15

JULY 31 – SEPTEMBER 3, 2020

SPECIAL REPORT Tourism

SPECIAL REPORT

MTÜ: ‘If There are Guests, There is Everything’ Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ) talks to the Budapest Business Journal of the devastating impact of COVID-19 on the industry, the steps it has taken, and his hopes for the future. 10 SPECIAL REPORT

Wizz Air’s Váradi: ‘Growth Will Continue’ József Váradi, CEO of Wizz Air, often billed as Central Europe’s largest low-cost carrier, talks about the impact of COVID on the company, his distrust of state-aid, and what he thinks the future of the airline industry will look like. 14

Looking to Accelerate Digital Takeup

SOCIALITE

Beyond Budapest: Dispatches From Lake Balaton On the back of a visit to the Balaton lakeside town of Siófok Delighted by the atmosphere he found there, David Holzer thinks the tourist authorities need to do more to promote awareness of attractions right across Hungary to a wider audience. 20

NEWS

Base Rate at new Record low, no More Cuts Expected As hinted at in the last month, the Monetary Council of the National Bank of Hungary further cut the key rate, already at a historical low, to 0.6%.

The move is expected to boost the virus-hit economy, but no further cuts are likely in the foreseeable future. 3

BUSI

N E SS

Despite the difficult climate, Citi is in “very good shape” Central Europe CEO Kevin A. Murray insists. Indeed, factor in learning around digitization from lockdown, and its future also seems very promising. 5

BUSINESS

Dealing With Uncertainty, Investing in the Future

We interview ExxonMobil Hungary’s outgoing country manager Romke Noordhuis, and his successor Jeroen Kirschbaum, another Dutch national, on how ExxonMobil has coped with COVID-19 and its future plans. 6

News

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Budapest Business Journal | July 31 – September 3, 2020

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THE EDITOR SAYS

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

Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Ekaterina Sidorina, Robert Smyth, Zsófia Végh.

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

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We have all faced our challenges since a new virus appeared in what then seemed like far off China, whether it is looking after staff or looking after business (and frequently both), but few would wish to have had to play the hand dealt to those in the hospitality sector.

We are now approaching what would normally be high season, the European holiday month of August. While it is clear the streets of Budapest are beginning to fill up again, it is equally clear that very few of the tourists you do see are foreigners.

We had originally planned to bring you the Tourism Special Report in this issue at the very start of July.

One thing COVID has taught all of us is to be nimble on out feet, however, so we shifted it back to the end of the month so we could get more accurate figures and better judge the current position.

Remaining ever mindful of the human health dimension but putting that to one side for the moment, the economic figures make for painful reading. Róbert Homolya, president and CEO of Hungarian State Railways (MÁV Zrt.) talked this week in a radio interview about the “brutal” loss of ticket and ticket revenue. Many will echo that sentiment.

Our excellent piece inside on the situation facing the hotel sector holds its own grim fascination, though it does also point to the one bright element, the recovery of provincial tourism. Budapest is the crown jewel for Hungary’s international tourism promotion, of course, and many, perhaps most foreign tourists will never get outside the city limits. That’s understandable, but they miss so much. It seems that many Hungarians have

opted this year to staycation, a decision that strikes me as eminently sensible. The recent flare up of COVID numbers in areas of France, Germany and Spain, not to mention the grim picture in parts of Bulgaria and Romania, make buying a plane ticket to anywhere seem something of a lottery right now.

(Having had the great good sense to marry a Hungarian, I was long ago inculcated in the delights of lakeside family holidays, and it is to Balaton that we will return this year.)

I have been struck by how matter-of-fact many business leaders I have spoken with are. My sense is that most are taking the view that complaining about coronavirus will not solve any of its challenges. True enough, but hanging with Damoclean foreboding over all of our efforts is the worry of a second wave. For many in hospitality, you suspect that would firmly move them from “make” to “break.” Control the controllables, they say, and let the rest take care of itself.

That is easier said than done, of course, and I think I might just divert a little positive energy to praying for all our sakes that a vaccine is found soon.

This is our last issue before the print version of the Budapest Business Journal takes its traditional August break (the website, however, will continue to be updated as normal), so, whether you choose to staycation or vacation, I do hope you get a chance to get away from it all and rest and recharge. It has been quite a first half of the year, and I think we have all earned a break.

Robin Marshall Editor-in-chief

Photo by MTI/Sándor Ujvári

Photo by Fortepan/Pál Négyesi

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TOURISM EMBRACING ʼMAKE OR BREAKʼ SUMMER

THEN & NOW

Mercedes-Benz’s first hybrid car, a CLA 250 e Coupé, rolls of the Daimler factory production line in Kecskemét on July 21, marking the series launch of both this model and the CLA 250 e Shooting Brake. The black and white photo from the Fortepan public archive shows Mercedes cars on the stand of József Bárdi at the first independent automobile exhibition at Városliget, Budapest, in 1925.

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Budapest Business Journal | July 31 – September 3, 2020

News///macroscope

Base Rate at Another Record low, no Further Cuts Expected

As hinted at in the last month, the Monetary Council of the National Bank of Hungary (MNB) further cut the key rate, already at a historical low, to 0.6%. The move is expected to boost the virus-hit economy, but no further cuts are likely in the foreseeable future, both central bank representatives and analysts say.

Changes in Gross Domestic Product (GDP) in Hungary; 2008-2020 (Q1) Annual economic growth rate; seasonally and calendar adjusted and balanced data

Quarterly Change in GDP; 2008-2020 (Q1) Seasonally and calendar adjusted and balanced data

Source:

ZSÓFIA CZIFRA

After leaving it unchanged for more than four years, monetary policy decision makers cut the base rate for the second month in a row, this time by 15 basis points.

The move did not come as a surprise, as MNB deputy governor Barnabás Virág had said a few days after the June policy meeting, when the first cut in four years was made, that he would propose another 15-basis point reduction at the next rate-setting meeting. He added, however, that a rate under 0.6% was not a possibility.

The Monetary Council decided to leave the O/N deposit rate at -0.05% and the O/N and one-week collateralized loan rates at 1.85%. These two mark the bottom and the top, respectively, of the central bank’s “interest rate corridor.” The base rate is paid on mandatory reserves and preferential deposits.

In its statement released after the meeting, the Monetary Council said that the new, 0.6% key rate would support price stability, the preservation of financial stability and the recovery of the economic growth in a sustainable manner. They added that “in the current rapidly changing environment, it is key to maintain short-term yields at a safe distance from a range close to zero.”

Other Instruments

The council also suggested that, if necessary, instruments other than the base rate would be used as additional stimulus.

“In the event of a persistent deterioration in the outlook for growth, the bank will deliver the required additional economic stimulus using its targeted instruments, i.e. the Funding for Growth Scheme Go! and the Bond Funding for Growth Scheme, providing the most direct support to investment,” the statement reads.

Analysts also believe that the 0.6% level is here to stay for a longer period of time. “The forward rate market priced the 15-basis point rate cut, and is not expecting further cuts,” wrote Takarékbank head analyst Gergely Suppan.

Also, as the inflation rate is likely to remain in the tolerance band in the coming months, even until the beginning of next year, there will be no need for tightening the monetary conditions, Suppan said, adding that he does not expect any tightening action in the next two to three years.

As the central bank had already hinted at a second rate cut, the decision surprised neither analysts nor markets, agreed Gábor Regős, head of the macroeconomic division of research institution Századvég.

Symbolic Cut

According to him, the rate-cutting decision is more symbolic; its goal is mainly to boost the economy through a lower key rate level, and also through a weaker forint/euro exchange rate, he added.

But he emphasized that the rate cut also has a communication goal, namely that it expresses that the central bank still has room to loosen monetary conditions.

The next interest rate setting meeting is scheduled for August 25.

In the meantime, it seems that economic sentiment has improved in Hungary, albeit still at a very low level. According to the GKI economic sentiment index, a composite indicator, the level rose to -18.2 in July from -20.5 in June. July’s reading reflected an improvement in both business and consumer sentiment.

Business confidence increased to -15.2 in July from -16.2 in June, driven in large part by less pessimistic views in the trade and services sectors. Meanwhile, sentiment in the industrial and construction sectors remained unchanged.

Consumer confidence has improved as well: the index rose to minus 26.9 in July from minus 32.8 in the previous month as households’ assessment of their financial position and expected

savings capacity improved. Economic think-tank FocusEconomics said its panelists projected private consumption to fall 3.3% in 2020, which is up 0.7 percentage points from last month’s projection. For 2021, panelists see private consumption rising 4.5%.

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will publish several important data sets in the coming weeks. First, the June retail trade data will come out on August 5, it will be interesting to see the how lifting of the quarantine rules has impacted consumption.

June industrial output data will be published a day later, the first estimate will be followed by the second reading on August 12. On August 11, July consumer prices will be released, and two days later, we will find out how the construction sector performed in June.

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Budapest Business Journal | July 31 – September 3, 2020

Investment Volumes Could top EUR 1 bln in Hungary Real estate investment volume for Hungary in first half year reached EUR 500 million in 14 deals according to CBRE. The main contribution to this figure was the purchase by the Hungarian Optimum Ventures Private Equity Fund (Optima) of a majority 61.5% stake in GTC. GARY J. MORRELL

“We currently see more than EUR 600 mln worth of deals that could realistically close this year and unexpected opportunities could [also] emerge,” the consultancy says.

“As such, while there is lingering uncertainty as to how the latter stages of the COVID-19 situation could play out, currently it seems like a recovery in investment activity can be expected in the second half and the annual investment volume can end up comfortably above the EUR 1 billion mark, with a stronger rebound in 2021.”

Office remains the leading sector in Poland with EUR 1.3 bln for H1.

Again, much of this is put down to the aforementioned purchase of a majority stake in GTC by the Optima that included both office complexes and shopping centers across the region. This follows the CEE trend of developers and investors concluding the acquisition of companies and platforms in other countries the region.

The yield gap between Budapest and Warsaw and Prague remains at around

100-125 basis points

GTC Pillar office complex.

JLL put the first half year volume even higher

at

EUR 610 mln,

with an estimation for the year at EUR 1.4 bln-1.6 bln.

“The super-cycle, witnessed during the previous years, has ended. That said, real estate investments remain attractive due to their relative returns and we expect the transactions to pick up after the summer when the market normalizes,” comments Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.

“In most asset classes compression is not on the horizon, but volumes should be back to their usual levels by 2021,” he adds.

Eston International have traced first half year investment volume at EUR 300 million,

although that excludes the Optima deal in the figures. A moderate estimation by the consultancy places the 2021 volume at EUR 1 bln, assuming a second wave of the coronavirus causes no further disruption.

Regional Leader

Poland remains the leading CEE investment market; JLL has recorded EUR 2.9 bln in transaction volume for H1 2020, in what it described as the second best first half year in the history of the market.

“Despite the global pandemic, the first months of the year saw a continuation of the trends that have been observed on the market for some time now,” JLL explains.

according to JLL. CBRE puts prime office yields at 5.75%, shopping centers at 6.25%, high street retail at 5.75% and industrial at 7.25%.

“Prague remains the hottest and most expensive market in the region and Budapest is catching up, but a considerable 100 basis point gap remains between these markets, offering great value to investors focused on Hungary,” comments Bence Vécsey, head of capital markets at Colliers Hungary.

Domestic investors are expected to continue to play a key role on the market.

“In recent years domestic investors dominated the Hungarian market and their market share is expected to remain significant,” says Perez-Ellischewitz of JLL. “Nevertheless, international investors are just as capable of carrying out transactions as their local competitors.

They might need the support of a local advisor or a local asset manager for market intelligence. Good examples are the recent acquisition of Eiffel Square by Allianz RE or Rumbach Center by Galeon Capital during the lock down period,” he adds.

Indoor Farm Technology: The key to the Post-COVID World Closed-system farms, lit with LED-lamps, can produce in all seasons and at any time of day to help achieve local self-sustenance, promoting exports at the same time, and thus have key potential in the post-COVID-19 world, states Zoltán Sejpes, director of the Tungsram Agritech business unit.

BBJ STAFF

Closed-system farming offers a solution to the biggest challenges in the future of global food supply. Soil contamination, the depletion of areas suitable for agricultural production, extreme weather conditions, the rising volume of food waste, urbanization, and the growing demand for quality food all point towards the increasing importance of local indoor farming and urban vertical farms, says Zoltán Sejpes.

Light is the alpha and the omega of indoor farming, Sejpes explains.

The proliferation of LED technology has brought about a veritable revolution in so-called vertical farming, as it allows for energy-efficient light that mirrors the solar lighting conditions necessary for plant growth.

In addition, the technology ensures that less water and virtually no agricultural land is needed for crop production; there is no waste generation, while pests and contamination can be avoided due to the closed system.

An example in the Budapest agglomeration can be found at Veresegyház, where an indoor farming complex has been in operation for some time. Here, tomatoes grow by means of artificial lighting; this complex provides several supermarket chains with tasty produce, independent of season, time of day, or weather.

GMO-free

Moreover, these farms produce a healthy, GMO-free crop, adds Sejpes; they only experiment with light spectrum, i.e., the proportion of its colors and with other, more

natural factors. A modern indoor farming module is more like a

4.0

industrial

unit than an agricultural one; this is a world of sensors, monitors, drones, software and artificial intelligence, where there is still much to discover in order to understand the “language of plants.”

With Tungsram lamps, experiments are already underway in several Hungarian institutes, and beyond Hungary at the University of Reading, as well as the

Fraunhofer Institute, which is well-known for its standard-setting certificates.

Furthermore, the first full scale vertical farms in the region will be established in Újpest, at Tungsram’s headquarters, becoming, as Sejpes puts it, the “playground” of every interested researcher, where they can complete worldclass experiments that have the potential of globally influencing the Earth’s food supply.

Sejpes thinks that, thanks to the modern indoor farming technologies, Hungary has the potential to attain year-round self-sustenance in the fields of vegetable and fruit production.

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Budapest Business Journal | July 31 – September 3, 2020

Business

Moving on, but Staying in Touch

Despite the difficult economic climate engendered by the COVID-19 health crisis, Citi’s business is in “very good shape”, Central Europe CEO Kevin A. Murray tells the Budapest Business Journal. Indeed, factor in some of the learning around digitization from the lockdown, and you could argue its future is also in very good shape.

ROBIN MARSHALL

When we caught up with Murray, it was via Zoom, as he was in Poland, transitioning to his next role as head of the Citibank Europe Plc. branch in Poland and its expanding Citi Solutions Center, which employs some 4,700 people with power to across two sites: Warsaw and Olsztyn (about 200 kilometers north of Warsaw).

Alongside that, he will maintain his position as CEO for Central Europe, with oversight of the regional cluster where Citi has a presence (Bulgaria, the Czech Republic, Hungary, Romania, and Slovakia), and another

12

countries

where Citi does business but has no physical presence. It puts him in a very good place to judge the recovery; more of that later.

“When the time to move comes along, you start thinking about your next role.

This opportunity in Poland came up; it allowed me to move on to another remit while also maintaining a significant part of my former business role, which was a rather unusual opportunity,” he explains.

“For any job, I always think; will it interest me? And this one was fascinating. There is,

“But considering where we are, I am incredibly pleased with the results. Now, let’s see what happens in the second half.”

He attributes such success to staying close to the customer, and in a sense, the move to working from home, which necessitated an embrace of digital platforms from all parties, may have helped. Certainly, people are much more aware of what is possible.

Digital Learning

“Some of the interesting learnings we took away from the pandemic is that digital plays an important part in continuity of business and how end-toend digitalization impacts the customer experience,” he says.

Citi, famously, has long been a pioneer of digital banking and FinTech applications. Lockdown looks to have built on that. “Every event that happens gives you a new view. We learn, modify, react and advance again.”

“Some of the interesting learnings we took away from the pandemic is that digital plays an important part in continuity of business and how end-toend digitalization impacts the customer experience.”

Kevin A. Murray I think, a Hungarian saying about looking at things with one eye crying and one eye laughing. That certainly fits here. We have really enjoyed our time in Hungary.”

The appointment was actually made in February, but when the pandemic hit and borders closed, the process slowed.

Ultimately, the final move to Poland is expected at the end of this summer.

His former role of managing director and CEO of the Citibank Europe Plc. Hungarian branch will be taken by Czech national Veronika Špaňárová, currently the country head for Slovakia.

World Experience

“I have worked with her for four years, but she is a 25-year veteran of Citi, who has worked in a number of roles in the Czech Republic and also overseas in Sao Paulo, Brazil, so she brings a world of experience with her. This is international progression for her career, so we are quite fortunate to get someone of her caliber.”

Murray expects her to be in place “sometime in the month of August, ‘Lord willing and the creek don’t rise’, as they used to say.” He is conscious of the challenges of taking a role where the former post-holder is your boss.

Initially, he will be a more frequent visitor to Budapest, but once Špaňárová is in place and the transition is over, he expects to visit once a quarter, as he does with the four other counties in the cluster unless something specific comes up where his involvement will help.

“Other than that, I intend to act like a good in-law and keep my visits short.”

While the business environment is certainly challenging, with an economic crisis resulting from actions taken to stem the health crisis, the underlying fundamentals, at least in Central and Eastern Europe, are good, which bodes well for the future.

“For any job, I always think; will it interest me? And this one was fascinating. There is, I think, a Hungarian saying about looking at things with one eye crying and one eye laughing.

That certainly fits here.

We have really enjoyed our time in Hungary.”

“The first six months for the cluster were better than the previous year

by about

10%

on the revenue side, mirroring Citigroup’s results. Where it looks more difficult is the cost of credit line. In the CECLs, the Current Expected Credit Loss, Citi takes a view on the future macro environment, and that is where the big numbers come in.

That’s what we have to keep an eye on for the future,” Murray explains.

Murray is full of praise for Citi staff who saw their work day overturned almost overnight as they were sent to work from home, amounting to

95% in the

case of Hungary, 85% in Poland.

“These are people who had to go home, clear off the kitchen table and set up a work station, plus balance that with educating their children or looking after elderly parents. And they did not miss a beat: front, middle and back office.”

But he is also keen to remember those who “had to come in because there were critical functions that had to be performed in the office. They deserve huge gratitude for coming in when no one else could do so.”

Getting back to “normal” will evolve over time, he insists. “We always said it would be driven by the data, not the date. When Citi’s people are more confident they will come back in a very controlled process.”

Citi celebrates its 35th anniversary in Hungary this year (an anniversary no one is going to forget quickly, Murray jokes).

The country remains a great location to do business, he says. “In the Hungarian Investment Promotion Agency, it has a real gem. Hungary would not get the investment figures it does if it did not have a pro-investment government.”

Will he miss it? “Personally, it is always the people I will miss and the many things we have accomplished, but this is a beautiful country, and living in this city [Budapest] has been a delight and a privilege. Anywhere I go there is something special you take with you; in Hungary there are so many. And the great thing is I get to come back.”

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Business

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Budapest Business Journal | July 31 – September 3, 2020

Dealing With Uncertainty, Investing in the Future When you consider that ExxonMobil has changed its country manager for Hungary, it is surprising what hasn’t altered. There’s still a Dutchman in charge, and Romke Noordhuis, the previous post holder, hasn’t even left the building.

ROBIN MARSHALL

The latter fact can be laid squarely at the door of COVID-19. Around about this time, Noordhuis, a runner up in this year’s BBJ Expat CEO of the Year awards, should have been in Houston, Texas, the base for his new global position as functional general auditor for the downstream business. For now it is unclear when he will be able to cross the Atlantic.

“The U.S. is closed, with the full suspension of non-immigration visas (work permits, effectively) for the rest of the year. After that, who knows?” he tells the Budapest Business Journal in an exclusive interview.

A global role, by its nature, can be performed from anywhere with good internet and phone connections, and Noordhuis even has a “small team based in Budapest.” But it is clear where he should be. “The business line management I support sits in Houston.”

The U.S. city is well known to the Dutch manager; indeed, four years ago he moved to Budapest to take up the country manager’s role from a five-year posting as a treasurer in Houston.

“It’s not new, I am comfortable there. In fact, our children will return to the same school they were in previously.” Once they get there, of course.

The situation means successor Jeroen Kirschbaum has been able to enjoy a longer handover than might otherwise have been the case. But Noordhuis is conscious of giving Kirschbaum his own space and not hanging around like the Ghost of Christmas Past.

“We will sign off [the handover] this week and then I will move upstairs; he won’t see me again unless he wants to, of course.”

Significant Opportunities

By his own admission, Noordhuis prefers making plans for the future to looking back, but I ask him what highlights he would pick from his time here. “One thing that stands out is the growth in people; four years ago there were 1,250, now we have around 1,800, and more to come.”

Romke Noordhuis (left) and Jeroen Kirschbaum, the past and present country manager of ExxonMobil Hungary.

He adds: “It is not just the number of people, but their quality, and the opportunities we are able to offer these people are significantly different. That is a process that was on-going before I got here, but we are really seeing this now. The types of activities are quite different from what they were four years ago.”

In order to accommodate that growing staff, ExxonMobil will move to new offices at GTC Pillar

in

2022.

Noordhuis describes it as a “milestone investment”, and emblematic of the company’s commitment to Budapest.

“The strategic cooperation agreement we signed with the government for sure was also a big step. It was the headline item on the evening news in Hungary.”

More recently, there has been the COVID-19 crisis. Noordhuis says ExxonMobil already had a pandemic plan “ready to go” as part of its business continuity planning, and had even run occasional drills.

“So, we sort of knew what we had to do, but it is obviously different when you have to start applying it. I am really proud how the organization responded in a very professional and resilient way.”

With teams split up and working from home, communication became a real point of focus.

“There were a lot of different sessions organized, including informal, virtual coffee chats,” he says.

Building Forward

In picking its next country manager for Hungary, ExxonMobil not only picked another Dutch native, but one who had been based in the United States;

Kirschbaum had even worked in Houston, where he led the digital transformation for ExxonMobil’s finance functions world-wide, but since 2018, he had been a planning manager at the corporate headquarters in Dallas.

“It is not just the number of people, but their quality, and the opportunities we are able to offer these people are significantly different. That is a process that was on-going before I got here, but we are really seeing this now. The types of activities are quite different from what they were four years ago.”

One of the major tasks will be to oversee the move to the new “world class” offices, and to build on the work of his predecessor.

“Romke has taken the organization to a new level in terms of growing the capabilities of our employees, and making the strategic value of the organization better understood.

It is clear to me that is the right direction, with clear and transparent goals for the organization,” Kirschbaum says.

“Obviously, with the uncertainty around the business environment, we will have to tweak it here and there and learn as we go, but the continued investment in the people, in the external relationships, and being

part of the business ecosystem in Hungary; building on the branding, building on the awareness and the understanding, internal and external, of the value proposition that we have for people to work here long-term.”

More immediately, though, he will have to navigate a path to the new normal. “I think the biggest challenge is that we are still dealing with unprecedented levels of uncertainty. We are slowly getting comfortable with the new normal, but we don’t really know what that is yet. It might take a while before we get back to the way things were, if we ever do,” he says.

“The focus is to keep employees safe, healthy and provide them with the flexibility to balance both the personal challenges they might have as well as their work priorities.”

Walk through ExxonMobil’s normally bustling Budapest office and it is striking how few people you see. Physical distancing in the office is clearly not a particular challenge just yet.

Kirschbaum says

about

50%

of the staff are still working from home, or working from the office on flexible shift patterns. There will be no rush to mandate everyone back full-time anytime soon, he says.

But let’s leave the final word with Noordhuis. What will he miss, once he is finally able to leave Hungary?

“First of all the organization. I have loved being part of this team. […] My family and I have really loved calling Budapest home.

All five of us have enjoyed being in this great city, just walking around Downtown, but also the Buda Hills; the history, the food, the wine especially: Villány is my favorite part of the country outside of Budapest.”

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Budapest Business Journal | July 31 – September 3, 2020

Business | 7

Planning for a Second COVID Wave Coronavirus ///roundup

NICHOLAS PONGRATZ

Finance Mihály Varga announced in a video uploaded to his Facebook page after signing an agreement with the Council of Europe Development Bank (CEB).

The minister said the preferential funding source will provide for the purchase of masks, medicines, tests, disinfectants and intensive care beds, among other things.

Under the agreement, the CEB will provide EUR 175 million, roughly HUF 60 bln, to cover central budget expenditures related to the epidemic.

Regarding food supply and the agricultural industry, “we are prepared for a possible new wave of the COVID19 epidemic,” Minister of Agriculture István Nagy told the leading economic daily Világgazdaság (Global Economy).

According to the Minister, the tightening of passenger traffic is no longer a problem for foreign seasonal workers, as those who are needed by the sector are already here.

A repeated flare-up of domestic infection rates would justify further social and economic constraints, with significant sacrifices to growth.

In the case of a second wave, external demand would also be weaker, as a result of which the export-driven Hungarian economy would also shift to a lower gear.

Exports account for approximately 85% of domestic GDP, while the automotive industry accounts for 16% of total exports.

If the population becomes more cautious and frugal due to fear of the epidemic, then economic activity could reach a lower level.

Even if only one or two out of every 10 people would not consume as much, economic performance could already be more subdued.

Although the emergency situation has alleviated, preparations must be made for that possible second wave of the Open to Hungarians coronavirus epidemic, and to that end "Hungarian agriculture is still open to Hungary will receive HUF 60 billion in Hungarian workers who have lost their funds to fight the epidemic, Minister of

Photo by Shutterstock/Sercan Erturk

Unsurprisingly, the biggest economic risk today is the emergence of a second wave of the coronavirus epidemic, says economic website novekedes.hu (Growth).

jobs," said Nagy, who insisted that Hungary still has a secure workforce, and that farmers who are offering work want to employ Hungarian workers. That perspective is corroborated by the National Chamber of Agriculture (NAK), who said that the entry of workers into the agricultural sector is essentially secured, in a statement to the economic daily.

That should be good news for students, the number of whom are looking for work has tripled compared to last summer, Viktor Virág, a member of the board of the Márton Áron School Cooperative, told novekedes.hu.

There are sectors such as hospitality where the need for student work has drastically decreased as everyone primarily wants to provide what opportunities they can for their full-time employees. Those employees themselves have been feeling more apprehensive about their job security,

with about 74% of employed Hungarians in Q2 believing that their job positions are secure at their current employer, which is a 16-percentage point drop compared to the previous quarter, according to a representative survey by insurer BNP Paribas Cardif and polling company Medián.

As a result of downtime due to the coronavirus, both in March and April, manual workers spent twice the amount of time as usual days on leave, according to a separate Trenkwalder report.

Trenkwalder saw an average of 92% more leave in March and 108% more in April. During the emergency, companies that shut down due to production chain problems kept significant numbers at home, typically on paid leave in the first few weeks. All of this has resulted in a reduction in annual leave limits, so many workers are able to take less time off than they would originally have planned this summer.

More than two-thirds of the respondents to a survey by OTP Mobil and Groupama Insurance are only preparing for domestic travel, with the most popular destination being Lake Balaton. Over half a million people have traveled to the lake by train in the past month, according to a communication from MÁV Zrt. Some 335,000 people arrived by train on the southern shore and almost 164,000 on the northern shore in the past month.

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Budapest Business Journal | July 31 – September 3, 2020

COVID creates Dilemmas for Company Owners (and Financial Advisors) Photo by Shutterstock/Kit Leong

The Corporate Finance Column

In his latest column, Les Nemethy looks at the uncertainties thrown up by the coronavirus when it comes to selling a business.

Imagine the following situation: You are a financial advisor. The owner of a large and very attractive hotel asks you to sell his property. When you ask him about the situation with COVID-19, he states that the hotel missed a few off-season months of operation in the spring, but that the summer months are doing better than ever, thanks to internal tourism.

Moreover, there have been millions of euros of new investment into the hotel, which is repositioned as a completely superior product. Due to the strong revenue flow and improvements, the owner expects top dollar for the hotel; no discount for COVID. What do you advise the owner? Do you take the mandate under the circumstances?

Scenes like this must be playing out all over the world. For any owner wanting to sell his or her company, COVID magnifies the uncertainties of a sale or, indeed, doing any kind of transaction. That’s especially so for a hotel, tourism being one of the most COVID-affected parts of the economy. The whole world seems to be trying to navigate these days without a compass.

Let’s examine some of the uncertainties: • There could be a resurgence of COVID19 that, again, shuts the hotel down.

(While travel is being freed up among many European countries, as of time of writing, COVID cases worldwide are also increasing dramatically, with resurgences happening in Spain, France

and Germany.) As hotels are valued on a multiple of earnings or cash flow, this will mean that a substantial discount would be required to sell the hotel.

• Even if there is no local resurgence in COVID-19 that shuts down the hotel, there could be various domino effects caused by the pandemic: a large number of bankruptcies, banks failing, sovereign default, and a stock market crash, to name a few. Once again, these would directly and adversely affect the valuation of the hotel.

• The expiry or diminution of the massive stimulus efforts could also create a downdraft in valuations. In certain countries, there are debt moratoria, whose expiry could create a sudden market for distressed real estate.

• Even if none of the above happens, so long as COVID-19 is as prevalent in the world as it is, any buyer of a hotel would need to allow for a scenario whereby the disease forces a future shutdown of the hotel, or at least a diminution of revenues. This also would create a discount, although some buyers would insist on a more significant

discount than others. Even if this particular hotel is performing well, most hotel investors are coming from a mindset of seeking distress purchases.

Substantial Risk

My own belief is that the risks of resurgence and domino effects are both substantial.

So where does this leave the seller? If you accept the above analysis, the chances of reaching full price (an aggressively high valuation) are close to nil. A financial advisor who takes on a mandate with these expectations is creating a false expectation.

The likely scenario is that a considerable amount of effort will be expended by seller and advisor in creating an information memorandum, contacting potential investors, only to see negotiations break down due to a significant gap in valuation.

This is probably the greatest reason why there have been so few M&A transactions worldwide during COVID-19: sellers don’t want to discount their company due to the coronavirus (usually preferring to ride things out), while buyers are typically seeking large discounts.

ConvergenCE Given Exclusive Contract to Lease Agora Offices Real estate services firm ConvergenCE has been given an exclusive contract to support owners HB Reavis in the leasing of Agora Tower, one of the newest additions to the Budapest office market, on Váci út.

BENCE GAÁL

The 16-floor building, which opened in June, is located at the foot of Árpád híd, on the Pest side of the capital. One of the features of the glass building is its roof structure that slopes sideways at a steep angle. Agora also boasts large community spaces and green areas.

The project features a number of innovative sustainability-focused

characteristics, such as integrated, intelligent access technology and elevator control, mobile applications and smart parking.

Since February, ConvergenCE has concluded contracts with two new tenants beside the existing ones with Raiffeisen Bank and B+N Referencia Zrt. One of new tenants is Nowy Styl, a leading European furniture company that provides comprehensive furniture solutions for office and public spaces.

Dóra Papp-Vas

Panoramic View

The other is with Stada Hungary Kft., a pharmaceutical company present in 130 countries worldwide. The offices

(There is a small universe of companies that benefit from COVID-19, where this does not apply, such as specific segments of online retailing, etc.)

There is always a gap between the expectations of buyers and sellers that needs to somehow be bridged but, with COVID-19, the gap is wider than I’ve ever experienced in my 35-year M&A career.

So, to resume, what do you as financial advisor tell the hotel owner? Do you take the mandate, and just hope that things work out?

Do you try to reduce price expectations? (This was a “no go”). Do you refuse the mandate?

You might say the hotel owner has nothing to lose by putting his hotel on the market. I would argue that an asset that is on the market for a long time becomes stale, hence less attractive to buyers; and that thousands of hours of staff time may be wasted in preparing and carrying out an unsuccessful sale process.

In my case, I advised the client to postpone any decision until spring 2021. An extra six months would give some additional perspective on where the virus is headed, and whether the aforementioned domino effects kick in.

I can assure you it takes a great deal of discipline to refuse or postpone a mandate.

I suspect the hotel owner is already talking to other financial advisors. On the one hand, I could say that there is a lack of appreciation for financial advisors who put client interests above their own; on the other hand, I leave open the possibility that I am wrong, and that it is the existence of different perspectives that makes a market.

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.

of the two companies, both 500 sqm in size, are located on the 10th and 11th floors of Agora Tower, offering panoramic views of the capital.

Agora Tower also boasts retail outlets on the ground and first floors. These are aimed at serving the convenience, health and wellbeing of the occupants. Besides restaurants and cafés, there will be a hairdresser, a bakery, a supermarket, a drugstore, as well as a gym. Bicycle lanes have been set up around the building, while bicycle storage facilities and showers have been installed inside Agora itself.

“Agora Tower is a truly outstanding project, unique not only in its exterior features but also in the services it provides to the community,” says ConvergenCE leasing director Dóra Papp-Vas, who leads the leasing of Agora Tower.

“Such a special and people-focused office building stands out in the market.

I would like to thank HB Reavis for their trust and this fantastic opportunity to work together,” she adds.

3

www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Special Report Tourism

MTÜ Head: ‘If There are Guests, There is Everything’

Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ) talks to the Budapest Business Journal about the devastating impact of COVID-19 on the industry, the steps it has taken, and his hopes for the future.

ZSÓFIA VÉGH

BBJ: How has the coronavirus epidemic affected the tourism sector?

Zoltán Guller: The tourism sector in Hungary has been doing excellently, setting new records every year since 2010.

Last year saw the best performance yet.

In the first two months of this year the effect of the coronavirus has not yet been felt. Based on the data we were expecting a promising year; it looked that 2020 was going to be the best year in the history of tourism in Hungary, which held true until the middle of March, when the coronavirus broke out in Hungary.

Once it appeared, the Hungarian tourism and hospitality sector practically ceased to exist in as much as 60 days.

A large number of hotels and spas were temporarily closed, visits to most attractions were suspended, and travel arrangement services basically stopped.

Most of the restaurants were also forced to impose downtime; those that remained open reorganized their operations as consumption on the spot was not viable at the time.

Air traffic also stopped, the borders were closed. In fact, this period in our lives was about survival. We have unprecedented, challenging months behind us as the sector, which accounts for 13% of GDP and provides a livelihood for 400,000 people, got in a critical situation overnight, with a virtual nullifying of turnover and, with that, revenue. Tourism is typically a field of small- and medium-sized enterprises, with around 175,000 businesses operating in the sector accounting for a tenth of the national economy, so the livelihoods of many families have been jeopardized by the spread of the virus in Europe.

Zoltán Guller BBJ: How have travel habits changed as a result of the epidemic?

ZG: The epidemic is affecting the sector in very many ways: trends, travel habits are changing, the whole of tourism is being transformed. It is quite obvious that when we are traveling, we are considering completely different aspects than before. Based on the surveys of the Hungarian Tourism Agency, domestic guests’ willingness to travel is constantly improving, people [do] want to go on holiday, more and more people are getting away from it, and there is more demand for active leisure time everywhere.

When making decisions on travel, the role of safety has increased and has been given more priority. Not only in this sector, of course, but in many areas of life; this period has brought about changes in mindset. What is clear already is that businesses had to adapt quickly and take an innovative approach to this situation. Many have switched to contactless payment, contactless check-in. Many new ideas have found their place in the market. We can say that if we only look at digital developments, in a few months we have jumped 10 years ahead in time.

BBJ: What do you expect from this season now compared to last year and your expectations prior to the epidemic?

ZG: Thanks to the operation of the National Tourist Information Center (NTAK), we can get an instant snapshot of how the sector is doing. It has managed to weather those two critical months thanks to government measures, and a cautious

reopening began in early May. Today, in rural Hungary, compared to the same period last year, we see almost a similar number of domestic tourists. In some settlements, Hungarians spend even more than a year earlier.

Looking at the country as a whole, occupancy data reached the figures of January-February prior to the declaration of the emergency.

It is fair to add, though, that this is usually the lowest period in tourism.

It is important to emphasize that, in the course of a few weeks, Hungarian tourists alone set the average occupancy rate of the country’s accommodation at almost 30%, which I think is worth mentioning in any case.

What’s even more important is that the number of guests, guest nights and spending is also increasing every day.

As of July 1, flights have been resumed in large numbers. First, it is domestic travel that is going to gradually rebuild, then foreign guests will start to return slowly. We trust that the domestic market will save tourism this year. Based on the data available, we have every chance to believe so.

BBJ: What steps have been taken so far to help the sector? What else are you planning?

ZG: Since the outbreak of the epidemic, the Hungarian Tourism Agency has been discussing possible solutions with trade organizations and listening to their recommendations; we have prepared a proposal with a consultancy that included the necessary and sufficient measures to keep businesses alive. The

Hungarian government was one of the first to announce an action plan to support tourism and hospitality with tax and contribution reductions, tax exemptions, preferential credit facilities, a credit moratorium, an increased and low-tax SZÉP-card framework, the abolition of public land use fees and the introduction of kurzarbeit [shorttime working, a less extreme version of furlough schemes].

The first steps in crisis management were aimed at keeping businesses alive, bridging a difficult financial situation and retaining jobs. Now that we can count on a large number of domestic tourists, and foreigners whose number is growing constantly, the process is clear; the number of guests and guest nights is increasing day by day, and the spending by tourists is also increasing. In the recently launched Economic Protection Operational Council (Gazdaságvédelmi Operatív Törzs), under the leadership of the Minister of Finance, we are now working on reducing tax as well as administrative burdens.

“From the National Tourist Information Center, we can see that the number of bookings is growing dynamically, so there is a chance that the revenues of the summer season will not only reach but also exceed last year’s results.

I believe that a quick and effective response is the key to success.”

BBJ: When will the sector recover from the virus?

ZG: Tourism is a very fortunate sector as it may have been hit quickly by the crisis, but it is also recovering from it quickly.

From NTAK, we can see that the number of bookings is growing dynamically, so there is a chance that the revenues of the summer season will not only reach but also exceed last year’s results. I believe that a quick and effective response is the key to success. In order to relaunch tourism, instead of initiating austerity measures, the government helped it recover from the crisis by cutting taxes and continuing developments, thus helping businesses through this difficult period. After all, in tourism, if there are guests, then there is everything.

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www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Special Report | 11

Tourism Sector Rides out Initial Downturn, but Many Businesses Face Tough Future July gave initial signs of a revival in Hungary’s tourism sector after the collapse caused by the onset of the coronavirus pandemic in March: the month saw first outings of open-topped buses in Budapest, while hotels at domestic resorts reported strong demand. But with Budapest hotel bookings for August at less than 10% of 2019 levels, the shortterm outlook remains bleak.

KESTER EDDY

Life for those in Hungarian hospitality sector remains “very difficult”, despite looser restrictions on foreign visitors since June, Tamás Flesch, president of the Hungarian Hotel and Restaurant Association, tells the Budapest Business Journal.

“July was a little bit better because of the Formula 1 [Grand Prix race], but the general occupancy of hotels in Budapest which are open is less than 10%,” he says.

Not only that, but the red-yellowgreen country-of-origin classification system introduced by the government to make entry restrictions more understandable to travelers seems to have resonated with potential visitors in an unexpected way.

“We were getting reservations from abroad, not many, but some, but after this red-yellow-green system was introduced, reservations stopped immediately, in a minute!” he says.

Moreover, the “booking window”, the period when visitors book rooms in advance of their stay,

has shrunk from between two weeks and three months to between

24-48 hours.

While this might feel more spontaneous and exciting for the visitors, it makes planning for hoteliers, who need to prepare staff and supplies, far more difficult.

“Now it’s Thursday, and you decide to go to Budapest tomorrow or Saturday. This is especially true for younger visitors traveling by car. It’s incredible!” Flesch says.

“Generally, the countryside is OK at the moment. Sopron is suffering, but Lake Balaton and Lake Velence are very good. Eger and [spa town] Hajdúszoboszló are also fine.”

hotels at the end of May, Balázs Kovács, Danubius chief executive tells the BBJ. “Domestic demand showed more rapid growth, which is why we opened our countryside hotels first. Guest numbers are currently significantly higher compared to the capital, with occupancy rates at between 80-90%,” he says.

Indeed, guest-nights in Danubius’ Balatonfüred units near Lake Balaton are better in the coming two months than in 2019, enabling the company to transfer some staff from Budapest to meet demand.

Capital Caution

Given the dearth of foreign visitors, Danubius has been far more cautious reopening its Budapest operations, starting with the Helia in June and the downtown Erzsébet in mid-July.

That caution appears to have paid off, with occupancy rates at between 30-40%, well above Flesch’s estimates for the current capital norm.

Danubius is moving to reopen the Hotel Gellért on August 7, along with the Hilton Budapest (in the Castle District), Radisson Blu Béke Hotel and Astoria in September.

Bright Spot

The one clear bright spot in the sector is the recovery of provincial tourism, with a recent survey by OTP Mobil and Groupama Insurance finding more than two-thirds of respondents were preparing for a domestic vacation.

This is in part a natural response as Hungarians shy away from neighboring countries such as Austria and Croatia, in part encouraged by a strong government marketing campaign dubbed #itissafeathome.

“Generally, the countryside is OK at the moment. Sopron is suffering, but Lake Balaton and Lake Velence are very good.

Eger and [spa town] Hajdúszoboszló are also fine,” Flesch said, although he stressed that foreign tourists, who are bigger spenders, remain a significant missing element.

The experience of Danubius Hotels, which with

14

properties

in Hungary is one of the largest hospitality chains in the country, largely mirrors Flesch’s analysis.

Following a complete, unavoidable shutdown throughout Hungary on April 1, the company began opening its four provincial

rates (Flesch estimates a 50% reduction in this key performance indicator), which in turn means excellent price deals for more adventurous tourists willing to travel in these uncertain times.

Tamás Flesch But despite this ambitious plan, Kovács admits that revenues this year are likely to be

60-70% down

on 2019.

Naturally, the poor occupancy rates have led to a corresponding drop in room

Balázs Kovács The four-star Hotel Moments, a short walk from the Szent István Bazilika on Andrássy út and run by Flesch’s company, Continental, is offering a 10% discount on overnight prices, with further giveaways for longer stays.

But with a number of government support schemes closing at the end of June, Flesch says the industry’s troubles are far from over.

“In March, hotels were optimistic, assuming they could close until September, then reopen and with 25-30% occupancy, break even for the year,” says Flesch.

This meant they retained, typically, 60-70% of staff, albeit on reduced salaries.

But with no vaccine expected until the end of the year at the earliest, at best the sector is now facing a further eight months with minimal revenues until Easter 2021.

“As we see the situation at the moment, we’ll have to fire people, for sure. We will have to decide within a few weeks,” Flesch warns. “We were quite happy with the [government] help until the end of June, and we know also that the government has a maximum capacity to help. But anyway, now, especially in Budapest, we need help.”

Stricter Hygiene Measures Increase Costs but Essential ‘for Proper Hotel Service’ The COVID-19 pandemic has prompted all responsible hoteliers to introduce stricter hygiene regimes to protect both guests and staff from the risk of infection.

Typically, measures include more intensive cleaning and disinfection of all public and staff areas, the installation of hand sanitizers and additional spacing between tables.

At Danubius Hotels, the new “Safe Stay” policy also includes special hygiene treatment of serving utensils, and safe serving of food.

“We have discontinued the breakfast principles through a game in play areas, where special attention is buffet and now have waiters serving the chosen food,” says Balázs Kovács, given to the disinfection of toys.

Staff, too, enjoy enhanced Danubius Hotels CEO, adding “In the safety protocols. All employees background, less visible to guests, have attended an in-house hygiene food is prepared by the kitchen staff training course based on international wearing masks, gloves and protective standards, and are tested for COVIDclothing, in accordance with the 19 prior to starting work. strictest hygiene standards.”

Such measures inevitably bring Danubius now employs Safety higher costs, Kovács admits, but he Specialists to answer questions, says they are essential “for proper and offers guests handouts to hotel services now, when guests are understand the new protective fundamentally concerned with safety.” regime. Children learn key safety

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Special Report

www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Wizz Air’s Váradi: ‘Growth Will Continue’ József Váradi, CEO of Hungarybased Wizz Air, often billed as Central Europe’s largest low-cost carrier, talks to the Budapest Business Journal about the impact of COVID on the company, his distrust of state-aid, and what he thinks the future of the airline industry will look like.

József Váradi Despite the fact that flying doesn’t entail a real risk of infection – no cases has been registered following a flight yet – people have this perception of flying being risky.

It is important that we respond correctly, by offering discounts, for example.

We also have diversified our operation: we have shifted 25% of our capacity to new markets and set up eight new basis since spring.

ZSÓFIA VÉGH

BBJ: How has the coronavirus affected the operations of Wizz Air? József Váradi: It was around mid-March when governments introduced restrictions in air travel, thus limiting the playing field of the airlines. Wizz Air hit bottom in April, when 97% of our fleet was grounded with only 3% in the air, mainly doing repatriation and cargo. Between March and June, we had 130 cargo flights, mostly to and from China carrying medical supplies. In July, compared to the same period of 2019, more than 70% of our fleet was again in the air. This compares with an industry average of 40%.

BBJ: What accounts for this difference?

JV: There are a number of reasons we are doing better than the rest. For one, we are much more resilient from a financial viewpoint: we have a large free-use cash reserve of EUR 1.5 billion. If all our fleet were grounded for two years, we would still be on the market. In a crisis, the cost structure of a company matters a lot.

BBJ: You also let go of roughly 20% of your staff with the promise of taking them back once you could. When do you expect that to take place?

JV: We took a number of decisions to improve our cost structure. The global air travel industry has never faced a shock as this one before, we have to adapt our business processes to these new challenges.

We renegotiated all our existing contracts, which trimmed all the unnecessary elements. We had to let go of 19% of the staff but we are planning to re-hire them; I calculate this can start at the beginning of next year at the earliest. First, the pilots and the cabin crew. The salaries of the office employees were cut by 15% for this year but we are planning to raise them back to their previous levels in the first quarter next year.

Senior-level staff saw a 20% cut.

I believe we are the winners of this situation: we are able to handle the crisis more effectively, can enter or acquire new markets and will come out of this stronger than before.

BBJ: What do you think the new normal is going to look like? How long until the industry recovers and becomes prosperous again?

JV: I disagree with those saying the industry is going to turn on its head. Some things will change, but some will remain the same. Just look at how fast the world returned to normal after 9/11, when everyone said the opposite. In the short run, there may be some changes in the health protocols, we have also introduced protective measures to reduce the number of points of contact, or made wearing masks mandatory; the entire industry has taken these safety standards up a notch. But in the long run, travelling is becoming ever more efficient, the purchasing power of people is increasing: growth will continue.

Another element, a less fortunate one, is the re-appearance of states in airlines, either as providers of loans or as owners.

This has never worked and caused many problems in the past. It will make the market less efficient, we will basically go back 10-20 years in time. We’ll see how the market will act. We still believe that airlines must operate on their own and have to be weighed by the market.

We don’t believe in state-aid and rescue packages. We will continue to work on becoming better than our competitors. In particular in the field of short-haul flights, it is crucial that we keep both our costs and our prices low.

BBJ: You say state interference is not a good way of dealing with airlines’ problems. What then could have been a good solution?

JV: These airlines should have been taken to the market, which would take them apart and would take up the space freed by

the elements that prove unviable. Look at Hungary. When Malév, the national airline, went bankrupt, Budapest Airport saw eight million passengers a year. Last year it saw 16 million. There is no other airport in Europe that has seen such a dynamic growth. Why? Because more efficient airlines replaced less efficient capacities, which has made Budapest Airport more attractive for customers. The same would happen for Lufthansa, if it weren’t for the state’s interference.

BBJ: When are you going to attain your previous financial and operational figures?

JV: The right question to ask is when the industry will recover, which is not the same. It will take a while, two-three years maybe, as trust in air travel, in longhaul travel has been shaken, and there are countries that are still closed down. It is rather unpredictable; I envision more of a rollercoaster-type recovery with improvements and setbacks that will end with the arrival of the vaccine.

As for Wizz Air, I think we will return to our previous operational levels within a year. With 77% capacity currently, we are still ahead of the market. I calculate that by next summer we will reach our former levels. We may not be operating by the very same structure, we may not have the same capacities we had before but we will adapt to market demand and the business environment. But this is exactly why we have started to add destinations and routes, so we have more opportunities to allocate our capacities where demand arises.

BBJ: There has been some controversy surrounding your bonus payment.

JV: There is a huge misunderstanding about the question of the bonus, which is related to last year, not this year. It has not been paid to this day, as we thought that in order to ease cash pressure on the company, its payment would be postponed for some time next year. Also, the remuneration of the management affects 40 people. It is based on three pillars: there is a base salary and a variable pay, the bonus, which is not really a bonus but rather part of the salary. And there is a shareholder program, the aim of which is to align the interests of the management and the shareholders. This year, the management, these 40 people, have waived a part of their base salary and a substantial part of their bonus which, I think is model behavior. Unlike most European airlines, Wizz Air’s senior management and the entire staff undertook significant pay concessions this year to contribute to the company’s efforts to navigate through the COVID-19 situation.

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Budapest Business Journal | July 31 – September 3, 2020

3

’Party Districtʼ Businesses Hoping for Tourist Revival (While Locals Enjoy the Peace) Budapest’s “Party District”, a quarter of Erzsébetváros (Elizabeth Town or District VII) with zany bars, beer gardens and restaurants that pre-coronavirus throbbed 24/7, is very slowly coming back to its former boozy, buzzing self. But not all are happy with the renaissance; indeed, for some, the lockdown provided much welcomed relief.

Different Conflicts

Mayor of District VII Péter Niedermüller admits that the growth of the hospitality industry in Erzsébetváros has “caused a

new regulations actually favor the big clubs,” she says, claiming the various political parties involved are looking to win votes from businesses for the 2022 national elections.

And with tourism once again beginning to pick up, she maintains that with “no authorities on the streets” at night “drugs and prostitutes are back.”

Zero Tolerance

KESTER EDDY

When British retirees John Bienias and Karen Culver moved into the inner part of Budapest’s District VII in 2007, part of the attraction was the cool, bubbling night life to found in the various off-beat “ruin pubs” and restaurants that had been proliferating since the turn of the Millennium.

“When we moved here in 2007, this was a slightly Bohemian district with some good bars and restaurants and a pleasant, lively atmosphere. Szimpla Kert, just opposite us, was still just a ruin bar visited mostly by Hungarians and our neighbors were mostly long-term Hungarian residents. We were very happy here,” With Szimpla Kert, which lays claim to being the most iconic, eclectic ruinpub plaza of them all, the couple were well placed to enjoy the thriving local art and cultural scene, including its longestablished Jewish heritage.

But the couple say things began to get out of hand some five years ago, particularly when stag parties from Western Europe discovered that, for relatively modest prices of food and victuals and Airbnb accommodation, they could gorge and booze themselves legless – though rarely voiceless – into the dawn hours.

On top of this, drug dealers regularly stood at their building entrance, openly plying their illicit “trade”, with prostitutes and pimps gathered further down the street.

“Up to the pandemic, the number of tourists and, especially, stag parties has grown to the point where the street is so crowded, and the behavior so bad, that it is no longer a fit place for human beings to live,” Bienias said.

Indeed, the noise, dirt and hassle became so intolerable that the couple are moving out to a quieter part of the city. They are not alone.

Special Report | 15

lot of different kinds of conflicts between the people living in the district, and the tourists,” with many people who have lived many decades in the area moving out, often tempted by high prices for their ageing flats in need of renovation.

“It [the number of guests] will get better later on. On Friday, Saturday, it’s better.

Now it’s maybe 25% what it was [before the virus].”

Elected last October with a manifesto that promised to reduce the negative effects of the hospitality industry on the local population, Niedermüller is a member of the center-left Democratic Coalition.

He says the council “would like to change a little bit the character of this party district, [….] to try to transform the district into a kind of cultural district to show [...] that it’s not the only way to come to the district and to drink as many beers as you can, but to be involved in the history, culture and traditions.”

The mayor says he has moved to tighten regulations and by-laws of the district’s entertainment sector and reduce late night noise, while stressing that he does not wish to “kill” the Party District.

Moreover, he says he is seeking to negotiate a consensus not only between the various stakeholders, namely the hospitality sector, general population and council in his own district, but also in the neighboring districts in downtown Budapest. At the same time, he admits progress is slow “because there are a lot of interests” to accommodate.

Dóra Garai, an independent councilor representing the local pressure group Élhető Erzsébetváros (Let Erzsébetváros be Livable), is frustrated with the reform of regulations nine months into the district council’s mandate.

“The new regulations do not address a lot of problems. The biggest problems are caused by the high-capacity discos and techno clubs within housing buildings.

These attract crime, vandalism and cheap party tourism to our district,” she told the Budapest Business Journal.

On top of this, Niedermüller has eased restrictions on how late pubs and restaurants may serve terraces to beyond 10 p.m., the previous limit.

“How does that help reduce evening noise levels?” she asks, “A lot of the

Niedermüller insists he has “zero tolerance” for drug trafficking and prostitution, but admits that, while there is cooperation with the local police force (which is controlled by the state, not the municipality), there are too few officers to enforce the law properly in the district.

Meanwhile, inside Szimpla Kert one July afternoon, there appears little evidence of a revival of tourism, with perhaps two dozen customers scattered among half a dozen bars.

“It will get better later on. On Friday, Saturday, it’s better. Now it’s maybe 25% what it was [before the virus],” Mati, the barman at the Shisha, tells the BBJ while preparing for the evening trade.

An old hand, with 10 years’ experience selling drinks and hiring out shishas, or hookah pipes, Mati says once television news stops talking about COVID-19, the tourists will come back.

And with foreign tourists making up 95% of his customers, that can’t come soon enough.

He dismisses allegations that the ruin pubs created noise preventing locals from sleeping. “We have music, but we keep it inside,” he says, waving his arms towards what presumably passes for sound insulation.

Mati equally rejects allegations of rowdyism at closing time, when customers hit the street at 4 a.m.

“Ah, sometimes they are noisy a little bit, but when they drink a bit more, they are silent,” he laughs, before letting me into his big secret. “I think there is a medicine against the virus,” he says, wide eyed.

Your correspondent listens, dutifully, for the scoop of a lifetime. “It is Hungarian pálinka! I drink one in the morning, I feel

Péter Niedermüller.

Photo by Tibor Végh. good, another at lunch, and another at night.

I’ve been doing this for maybe five months.

It’s 60% alcohol, then there is no virus.”

Editorial note: There is no medical evidence that drinking strong alcoholic spirits prevents COVID-19 infections.

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Four-Star Hotels Outside Budapest

7

eventS

pOOlS

tHeRapy

maSSage

yeaR eStaBliSHeD yeaR laSt RenOvateD

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Lake, sports centre, animation, conference venue

1985 2015

(86) (14)

Szetlik lili – –

8237 Tihany, Rév utca 3.

(87) 538-500 reserv@clubtihany.hu

298 8 5

1,955

87 146

–

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

Lake, sports centrer, animation, conference venue

2004 2019

Karosinvest Zrt. (100) –

Botond Üsztöke – –

8749 Zalakaros, Alma utca 1.

(93) 542-550 sales@karos-spa.hu

✓

Conference halls, Carbona Shop / gft store, sauna island, swimming pool, NaturMed health program, animation (in summer and on holidays)

1997 2015

Hotel Carbona Zrt. (100) –

zsuzsa müller-pápai – –

8380 Hévíz, Attila utca 1.

(83) 501-500 hotel@carbona.hu

2006 –

P.S. Hotel Kft. (100) –

Bálint tölli – –

9600 Sárvár, Vadkert körút 4.

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

OtHeR

caR Rental

✓

www.carbona.hu

paRk inn By RaDiSSOn SáRváR ReSORt & Spa / p.S. HOtel kFt.

236 22 5

2,557 (2018)

113–135 144–166

–

✓

✓

✓

✓

✓

✓

✓

✓

–

–

Currency exchange, gift shop

26,861

83 132

–

✓

✓

✓

–

✓

✓

✓

✓

✓

✓

Sports, salt cabin, sauna

2003 2015

Hunguest Hotels Zrt. (100) –

adél Joós – –

8300 Tapolca, Köztársaság tér 10.

(87) 513-100 hotelpelion@ hunguesthotels.com

✓

Sports, animation, bike rental, solarium, sauna world, transfer, ecar filling stattion

2000 2019

Hévinvest Spa-Golf Zrt. (100) –

Ferenc Horváth – –

8380 Hévíz, Jókai utca 3.

(83) 501-100 sales@europafit.hu

Danubius Hotels Zrt. (100) –

Rita nagy – –

8380 Hévíz, Kossuth Lajos utca 13–15.

(83) 889-500 res.aq@ hu.ensanahotels.com

–

✓

✓

✓

–

✓

✓

✓

–

✓

HungueSt HOtel peliOn / HungueSt HOtelS zRt.

228

HOtel euRópa Fit / HévinveSt Spa-gOlF zRt. www.europafit.hu

225 6 3

2,488 (2018)

113 186

enSana tHeRmal aqua / DanuBiuS HOtelS zRt. / enSana S.R.O.

224 7 2

3,425 (2018)

115–150 115–150

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

1984 2015

2,100

48 90

✓

✓

–

✓

✓

✓

–

✓

✓

✓

✓

–

2000 2017

Eger Invest Zrt. (87.30), Eger East-West Zrt. (12.30) –

lászló Harmati Krisztina Abonyi Judit Rózsa Kovácsné

3300 Eger, Szálloda utca 1–3.

(36) 522-200 info@hotelegerpark.hu

1,777 (2018)

126 168

✓

Transfer, bike and e-scooter rental, sports programs

2004 2016

MINERVA Befektetési Alapkezelő Zrt. (100) –

tamás Sáfrány – Barbara Vigh-Guttmann

9740 Bük, Golf utca 4.

(94) 801-600 reservation@ greenfieldhotel.hu

✓

Lake, running course, volleyball, playground, playrooms, bike rental, e-scooter rental, sauna world, animation

2005 2016

Hunguest Hotels Zrt. (100) –

katalin Szabó – –

3394 Egerszalók, Forrás utca 4.

(36) 688-600 sales@salirisresort.hu

1976 2015

Danubius Hotels Zrt. (100) –

Rita nagy – –

8380 Hévíz, Kossuth Lajos utca 9–11.

(83) 889-400 res.he@ hu.ensanahotels.com

1986 2017

Danubius Hotels Zrt. (100) –

németh viktória Krisztina Gergely Vajdáné –

9740 Bük, Európa út 1.

(94) 889-400 reservation.buk@ danubiushotels.com 6726 Szeged, Szent-Györgyi Albert utca 16-24.

(62) 566-466 hotelforras@ hunguesthotels.hu

HOtel egeR & paRk / egeR paRk HOtel kFt. www.hotelegerpark.hu

9

85–105 110–180

114–223 172–309

www.ensanahotels.com/thermal-aqua/hu

8

1,204 (2018)

aDDReSS pHOne email

2,842

www.hotelpelion.hunguesthotels.hu

6

300 30 7

tOp lOcal executive cFO maRketing DiRectOR

250 10 3

www.parkinnsarvar.hu

5

inteRnet in ROOmS

4

natuRmeD HOtel caRBOna / HOtel caRBOna zRt.

OWneRSHip (%) HungaRian nOn-HungaRian

gaRage

3

Family FRienDly

www.karos-spa.hu

Beauty SalOn

HOtel kaROS Spa / kaROSinveSt zRt.

WellneSS

2

BuSineSS cORneR

www.clubtihany.hu

Single Rate (euRO/nigHt) DOuBle Rate (euRO/nigHt)

cluB tiHany / cluB tiHany ÜDÜlőközpOnt zRt

tOtal net Revenue in 2019 (HuF mln)

1

HOtel name / name OF OpeRating cOmpany WeBSite

SeRviceS

nO. OF ROOmS nO. OF SuiteS nO. OF meeting ROOmS

Rank

Ranked by number of rooms

gReenFielD HOtel gOlF & Spa / HOtel gOlF kFt. www.greenfieldhotel.hu

SaliRiS ReSORt Spa éS kOnFeRencia HOtel / 10 HungueSt HOtelS zRt. www.salirisresort.hu

enSana tHeRmal Hévíz / DanuBiuS HOtelS zRt. / 11 enSana S.R.O. www.ensanahotels.com/ thermal-heviz/hu

DanuBiuS HOtel BÜk /

12 DanuBiuS HOtelS zRt. www.danubiushotels.com/hu/szallodak-bukfurdo/danubius-hotel-buk

A A

214 A A

207 13 6

–

✓

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

–

✓

✓

✓

✓

✓

✓

204 10 6

26,861

90–120 120–150

203 7 4

3,425 (2018)

100–150 100–150

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

Bike rental, gift shop

197 3 3

2,104

94 160

–

✓

✓

✓

–

✓

–

✓

✓

–

✓

–

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

HungueSt HOtel FORRáS / 13 HungueSt HOtelS zRt.

196 6 7

26,861

84 116

–

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

–

1987 2017

(100) –

mihály Szabó – –

velence ReSORt&Spa /

186 4 7

2,272 (2018)

83–150 117–263

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

2012 –

VRS Part HOTEL Kft. (100) –

péter Bársony – –

2481 Velence, Béke utca 57.

(22) 589-900 reservation@ velencespa.com

1,437

54 91

✓

✓

✓

–

✓

✓

–

✓

✓

✓

✓

–

1998 2020

Lajos Tóth (100) –

lajos tóth Sándor Balogh Andrea Gurzó

4200 Hajdúszoboszló, Mátyás király sétány 25.

(52) 363-811 info@hotelsilver.hu

www.hotelforras.hunguesthotels.hu

14 vRS paRt HOtel kFt. www.velencespa.com

HOtel SilveR /

15 geOtHeRm ÜDÜlő kFt. www.hotelsilver.hu

170 A A

3

www.bbj.hu

tOtal net Revenue in 2019 (HuF mln)

Single Rate (euRO/nigHt) DOuBle Rate (euRO/nigHt)

BuSineSS cORneR

WellneSS

Beauty SalOn

Family FRienDly

gaRage

inteRnet in ROOmS

caR Rental

eventS

pOOlS

tHeRapy

maSSage

OtHeR

yeaR eStaBliSHeD yeaR laSt RenOvateD

SeRviceS

OWneRSHip (%) HungaRian nOn-HungaRian

2,120

104 160

✓

✓

✓

✓

✓

✓

–

✓

✓

✓

✓

–

zRt.

164 10 10

2004 2020

DBI Ingatlanhasznosító Kft. (100) –

gábor nádas Tímea Kertész Zsófia Nagy-Bándli

2025 Visegrád, Lepence-völgy 2.

(26) 801-900 www.thv.hu

SilvanuS kOnFeRencia éS SpORt HOtel / SilvanuS HOtel kFt.

151 8 9

1,562 (2018)

A A

–

✓

–

✓

–

✓

✓

✓

✓

–

✓

–

1971 2015

Individuals (100) –

árpád lantos – –

2025 Visegrád, Panoráma út 2.

(26) 398-311 info@hotelsilvanus.hu

142 1 4

1,269 (2018)

85–160 85–160

–

–

✓

–

–

✓

–

✓

✓

–

✓

Transfer, sauna, infrasauna, Turkish bath, gift shop

2004 –

Büki Fejlesztési és Beruházási Kft. (100) –

andrás csere – –

9740 Bükfürdő, Európa út 18.

(94) 558-030 info@caramell.hu

1,218 (2018)

97 70

✓

✓

✓

✓

–

✓

–

✓

✓

–

✓

–

1991 2019

László Kollár (97), Edit Laufer Jordánné (3) –

edit laufer Jordánné, lászló kollár – –

7346 Bikal, Rákóczi utca 22.

(72) 459-547 info@puchner.hu

2,300

140 160

–

✓

✓

✓

–

✓

–

✓

✓

✓

✓

Kindergarten, playhouse, go-kart, rope way

1996 2019

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

csaba Baldauf Katalin Hosszú Markóné Dóra Kutai

8394 Alsópáhok, Fő utca 120.

(83) 344-141 sales@kolping.hotel.hu

3,425 (2018)

62 100

–

✓

✓

–

–

✓

–

–

✓

✓

✓

–

Danubius Hotels Zrt. (100) –

istván Henrik – –

9600 Sárvár, Rákóczi utca 1.

(95) 888-400 res.sa@ hu.ensanahotels.com

anita Juszkó Valéria Szabó-Csiffáry Krisztina Farkas

6000 Kecskemét, Izsáki út 6.

(76) 888-500 sales@ fourpointskecskemet. com

HOtel name / name OF OpeRating cOmpany WeBSite

tHeRmal HOtel viSegRáD SupeRiOR /

16 tHeRmal HOtel viSegRáD info@thv.hu

17

www.hotelsilvanus.hu

caRamell pRemium ReSORt SupeRiOR / 18 BÜki FeJleSztéSi éS BeRuHázáSi kFt. www.caramell.hu

pucHneR kaStélySzálló /

19 Hella'91 kFt. www.puchner.hu

kOlping HOtel Spa & Family ReSORt / 19 kOlping HOtel kFt. www.kolping.hotel.hu

enSana tHeRmal SáRváR HealtH Spa HOtel / 21 DanuBiuS HOtelS zRt. / enSana S.R.O. www.ensanahotels.com/ thermal-sarvar/hu

FOuR pOintS By SHeRatOn kecSkemét HOtel éS kOnFeRenciaközpOnt / 21 kéSz HOtel éS kOnFeRencia meneDzSment kFt.

138 A A

138 A A

136 – –

136 6 6

1985 A

HungueSt HOtel palOta / HOtel palOta lillaFÜReD kFt. www.hotelpalota.hu

133 A A

tOp lOcal executive cFO maRketing DiRectOR

aDDReSS pHOne email

1,092

80-95 85 100

✓

✓

–

–

–

✓

–

✓

✓

–

✓

–

2013 2013

KÉSZ Hotel és Konferencia Menedzsment Kft. (100) –

26,861

A A

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

1930 2009

Hunguest Hotels Zrt. (100) –

krisztina Borda – –

3517 Miskolc-Lillafüred, Erzsébet sétány 1.

(46) 331-411 info@hotelpalota.hu

www.fourpointskecskemet.hu

23

Special Report | 17

nO. OF ROOmS nO. OF SuiteS nO. OF meeting ROOmS

Rank

Budapest Business Journal | July 31 – September 3, 2020

aBacuS BuSineSS & WellneSS HOtel / aBacuS HOtel kFt.

128 11 8

1,286 (2018)

96 111

✓

✓

–

✓

✓

✓

–

✓

✓

–

✓

–

2002 –

Abacus Hotel Kft. (100) –

zsolt kálmán – –

2053 Herceghalom, Gesztenyés út 3.

(23) 532-360 hotel@abacus.hu

aRanyHOmOk WellneSS HOtel / aRanyHOmOk SzállODa kFt.

113 4 8

542 (2018)

45 55

✓

✓

✓

–

–

✓

–

✓

✓

✓

–

–

1993 2015

Individuals (100) –

Dóra loewemann-gömöri – –

6000 Kecskemét, Kossuth tér 3.

(76) 503-730 sales@ hotelaranyhomok.hu

anna gRanD HOtel Wine & vital / anna gRanD inveSt kFt.

108 – 7

1,081

A A

✓

✓

–

–

✓

✓

–

✓

✓

✓

✓

–

1997 2015

Anna Grand Invest Kft. (100) –

gréta máthé – –

8230 Balatonfüred, Gyógy tér 1.

(87) 581-200 reservation@ annagrandhotel.hu

aquaticum teRmál & WellneSS HOtel / DeBReceni gyógyFÜRDő kFt.

96 40 5

2,942

120 165

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Fitness island, Thai massage, dentistry, pharmacy, spa, sauna world

1998 2014

Debreceni Vagyonkezelő Zrt. (100) –

gábor Hevessy – –

4032 Debrecen, Nagyerdei park 1.

(52) 514-111 hotel@aquaticum.hu

87 4 17

2,941

90–100 100–110

✓

✓

–

–

✓

✓

✓

✓

✓

–

✓

Event halls for as many as 1,500 people

2006 2019

Debreceni Vagyonkezelő Zrt. (100) –

zsuzsanna Szerdi – –

4026 Debrecen, Hunyadi utca 1–3.

(52) 506-600 hotel@hotellycium.hu

87 10 2

348 (2018)

45 110

–

✓

✓

–

✓

✓

✓

✓

✓

–

✓

Squash, 3D movie, horse riding

2001 2011

Individuals (100) –

mária Bálint virágné – –

8749 Zalakaros, Sport utca 10.

(93) 540-140 info@hotelaphrodite.hu

BeSt WeSteRn pluS lakeSiDe HOtel / 30 meDiuS tOuRS SzOlgáltató kFt.

86 4 4

583 (2018)

80 90

✓

–

–

–

–

✓

–

✓

✓

–

–

–

2014 2015

Medius Tours Szolgáltató Kft. (100) –

gábor márton – –

8000 Székesfehérvár, Liget sor (22) 799-099 hotel@lakesidehotel.hu

ReSiDence HOtel ózOn / cOnFeRence&WellneSS 31 HOtel HOtel ózOn kFt.

79 3 8

1,340 (2018)

133 166

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

1995 2010

Hotel Ózon Kft. (100) –

József Henrik Hoffmann – –

3233 Mátraháza (37) 506-000 info@hotel-ozon.hu

615 (2018)

92 121

✓

✓

✓

–

✓

✓

–

✓

✓

✓

✓

Transfer, medical wellness center

1990 2016

Gasztro-Kristály Zrt. (100) –

Brigitta Berszán-Rudolf – –

2890 Tata, Ady E. út 22.

(34) 383-614 info@hotelkristaly.eu

24

www.abacushotel.hu

25

www.hotelaranyhomok.hu

26

www.annagrandhotel.hu

27

www.aquaticum.hu

HOtel lycium DeBRecen /

28 DeBReceni gyógyFÜRDő kFt. www.hotellycium.hu

28

apHRODite WellneSS HOtel zalakaROS / zala kRaFt kFt. www.wellnesshotelaphrodite.hu

www.lakesidehotel.hu

www.hotelozon.hu

kRiStály impeRial HOtel /

32 gaSztRO-kRiStály zRt. www.hotelkristaly.eu

67 A A

Special Report

www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Single Rate (euRO/nigHt) DOuBle Rate (euRO/nigHt)

BuSineSS cORneR

WellneSS

Beauty SalOn

Family FRienDly

gaRage

inteRnet in ROOmS

caR Rental

eventS

pOOlS

tHeRapy

maSSage

OtHeR

yeaR eStaBliSHeD yeaR laSt RenOvateD

OWneRSHip (%) HungaRian nOn-HungaRian

66 1 1

1,286 (2018)

80–100 125–160

–

✓

✓

–

–

✓

–

✓

✓

–

–

–

2003 –

Sebestyén Horváth (50), Tihamér Horváth (50) –

tihamér Horváth – –

8784 Kehidakustány, Kossuth Lajos utca 62.

(83) 534-501 sales@kehidatermal.hu

60 3 4

2,077 (2018)

190 159

–

✓

✓

✓

✓

✓

–

✓

✓

✓

–

Cave bath

2007 –

Demjén Termál Fürdő Kft. (100) –

péter tóth – –

3395 Demjén (36) 688-700 info@cascaderesort.hu

59 1 6

705 (2018)

90–100 100 130

✓

–

–

–

–

✓

✓

✓

✓

–

–

Parking lot, squash, bowling, jacuzzi, infrasauna, fitness club

2007 –

(100) –

imre nagy – –

9027 Győr, Budai út 4–6.

(96) 547-770 hotel@hotelfamulus.hu

58 2 3

252 (2018)

62 72

✓

✓

✓

✓

✓

✓

–

✓

✓

–

✓

Tennis (3 indoor, 4 open air), squash (3), aerobic, fitness room

1995 2010

Béláné Laczkó, Ildikó Harász Sebestyénné (100) –

Béla laczkó – –

7635 Pécs, Középmakár dűlő 4.

(72) 224-400 reservation@ hotelmakar.hu

ReSiDence BalatOn cOnFeRence & WellneSS 37 HOtel / R HOtel Üzemeltető kFt.

57 1 4

379 (2018)

98 133

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

1996 2013

Residence Balaton Hotel Szállodaipari Kft. (100) –

violetta geiger – –

8600 Siófok, Erkel Ferenc utca 49.

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

meSéS SHiRaz WellneSS & tRéning HOtel / HOtel egeRSzalók zRt.

56 3 6

245 (2018)

130–230 130–230

–

✓

✓

✓

–

✓

–

✓

✓

–

✓

North African spa, sauna, child care, gift shop

2003 –

(100) –

Richárd Szepesi – –

3394 Egerszalók, Széchenyi út 31.

(36) 574-500 info@shirazhotel.hu

HOtel SilveRine lake ReSORt / 39 SilveR inveSt kFt.

56 9 4

–

2006 2020

Andrea Rádóczy Barnáné (100) –

andrea Rádóczy Barnáné Márta Zsernoviczky Renáta Bognár

8230 Balatonfüred, Zákonyi Ferenc sétány 4.

(87) 583-000 sales.balaton@ silverinelake.hu

SGH Vagyonkezelő Kft. (100) –

zita kovácspongrácz – Eszter Sándor

8782 Zalacsány, Csány László utca 24.

(83) 537-000 info@ wellnesskastely.hu

Rank

tOtal net Revenue in 2019 (HuF mln)

SeRviceS

nO. OF ROOmS nO. OF SuiteS nO. OF meeting ROOmS

18 | 3

HOtel name / name OF OpeRating cOmpany WeBSite

keHiDa teRmál HOtel /

33 keHiDa teRmál kFt. www.kehidatermal.hu

34

HOtel caScaDe ReSORt & Spa / DemJén teRmál FÜRDő kFt. www.cascaderesort.hu

HOtel FamuluS /

35 pannOn FamuluS kFt. www.hotelfamulus.hu

36

HOtel makáR SpORt&WellneSS / makáR inveStment zRt. www.hotelmakar.hu

www.balaton.hotel-residence.hu

38

www.shiraz.hu

www.silverinelake.hu

702

120 150

–

✓

✓

✓

–

✓

–

✓

✓

–

✓

–

2012 2020

–

✓

–

–

✓

✓

–

✓

✓

–

✓

tOp lOcal executive cFO maRketing DiRectOR

aDDReSS pHOne email

BattHyány kaStélySzálló / 40 SgHtHeRmál kFt.

50 17 2

A

A A

Oxigén HOtel Family & Spa /

50 – –

664 (2018)

150 190

–

✓

–

–

–

✓

–

✓

✓

–

–

–

2012 –

Szaktudás Kiadó Ház Zrt. (100) –

krisztina Sárvári – –

3325 Noszvaj, Szomolyai út (36) 463-007 info@oxigenhotel.hu

Duna Relax & event HOtel / kék Duna WellneSS HOtel ingatlankezelő kFt.

45 5 7

336 (2018)

78 108

✓

✓

✓

–

–

✓

–

✓

✓

✓

✓

–

2003 2016

Individuals (100) –

krisztina Sárvári – Krisztina Sárvári

2300 Ráckeve, Dömsödi út 1/A (24) 523-230 info@wellnesshotel.hu

FRieD kaStély SzállODa éS étteRem / cetemcOm kFt.

41 5 4

263

80–160 80–160

–

✓

✓

–

–

✓

–

✓

✓

–

–

–

2001 –

Individuals (100) –

lászló thuróczy – –

7081 Simontornya, Malom út 33.

(74) 486-560 info@friedhotel.hu

38 – –

371 (2018)

106–125 106–125

–

✓

✓

–

–

✓

–

✓

✓

–

–

–

2009 –

Espa Kft. (100) –

tamás Russói – –

2072 Zsámbék, Nyárfás utca 2.

(23) 919-100 info@szepiahotel.hu

37 3 2

29

55 60

–

✓

–

–

–

✓

–

–

–

–

✓

–

2014 –

Glorius Hotel Kft. (100) –

mihály csábi – –

6900 Makó, Csanád vezér tér 2.

(62) 511-060 info@glorius.hu

cROcuS geRe BOR HOtel Wine Spa / aka kFt.

34 2 2

1,388 (2018)

60–105 70–135

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

2010 2015

AKA Kft. (100) –

Ferenc Schmidt – –

7773 Villány, Diófás utca 4–12.

(72) 492-195 hotel@gere.hu

BetekintS WellneSS & kOnFeRencia HOtel / BetekintS kFt.

34 3 4

354

115 90

–

✓

–

✓

–

✓

–

✓

✓

–

✓

–

1999 2020

(100) –

lászló márkus – Ádám Nagy

8200 Veszprém, Veszprémvölgyi utca 4.

(88) 579-280 betekints@betekints.hu

31 2 3

A

60 81

–

✓

–

✓

–

✓

–

✓

✓

–

✓

Cellar tours, wine tasting

2013 2015

Bock family (100) –

andrea Hepp-Ripszám – Gábor Sipos

7773 Villány, Batthyány utca 15.

(72) 492-919 recepcio@bock.hu 8200 Veszprém, Kittenberger Kálmán utca 11.

(88) 590-070 villamedici@ villamedici.hu 3519 Miskolc, (Miskolctapolca) Fagyöngy utca 2–4.

(46) 501-055 hotel@hotelaurora.hu

www.wellnesskastely.hu

41 SzaktuDáS kiaDó Ház zRt. www.oxigenhotel.hu

42

www.wellnesshotel.hu

43

www.friedhotel.hu

Szépia BiO & aRt HOtel /

44 eSpa kFt. www.szepiahotel.hu

gRanD HOtel glORiuS /

45 glORiuS HOtel kFt. www.glorius.hu

46

www.gere.hu

47

www.betekints.hu

BOck HOtel eRmitage /

48 BOck panzió kFt. www.hotel.bock.hu

HOtel villa meDici / 49 villa meDici kFt.

24 2 3

HOtel auRORa / 50 H-auRORa 2013 kFt.

18 9 1

www.hotelvillamedici.hu

www.hotelaurora.hu

283 (2018)

106 112

385 (2018)

80 115

✓

–

✓

✓

–

–

–

✓

–

–

✓

✓

–

–

✓

–

✓

✓

–

–

✓

–

1996 2019

Individuals (100) –

Sándorné neubauer, edit neubauer – –

✓

Dentistry, conference hall

2013 2016

Ferenc Kovács (50), Jnr. Ferenc Kovács (50) –

gergely Oravecz – –

Special Report | 19

3

www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Five-Star Hotels Outside Budapest Ranked by number of rooms

total net Revenue in 2019 (HuF mln)

single Rate (euRo/nigHt) DouBle Rate (euRo/nigHt)

Business coRneR

Beauty salon

Family FRienDly

gaRage

inteRnet in Rooms

caR Rental

events

pools

tHeRapy

massage

yeaR estaBlisHeD yeaR last RenovateD

oWneRsHip (%) HungaRian non-HungaRian

Wellness

otHeR

1

no. oF Rooms no. oF suites no. oF meeting Rooms

Rank

seRvices

spiRit Hotel tHeRmal spa supeRioR / spiRit Hotel kFt.

271 15 6

5,164

169 274

✓

✓

✓

–

–

✓

–

✓

✓

✓

✓

–

2008 2020

(100) –

krisztina kozó András Kósi Veronika Németh

9600 Sárvár, Vadkert körút 5.

(95) 889-500 info@spirithotel.hu

lotus tHeRme Hotel & spa / Hotel gaRDen kFt.

232 10 5

2,673

A A

–

✓

✓

–

–

✓

✓

✓

✓

✓

✓

Tennis court

1996 2020

– (100)

attila Fülöp Mónika Póka Viktor Kosztolánczi

8380 Hévíz, Lótuszvirág utca 1.

(83) 500-500 info@lotustherme.net

Hotel Divinus / Divinus Hotel Üzemeltető kFt.

149 9 10

933

110 131

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Billiard, darts, table tennis, fitness room

2008 2019

Divinus Hotel Üzemeltető Kft. (100) –

János szücs – –

4032 Debrecen, Nagyerdei körút 1.

(52) 510-900 info@hoteldivinus.hu

kastélyHotel sasváR ResoRt / A

58 5

A

A A

–

✓

–

✓

–

✓

–

✓

✓

✓

✓

–

(100) –

andrás szélessy – –

3242 Parádsasvár, Kossuth utca 1.

(30) 424-4444 info@khs.hu

504

113 139

–

✓

✓

–

–

✓

–

✓

✓

–

✓

–

Témadesign Kft. (100) –

attila tapodi – Gabriella Károlyi

3915 Tarcal, Fő utca 94.

(47) 580-015 hotel@ andrassyrezidencia.hu

istván gyenesei János Szemző Kinga Kiss

7541 Kutas-Kozmapuszta, 0120/4.

(82) 568-400 exclusive@ hertelendy-castle.com

Ferenc szabó – –

4644 Mándok, Szent István tér 9.

(70) 677-0131 info@forgachkastely.hu

Hotel name / name oF opeRating company WeBsite

www.spirithotel.hu

2

www.lotustherme.net

3

www.hoteldivinus.hu

4

www.khs.hu

5

A

anDRássy ReziDencia Wine & spa / témaDesign kFt.

41 3 3

HeRtelenDy kastély / HeRtelenDy kastélyszálló szálloDa és konFeRencia központ kFt.

12 8 3

www.andrassyrezidencia.hu

6

1998 A

2008 A

123 (2018)

345 518

✓

✓

✓

✓

✓

✓

–

✓

✓

–

✓

–

2007 2018

– Koller Group Holding AG (100)

270 (2018)

130–350 130–350

✓

✓

✓

✓

–

✓

–

✓

✓

✓

✓

–

2010 –

Individuals (100) –

top local executive cFo maRketing DiRectoR

aDDRess pHone email

www.hertelendy-castle.com

6

FoRgácH kastély / WoRlD-tRansit kFt. www.forgachkastely.hu

A = would not disclose, NR = not ranked, NA = not appliacable

12 A A

This list was compiled from responses to questionnaires received by July 29, 2020 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies' voluntary data submissions. 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

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Budapest Business Journal | July 31 – September 3, 2020

Socialite Beyond Budapest: Dispatches From Lake Balaton In a recent interview, quoted on the Guardian website, Budapest city mayor Gergely Karácsony said, “We want to spread out the spots in the city that are touristically interesting, and change the type of people who come. It shouldn’t only be bachelor parties and booze – we want to rebrand ourselves a bit.”

Siófok lies on the southern shore of Lake Balaton.

Photo by Geza Kurka Photos / Shutterstock.

DAVID HOLZER

I’ve just spent several days at Siófok on Lake Balaton, a tourist destination that’s easy to reach from Budapest and has an entire tourist infrastructure already in place.

With that in mind, I’d suggest that promoting awareness of “spots” right across Hungary that are touristically interesting could be stepped up a little.

Before I came to Hungary, I had no idea the Balaton even existed. A Hungarian friend of mine has met groups of British lads at the lake; they rent a car at Budapest Airport and head up for a short break. But they’re in the minority.

What struck me about my few days in Siófok (about 105 km southwest from central Budapest) was just how different the Balaton sun, lake and fun vacation experience is from the British seaside or Mediterranean equivalent.

We’ll get the lake bit out of the way first, shall we? I wasn’t quite prepared for how far I’d have to walk to get into comfortably swimmable water. It felt like I was in the middle of the lake before it was chest high. Apparently, the water’s much deeper on the less obviously touristic northern side of the lake.

This shallowness makes the lake pretty safe for children, I’d guess. It also means that there aren’t strong currents to whisk the SUPpers (the increasingly numerous stand up paddle boarders) out into dangerous waters.

If a storm blows up, as it did on our last day, it’s easy to see it coming from across the lake, which leaves ample time to haul out your kids. But, even in the height of the storm, there were still people in the lake optimistically throwing balls to each other.

Wet or Warm

Although we’re having the wettest summer I’ve yet experienced in Hungary, the sun bit is normally a breeze. Hungary tends to get hot in May and, apart from summer storms, stay that way until October.

But, unlike the Med, there’s a strange softness to the Hungarian summer sun.

Perhaps it’s because the landscape seems to remain green throughout and never really looks bone dry and parched.

Now to the fun, which is 100% Hungarian. Although I love Budapest, its center does have an air of “any-city-inEurope” blandness about it. This isn’t just down to the Starbucks and McDonald’s joints. Or the retail brands being the same as those on any shopping street anywhere in the developed world.

It’s also to do with the fact that what passes for hipster in Budapest is a pale version of what you’d find in London, Berlin, Amsterdam or Madrid. If you really want to get a sense of what Budapest is about, you have to head away from the area around Király utca and pretty much the entire District VII. Cross a bridge over to the Buda side and the streets immediately feel more authentically Hungarian. Or head out to a

district like the 10th, home of Budapest’s Chinatown at the Monori Center in Kőbánya, about 30 minutes by bus from Deák Ferenc tér, and you are really in another world.

But unless, like me, you like to drift aimlessly around cities and, ideally, get lost, you really need a reason to visit off the beaten track Budapest. How many tourists are going to come to Budapest to taste authentic Chinese food, for instance?

Unless Karácsony is thinking about reviving long-lost secret Budapest attractions or creating them – a House of Terror theme park perhaps – it’s hard to know where he plans to direct tourists for wholesome family fun.

(Mind you, there is that bizarre structure you see to the right just before you enter Nyugati station which, I’m told, was once a zoo. That has potential, I’m sure.)

Fun for All

Fun on Siófok’s main drag, Petőfi sétány (promenade), is certainly nagyon Hungarian and pretty much for all the family. This is the case even after midnight, when the street is jumping and thronged with bronzed young Hungarians: men with arms the size of legs, and women spilling out of glittery handkerchiefs.

At this time of night, the atmosphere on a street in the United Kingdom or somewhere like Magaluf in Mallorca, where young Brits congregate, would, in my experience, be pretty tense.

If violence hasn’t already erupted, it’s a constant threat. People are staggering or passed out drunk and you’re in constant danger of stepping into pavement pizza.

On Petőfi stny at midnight, there was all the good stuff and none of the horror.

Music blared out of bars, the bleep and whoosh of techno indistinguishable from the sounds made by the machines in the amusement arcades. The air was so thick with the aroma of frying food it was probably hardening our arteries without us eating a thing.

What was left of that atmosphere was good-humored and friendly, despite the colossal amounts of alcohol being consumed. I assume there was a Slow Screw On The Lake cocktail on offer somewhere but, sadly, I didn’t see it.

I must admit I was surprised to discover that some overseas “bachelor parties and booze” tourists do head for the Balaton.

But, if they behave like decent young Hungarians, it’s a good sign.

Perhaps an enterprising tour operator could offer a bus service from Budapest Airport out to the Balaton. Such a service could also venture out to other places of interest in the Hungarian countryside.

Because, in my experience, one of the deterrents to traveling more widely in Hungary is navigating the rail network if you speak only a few words of the language. Something else for Hungary’s tourist experts to ponder.

4

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Budapest Business Journal | July 31 – September 3, 2020

Socialite | 21

Photo by Shutterstock/Botond Horvath

The Best Rosé now a Wine for all Seasons Hungary is currently awash with rosé, a wine style in which the country’s vintners generally excel, often by skillfully channeling the crispy acidity and succulent red fruit of the indigenous Kékfrankos grape into the glass.

ROBERT SMYTH

For many years Hungary has pumped out millions of hectoliters of well-made, easy to drink, fruity rosé that’s at its peak pretty much as it hits the shelves and is meant to be sipped during the spring and summer following its harvest and vinification. More recently, increasingly sophisticated rosés are being made that can be enjoyed any time in the year of their release, and for another year or two beyond that.

From the Mátra wine region, near the town of Hatvan, the Nagygombos winery, which cultivates 90 hectares in one contiguous vineyard block, describes itself as a rosé specialist.

It cites factors that are prime for making the pink stuff, such as the cool northern climate that allows the grapes to ripen gradually over the growing season, slowly acquiring flavors while preserving their substantial acidity (essential for rosé), and the lime nyirok clay bedrock with sandy loess soils that also encourage fruitiness, as well as the choice of grape varieties.

Nagygombos, where the wines are made

by Anna Barta (her father, Károly, is the owner of Tokaj’s prestigious Barta winery), has released a trio of rosés from the 2019 vintage that all show nice nuances of the wine style, with the first two being ideal for imbibing on hot summer days, and vinified fully in stainless steel.

The pale salmon-colored Nagygombos Játékos Rosé 2019, is a blend of Merlot and Cabernet Franc, with thirst-quenching citrus fruit, especially grapefruit, to go alongside the cherry, raspberry, plus those small red berries with a sour twist, and watermelon. Its lively acidity is counterbalanced by a touch of residual sugar. It is playful as its name (in Hungarian) implies and a refreshing tipple for hot nights (and days).

The bright salmon-colored Nagygombos Mosoly Rosé 2019, made solely from Kékfrankos, positively oozes ripe strawberry, then raspberry and cherry, and is a good showcase of the grape variety regarding its

capacity to convey its fabulous fruit to rosé, with that mouth-watering, tongue tingling acidity keeping it fresh.

These two, which are fun to taste alongside each other (though I prefer the fresh red fruitiness of the latter) cost a very reasonable HUF 1,150-1,200 from Auchan, CBA, Reál and Artizan webshop.

More Sophisticated

The Mátra-based winery also has a more sophisticated rosé up its sleeve.

Nagygombos Borászat Barta Anna Gamay Noir Rosé 2019 is made from the Gamay Noir grape, the French grape that hails from Burgundy and is most widely associated with Beaujolais. It is aged both in stainless steel and oak, with the oak bringing considerable texture and spicy flavors.

More like an oaked white wine in terms of texture than a rosé, but also with a touch of red wine tannin, this layered wine has raspberry and sour cherry, accompanied by complex pomegranate, caramel and yeasty notes. It costs HUF 1,690 from matraiborokhaza.hu.

There are also some rewarding rosé finds to be made around Lake Balaton. From Balatonfüred, the Figula winery serves up a light and suitably zesty Rosé Cuvée 2019 (Cabernets Sauvignon and Franc, plus Kélfrankos and Zweigelt), but it is the 100% Cabernet Sauvignon Bella Róza Rozé 2019 (HUF 4,250 from Bortársaság), made from grapes from Balatonszőlős, which raises the rosé stakes.

Spontaneously fermented; half in oak (steamed, not toasted, in order to avoid woody notes but still enhance the texture), half in tanks. An onion skin color, with orange peel and marmalade notes, it is complex and spicy with great mouth-feel.

From just a few kilometers away, on the Tihany Peninsula (which juts out into Lake Balaton, giving it a unique mesoclimate, while it also has volcanic basalt soils), comes Tihany Rozé 2019, a co-production between local winemaker Dávid Bökő and Gellavilla, the winery of Bortársaság head/ part-owner Attila Tálos.

It’s made from Kékfrankos and Zweigelt grapes, with a bit more of the former, harvested on two separate dates from a remarkable spot between Sajkod Bay and Tihany’s reedy Külső-tó (Outer Lake), about 200 meters from Lake Balaton.

The grapes underwent whole-bunch pressing and brief settling, then were fermented spontaneously (but separately) in temperature-controlled tanks. After lengthy ageing on lees, blending was carried out in February.

The final wine was bottled in mid-May. It is light and airy, but also really elegant with good mouthfeel and length, and a lovely balance between ripeness and acidity.

Expect to pay HUF 3,750 from Bortársaság.

Contemporary

It’s also available in the Szőlősi Kocsma, the now cool and contemporary Balatonszőlős pub (you’ll find it in that town at Fő utca 10), fabulously renewed by Attila Tálos. This is a great place for eating as well. While on that theme, Tihanyi Vinarius is a strikingly restored winethemed restaurant overlooking Tihany’s Inner Lake, at Kiserdőtelepi út 15. It was originally built in 1820 by the Tihany Abbey to house its wine cellar and press house.

Franz Reinhard Weninger, an Austrian winemaker who makes wine following biodynamic principles in Balf, in the Sopron wine region on the Hungarian side, and in Horitschon in the Burgenland, on the Austrian side, makes Rózsa Petsovits Rosé; a tribute to his grandmother, who had Hungarian origins.

It comprises Pinot Noir and St. Laurent from the Burgenland and Syrah from Sopron. After a little skin contact, it underwent slow and spontaneous fermentation in concrete vats and used barrels.

This exciting, edgy wine is unfined and unfiltered, very dark for rosé, approaching pale ruby in color, really earthy with

juicy sour cherry and raspberry notes, with a wild, untamed feel, almost on the edge of refermenting as Weninger uses very little sulfur. The 2019 costs HUF 3,850 from Bortársaság.

From Szekszárd, the Dúzsi winery has a six pack of wild-yeast fermented rosés (Fajta-Rozé Válogatás 2019), made by Bence Dúzsi, the son of Tamás Dúzsi (also known as “The Prince of Rosé”) from six different varieties and gives the winery’s classic Kékfrankos rosé free as the seventh (HUF 13,900 from Bortársaság). The grapes for the six come from plots that are being transitioned over to organic cultivation. It is always a joy to sniff out the subtleties of each variety.

22 | 4

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Budapest Business Journal | July 31 – September 3, 2020

30 YEARS OF FREEDOM

Aerial photo of the intersection of Budaörsi út and the M1-M7, with Beregszász út on the left, and an auto car service on Boldizsár utca on the right (Budapest, District XI). Photo by Fortepan/Zoltán Szalay.

Taxi Blockade: A Chronicle of Four Remarkable Days In the last days of October 1990, the price of petrol in Hungary soared overnight by about 65%. Protesting against the increase, taxi drivers and private carriers first blocked roads in Budapest, then nationwide, paralyzing traffic for days. It was serious enough that Prime Minister József Antall was forced to work from his hospital bed to find a solution for what became known as the “taxi blockade.”

BBJ STAFF

In doing its best to reduce the huge public debt inherited from the previous regime, the Antall government has had to deal with a series of serious conflicts and conflicts of interest. Thirty years on, the October 1990 taxi blockade still divides politicians and public alike: many recall it as the first mass demonstration in democratic Hungary; others see it as an arbitrary action by a group of entrepreneurs that paralyzed others.

The price increase was officially announced on October 25, but had been preceded by controversial rumors. On October 19, the first news item about the possible price increase appeared in Népszava entitled “Betrayal: HUF 56-62

Gasoline is Coming”, while Magyar Hírlap reported on October 24 that petrol would become more expensive from October 29.

State news agency MTI reported that gasoline price increases were not on the agenda of the government’s October 25 meeting. Nevertheless, a 65% increase in fuel prices was announced at a parliamentary press conference that afternoon. According to the government, the price increase was triggered by the decline in Soviet oil supplies and by the First Gulf War, which had begun on August 2.

Outraged taxi drivers gathered on October 25 at Hősök tere in Budapest and then at Kossuth tér, in front of the Parliament, where they met with Minister of Transport Csaba Siklós, although he refused to receive their petition.

The taxi drivers decided to widen their protest: keeping in touch with each other via their radio network, they blocked all the bridges in Budapest, crippling the city’s traffic flow. From midnight, the blockade went nationwide, joined by both private and freight carriers.

The next day, October 26, movement was almost impossible on the country’s main roads and in larger cities, with traffic also building up at the borders.

Budapest Ferenc Liszt International Airport, then known as Ferihegy Airport, could not be reached from the capital, only the metro ran in the inner areas of the city. Demonstrators, however, did let ambulances and other emergency vehicles and lorries transporting food through their blockades.

Government spokesman Balázs László described the action of taxi drivers as illegal on the morning of October 26, citing the fact that it had not been announced

72 hours

earlier in accordance with the provisions of the Assembly Act. The government had certainly been caught unawares by the protest; four of the 11 ministers were abroad, and Prime Minister József Antall was hospitalized.

(As is now well known, but was not at the time, the prime minister had been diagnosed with non-Hodgkin lymphoma in the summer of 1990. He had undergone an operation just two days before the blockade, and would not see out his term in office: he died on December 12, 1993.)

Order by All Means

In his absence, the Minister of the Interior, Balázs Horváth, performed the duties of the Prime Minister, and announced that the government would restore order by all legal means. In a speech broadcast on radio and television, he justified the government’s action and announced that three crisis teams had been set up.

President Árpád Göncz made a public address on television that evening,

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www.bbj.hu

Budapest Business Journal | July 31 – September 3, 2020

Margit híd (Margaret Bridge) during the blockade. Photo by Fortepan/Zoltán Szalay. proposing that the government suspend the increase in petrol prices and, in response, that the taxi drivers end their blockade.

On October 27, Hungary awoke to a complete blockade of its roads. Taxi drivers and haulers, along with members of the public who joined them, paralyzed the country.

Road barricades were erected in an estimated

600 locations,

affecting a total of 105 settlements. In Budapest, with the exception of the Chain Bridge, all Danube bridges were closed and 25 major junctions were blocked. German Chancellor Helmut Kohl and Austrian Chancellor Franz Vranitzky both offered to help.

Negotiations between the carriers and the government lasted all day. In the evening, it was agreed to publish a joint statement. In this, the government announced that it would present a solution to a meeting of the Conciliation Council to be held on October 28, through which a discount of HUF 10 per liter could be envisaged under certain conditions. The agreement was made conditional on the lifting of the blockade.

Based on a preliminary agreement between the government and the carriers, at midnight, National Chief of Police Győző Szabó called on the protesters to remove the barriers.

By the morning of October 28, the blockade had eased somewhat, though it was far from universally lifted. At noon, the meeting of the Conciliation Council began at the Ministry of Social Affairs and Labor and was broadcast live on television at the request of the carriers.

On behalf of the government, Minister of Industry and Trade Ákos Péter Bod and Minister of Finance Ferenc Rabár led the negotiations, the workers’ delegation was headed by Pál Forgács, President of the Trade Union Roundtable and the Democratic League of Independent Trade Unions (FSZDL), and Sándor Nagy, National Association of Hungarian Trade Unions, while the employers were represented by János Palotás, President of the National Association of Entrepreneurs (VOSZ).

The meeting was chaired by István Orbán, vice president of the Hungarian Chamber of Commerce.

According to the agreement reached that evening, the increased petrol prices were to be reduced by HUF 12 from midnight on October 29, and the new prices would be valid until laws related to price liberalization come into force.

Blockade Lifted

Within a few hours of the news of the agreement, the blockade was completely

lifted throughout the country, and traffic was restored.

After signing the agreement, Prime Minister József Antall made a television statement to the television from his hospital bed. In what perhaps inevitably became known as his “pajama interview”, Antall analyzed the situation in the country, evaluated the compromise that had resolved the crisis, and acknowledged that his government had made mistakes in preparing for the announcement of the gas price increase.

He said there were no losers or winners in the situation and promised that the government would not act against those involved in the “civil dissatisfaction movement”.

Viewed from this distance, it would be easy to regard the taxi drivers’ blockade simply as an example of mass industrial unrest, but not everyone agrees with that assessment. In 2016, the Institute and Archive for the History of Regime Change (Retörki) analyzed the events and background of the blockade in a twovolume,

700 page

summary.

“Here, the program was the overthrow of the government,” remarked Zoltán Bíró, the general director of Retörki, at the time of the presentation of the

dissertation. According to him “this is how the SZDSZ wanted to achieve what it did not succeed in the elections.”

He added that the country had been close to a civil war situation developing in those days.

Subsequently, at the spring session of Parliament, President Árpád Göncz submitted a bill offering an amnesty.

The taxi blockade had resulted in hundreds of thousands of participants nationwide committing crimes because the demonstration was not announced 72 hours before it began and had paralyzed the operation of public utility plants. With the enactment of the Public Amnesty Act, the state dropped charges.

Political parties had also joined the argument: opposition SZDSZ politicians spoke at the barricades, and the ruling Hungarian Democratic Forum tried to win sympathy for its cause. Viktor Orbán, the young leader of the then liberal opposition Fidesz party, said in a speech to parliament after the three-day crisis that the government had lied because it denied that it was preparing to raise prices before the announcement.

Dented Prestige

The blockade severely damaged the prestige of the Antall government, which had proclaimed a “social market economy.”

Minister of the Interior Balázs Horváth was unable to handle the situation in place of the ailing Antall; President Árpád Göncz had managed to take some of the heat out of the situation by stating that, as the head of state and commander-in-chief of the army, he would forbid its deployment.

Plenty of simple sympathizers took the side of the taxi drivers, offering food and drink to those manning the barricades.

The four-day blockade can be seen as the beginning of the end for the first freely-elected post-communist Hungarian government, but also the first serious test of the country’s fledgling democracy. Ironically, though, rather than the highly active Free Democrats (SZDSZ), it was the reborn Socialist Party (MSZP) under Gyula Horn that was to reap the laurels of dissatisfaction by winning the 1994 general election.

The success of the taxi blockade was basically down to two things: in 1990,

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there were more taxi drivers in Budapest than in New York, according to an Origo article from 2005, which claimed nearly

20,000 drivers

held a license and another estimated 5,000 worked illegally. As regulations were tightened through the ‘90s and subsequent decades, more and more gave up the profession.

Kossuth Lajos tér (Budapest, District V), in the background the MTESZ house on the left. At center right is one of the main organizers of the taxi blockade, Pál Horváth.

Photo by Fortepan/Zoltán Szalay.

(Editor’s note: If that number makes it seem everyone must have been a taxi driver, perhaps they were. Certainly, I was told when I first arrived in Hungary in 1998 that Gábor Demszky, the SZDSZ Mayor of Budapest from 1990-2010, had fought his first election partly on a campaign of knowing the problems of the city’s streets better than other candidates from his time as a taxi driver.)

Another factor in the success was that the taxi drivers had a communication network that was only available to the police, ambulance service and the army at the time. In a time before widely available cell phones, CB radio provided a system that allowed the demonstration to paralyze the country.

At the same time, it is thoughtprovoking to note that CB communications are not encrypted, so anyone with a handset (including law enforcement units) could easily listen in, yet the organization was successful. According to some, this was another reason for the introduction of the so-called CEPT standard, which practically buried CB radio alive.

Örs vezér tere (Budapest, District XIV), the overpass in front of the Sugár Shopping Center. Photo by Fortepan/Zoltán Szalay.

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