The effects of COVID-19 on tourism destinations – The answer of Budapest
The coronavirus epidemic has had unprecedented negative effects on several sectors and has put pressure on the tourism sector as well. According to the UN World Tourism Organization, an estimated €840 – 1,000 billion in losses were caused by the coronavirus epidemic in the global travel industry.
Restrictions on entry and exit have led to highly significant changes in tourism. In terms of destinations, the attention of those wishing to travel has focused on domestic destinations instead of high-end foreign resorts.
Numbers of Hungarian tourism
According to the Hungarian Central Statistical Office between January and June 2020, the commercial accommodation registered was a total of 7.8 million guest nights which is 56% less than in the previous year. Foreign guests spent 68% and domestic guests 44% less (2.7 and 5.0 million, respectively) guest nights in commercial accommodation than in the same period of time in 2019. The total gross sales revenue of commercial accommodation decreased by 55% at current prices and amounted to HUF 137 billion.
As shown in the figure above, in July 2020, compared to the same month of the previous year the number of foreign guests fell by 76% and the number of guest nights by 75%. It meant 166 thousand guests spent 478 thousand nights, mainly in hotels or campsites. The decrease was 50% in the case of hotels, 57-60% in campsites, boarding houses and holiday homes, and 91% in communal accommodation. According to the destinations, the capital city Budapest was suffering the most altogether with 88% decline.
Given the above figures in the number of foreign guests there was a steep decrease in the summer months compared to the similar months of the previous year. In June the decline meant 91.3%, in July 72.1% and in August 68.4% less foreign tourists in the Hungarian regions according to MTÜ (Hungarian Tourism Agency).
To examine guest nights with summary data, Table 1 shows that the number of domestic guests (according to the table above) fell by 12% and the number of guest nights by 18%. The number of guests was 758,000 and the number of guest nights spent was 2.1 million in July 2020. Hotels and boarding houses registered 2.5% more nights than in the previous month of 2019. The campsites accounted for two-thirds of the July traffic of the previous year.
How did Budapest react?
In Budapest, micro and small enterprises operating in tourism are helped by establishing a discounted rental fee for properties owned by the local government of the capital, as well as a discounted public space usage fee.
The rate of rent reduction is determined in proportion to the decrease in sales revenue. Until 31 March 2021, a 90% discount will be given on the public space usage fee to be paid for the catering terraces, while 70% of the taxi fare will be granted. An amendment to the regulation is also envisaged to exempt taxi drivers from replacing vehicles older than 10 years. The deputy mayor said that businesses working in the tourism sector have long been helped by a room rental discount. One of the conditions for granting the discount is that the redundancies in the given company do not reach 10%, thus supporting the employees as well.