Latest data continue to confirm our view of a weak outlook for foreign visitors in 2008, with arrivalstotalling just under 16.9mn in H108, a decline of 2% on the corresponding period of 2007. Of the top foursource markets, arrivals from Romania and Slovakia were up around 1% and 5% year-on-year (y-o-y)respectively, while arrivals from both Austria and Germany declined by almost 5% y-o-y. Overall,arrivals from Europe were down 2% compared with the same period in 2007, although arrivals from theEU were up a slight 1% y-o-y (with strong growth in arrivals from the Czech Republic and Poland).
Forecast Scenario
In line with recent data for foreign visitor arrivals and downward revisions, this quarter, to forecasts foreconomic growth in the eurozone (which accounted for 58% of all visitors in 2007), BMI has adjusteddown its outlook for foreign arrivals to Hungary in 2008 and 2009. As a result, we expect a modest fall inthe number of arrivals in both years, with mild recovery occurring from 2010. Growth in internationaltourism receipts (in US dollar terms) is also forecast to slow in the short term, as the outlook for visitorarrivals weakens and the Hungarian forint depreciates against the US dollar.
Hospitality
Further weakness is evident in the hospitality sector in 2008. The most recent data are for the periodJanuary to August 2008 and show the total number of nights spent in all accommodation establishmentswere down nearly 1% compared with the corresponding period of 2007 to some 14.4mn. Tourist nightsby international visitors, which amounted to about 7.1mn, declined by 0.6% y-o-y, while nights bydomestic residents fell 1.2% y-o-y. Concerning key source markets, the number of nights by German andAustrian tourists declined over the eight-month period by 9.4% and 3% y-o-y respectively. Interestingly,tourist nights accounted for by the UK were up a relatively favourable 10% y-o-y. Two other majorsource markets, Italy and the US, however, both recorded negative growth in tourist nights (down around11% and 7% y-o-y and respectively).
Malév Hungarian Airlines
Financial results for 2007 show the national flag carrier Malév Hungarian Airlines recorded a profit ofHUF703mn (US$4.1mn), compared with a loss of HUF10.5bn (US$55mn) in the previous year. Theimproved results partly reflect a fall in operating costs. The airline carried over 3.1mn passengers onscheduled flights in 2007, an increase of 5.3% y-o-y. Western European routes accounted for 54% of totalpassenger traffic, with significant growth on several routes, including Gothenburg, Paris and London-Gatwick. The airline recorded its strongest growth in passenger numbers (up 7% y-o-y) on routes inEastern Europe.
Wizz Air
From April 2009, Hungarian low-cost carrier Wizz Air will add a new aircraft to its Budapest base. Theadditional capacity will be deployed for increasing frequencies on the current network, opening newroutes to Madrid and Naples, and re-launching routes to Barcelona and Oslo Torp. As a result, Wizz Airwill increase its capacity in Hungary by 30% in 2009 compared with 2008. In October 2008, the airlinealso announced that it would add three new aircraft and double its capacity in Romania in the comingmonths. The first new aircraft will be operated from Timisoara (Wizz Air’s 10th base) from February2009 - brought forward due to strong demand.
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