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Hungarian Tourism: at a Crossroad Sara Lupson Lehigh University CORE Metadata, citation and similar papers at core.ac.uk Provided by Lehigh University: Lehigh Preserve Lehigh University Lehigh Preserve Transformation in post-communist Hungary Perspectives on Business and Economics 1-1-2006 Hungarian Tourism: At a Crossroad Sara Lupson Lehigh University Follow this and additional works at: http://preserve.lehigh.edu/perspectives-v24 Recommended Citation Lupson, Sara, "Hungarian Tourism: At a Crossroad" (2006). Transformation in post-communist Hungary. Paper 7. http://preserve.lehigh.edu/perspectives-v24/7 This Article is brought to you for free and open access by the Perspectives on Business and Economics at Lehigh Preserve. It has been accepted for inclusion in Transformation in post-communist Hungary by an authorized administrator of Lehigh Preserve. For more information, please contact [email protected]. HUNGARIAN TOURISM: AT A CROSSROAD Sara Lupson Introduction puts it in a situation similar to that of Hungary, is expected to reap roughly $9.44 billion more Since the fall of the Iron Curtain, tourism than Hungary in tourism-related economic has played a vital role in Hungary’s growing activity in 2005. (“Czech Republic Travel & economy. According to the World Travel & Tourism…,” p. 3) The Czech Republic’s higher Tourism Council (WTTC), tourism in Hungary level of tourism revenue comes as a surprise accounted for 9.3 percent of the total GDP since Hungary received roughly twice as many and 8.9 percent of total employment in international visitors in 2004. (“Tourism 2005. (“Hungary Travel & Tourism…,” p. 3) Highlights: 2005 Edition,” p. 6) This is indica- Additionally, tourism is a profitable sector of tive of many shortcomings of Hungary’s Hungary’s economy, instrumental in covering tourism industry. 73.9 percent of Hungary’s 2002 foreign trade In this article I survey the international deficit. (“Tourism in Hungary, 1990–2002,” tourism industry of Hungary to provide better p. 2) Thus, it is not surprising that the insight into the industry’s potential as a larger Hungarian government seeks to improve all economic influence. I review the history of forms of tourism and make Hungary the spa tourism in Hungary as well as specific sectors and convention center of Europe. (“The of tourism, namely business, cultural, health- Shortened Version…”) However, Hungary still and-wellness, and wine tourism, that I feel have has a long road ahead to becoming the tourism the ability to flourish. I then examine the cur- “Queen of the Danube.” rent efforts of Hungary to become a highly- While the tourism industry bolsters the frequented tourist destination and provide Hungarian economy, Hungary is not fully tak- ideas to possibly aid Hungary in capitalizing on ing advantage of the world’s propensity to trav- its potential to become a tourism hub of el. The Czech Republic, whose transitional state Europe. 55 A History of Hungary’s tion faded in the second half of the 1990s, Tourism Industry tourism continued to grow in Hungary. By 2001, the WTTC attributed 10.9 percent of Hungary experienced travel and tourism employment in Hungary to tourism. (Kiss, as early as 9 BC when Roman occupation p. 105) The growth in Hungary’s tourism indus- brought improvements in transportation, eco- try was halted in 2001 when the global tourism nomic growth, and a strong tradition of leisure industry was shaken by the terrorist attacks of tourism. (Rátz, pp. 14–18) After the Middle September 11th, the war in Iraq, and the SARS Ages, travel and tourism were rekindled during outbreak. Only recently has tourism in Hungary the 16th to 19th centuries by improvements returned to the levels of growth experienced and developments in transportation such as the prior to September 2001. The recovery of invention of the stagecoach, improved roads, tourism worldwide and Hungary’s accession to and later the development of the railway. The the European Union in May 2004 present new speed, ease, and relative affordability of Hungary with the opportunity to further travel encouraged the middle class to tour strengthen its tourism industry. Opportunities Europe en masse, resulting in the rise of a sub- to draw international tourists are most preva- stantial tourism industry. Hungary, in particu- lent in the areas of business tourism, cultural lar, developed a strong bath and spa tradition as tourism, health tourism, and wine tourism. such towns as Hévíz became prominent desti- Each of these areas of tourism will be discussed nations for those seeking health benefits. (Rátz, in the following sections. pp. 15–20) In the mid-19th century, Budapest’s role Hungary’s Potential Moneymakers as a capital in the Austro-Hungarian Empire prompted growth in both business and cultur- Business Tourism al tourism. Tourism was halted, however, by World War I and then again by World War II. One potential area of growth for Hungary The conclusion of the Second World War left is in business tourism, frequently referred to as Hungary behind the Iron Curtain, cutting off the “MICE industry” (meetings, incentive 1 all tourism from the West. Under communist tourism , conferences, and exhibitions). While rule, leisure tourism was viewed as a dangerous this form of tourism has existed since the early luxury and thus discouraged. However, the state 19th century, during the 1960s the MICE indus- did offer the opportunity for citizens to travel try began to develop into the economic force it within a state-owned network of holiday resorts. is today. (Kiss, p. 91) One reason behind this Travel from one socialist bloc country to anoth- economic force is the business tourism indus- er was available, though monitored. As a result, try’s relative independence from the weather. domestic tourism became very important in Business tourists are more likely to travel in the Hungary. Mountainside and lakeside resorts in traditional tourist off-season, thereby creating the Lake Balaton and Lake Tisza regions a more stable industry. While all forms of busi- became frequent tourist destinations. While ness tourism are beneficial, Hungary current- domestic tourism was at very high levels, it was ly focuses on drawing conference tourists, as strictly controlled by the government, thus lim- this is the larger moneymaker. Conference iting its role as an economic asset. (Kiss, tourism generates higher revenue because pp. 103–104) these tourists generally stay longer and spend After the fall of the Iron Curtain in 1989, more than other types of tourists. (“Tourism in the socialist bloc countries transitioned to mar- Hungary 2004,” p. 46) Conference tourism is ket economies. As a result Western tourists, also indirectly responsible for growth in other long denied access, flooded into Hungary. The areas of the economy. The reason is that lead- consequent flow of money aided Hungary’s fledgling market economy. Despite a marked 1Incentive tourism refers to the practice of companies decrease in international interest in the former offering travel products such as cruises or retreats to their socialist bloc countries as the West’s infatua- employees as an incentive for good performance. 56 ing professionals attending the conferences preserved relics of its rich history that draw often help to bring new technology, ideas, and many tourists from within and outside Europe connections in their areas of expertise to the who wish to expand their cultural horizons. host country’s industry. (“Tourism in Hungary Budapest’s castle district, grandiose architec- 2004,” p. 46) ture, museums, and opera scene all help Hungary’s success in the MICE market Hungary draw these tourists to Budapest. In has been mixed, however, according to data addition, many annual cultural events, folk generated by the International Congress and music events, and craft fairs also draw tourists Convention Association (ICCA). Hungary to Hungary. With the abundance of these cul- ranked 14th in 1996 on the list of popular con- tural attractions, Budapest should be a prime vention countries, while Budapest ranked 3rd destination for the cultural tourist. among cities. However, in 2004 Hungary sank However, Hungary’s success as a cultural to 19th and Budapest to 9th. (Kiss, p. 94) While tourist destination is somewhat unclear. Typical private investors and the government pour tourism indicators do not distinguish cultural money into the MICE industry to expand hotels, tourists from other types of tourists, making it conference halls, and supplementary infra- difficult to assess the health of the cultural structure, the industry’s growth seems to be tourism industry. Still, most tourists, regard- slowing. This may be due to a decline in less of their motivation for the trip, engage in Hungary’s ability to offer tourists good value for basic cultural tourist activities such as sight- their money. As Hungary strives to strengthen seeing. Thus, some statistics, such as the num- the forint in order to join the European ber of international visitors entering Hungary Monetary Union (EMU), tourists find that their (international arrivals), may be good indicators money does not go as far in Hungary as it once of the industry’s health. According to the 2005 did. Since the MICE industry is sensitive to this, World Tourism Organization (WTO) data, Hungary must fight hard to prevent additional Hungary attracted 2.9 percent of all interna- decline in the industry. Moreover, the ICCA tional arrivals in Europe in 2004. (“Tourism reported a recent decline in MICE tourism Highlights: 2005 Edition,” p. 6) Hungary’s worldwide. This global decline, coupled with numbers actually exceeded those of the Czech Hungary’s reduced popularity as a conference Republic, which claimed only 1.5 percent of destination, has cast a shadow on the country’s international arrivals in Europe. Additionally, most potentially lucrative form of tourism. Hungary’s 2.9 percent ranked closely behind Still, the Hungarian National Tourist those of Germany and Austria, traditional Office (HNTO) remains hopeful about tourist “heavy-hitters,” which accounted for Budapest’s future prospects as a MICE tourism 4.8 percent and 4.7 percent of the internation- destination.
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