OECD Tourism Trends and Policies 2018

Hungary

Tourism in the economy

According to the latest Tourism Satellite Account (2013), the direct contribution of tourism to the country’s GDP is EUR 5.0 billion (6.1% of total) and the industry employs 346 000 people (9.1% of the workforce). If indirect contributions are included, tourism accounts for 9.8% of GDP (up from 9% in 2009) and provides 12% of total employment.

2016 was an exceptional year for the tourism sector. In total, Hungary welcomed 11.1 million guests in commercial accommodation, spending 27.6 million guest nights in 2016. This reflects an increase of 6.9% and 6.7% respectively compared to the previous year. The gross revenue of commercial accommodation establishments (including all services) grew by 9.4%.

International and domestic tourism both performed well, with 5.8 million domestic (up 6.2% on 2015) and 5.3 million international arrivals (up 7.6%) in commercial accommodation, with each group spending almost 14 million nights, an increase of 7% and 5.5% respectively on 2015.

Hungary’s top three inbound markets by guest nights in 2016 were Germany, United Kingdom and Austria. While there was a slight decrease in guest nights from Germany (down 2.2%), those attributable to neighbouring countries such as the Slovak Republic (up 19.8%), the Czech Republic (up 17.8%) and Romania (up 16.4%) increased significantly from 2015.

Tourism governance and funding

In 2016-2017, there have been significant structural changes in the Hungarian tourism administration. Government responsibility for tourism was transferred from the Ministry for National Economy to the Ministry of National Development in April 2016. The national tourism administration and the traditional promotional tasks of the former Hungarian Tourism Ltd. were integrated into the newly established Hungarian Tourism Agency (HTA), operating under the supervision of the Ministry of National Development.

The main tasks of the HTA include: i) tourism policy making, ii) development and implementation of long-term tourism development strategies, iii) coordination of tourism developments in the designated tourism regions, iv) management of tourism related EU funding, and v) promotion of Hungary to international and domestic markets. Other tasks include:

• Monitoring: researching and analysing trends in the tourism sector on both the national and international level and their impact on Hungary,

• Communication: informing stakeholders about the performance of the sector, development opportunities, research findings and other information,

• Quality Assurance: introducing, developing and operating quality systems in the sector (trademarks, awards, etc.),

• Implementation: making priority tourism investments,

• Innovation: supporting the establishment of new products, business models and services,

• Incentives: planning and ensuring the effective use of grants and other financial resources for tourism projects and for the development of innovative grant schemes,

• Education: suggesting necessary developments in the higher education sector concerning tourism.

Since July 2017, international tourism relations have been managed by the Ministry of Foreign Affairs and Trade, under the supervision of the Ministerial Commissioner for International Tourism Relations. This includes bilateral arrangements (e.g. tourism working groups, joint economic commissions), representing Hungary in regional groupings (e.g. Visegrád Group, China-CEEC tourism co-operation), and co-operation with international organisations (e.g. OECD, UNWTO).

Hungary: Organisational chart of tourism bodies

Source: OECD, adapted from the Ministry of National Development and Ministry of Foreign Affairs and Trade, 2018.

Tourism is considered a strategic priority for the Hungarian Government. This has been underlined by the quadrupling of the budget allocation for tourism from 2016 to 2017, to almost EUR 70 million. Of this, EUR 36.7 million is dedicated to the operation and promotional activities of the HTA and EUR 33 million to quality developments in tourism.

As a further sign of support for the industry, VAT in the catering sector is being reduced in two stages. Since January 2017, the VAT was reduced from 27% to 18%. In 2018, the VAT on catering will reduce further to 5%, but relevant companies will be obliged to pay a 4% contribution to a dedicated fund which will be used to support tourism promotional activities. In addition to the preferential VAT rate for accommodation services, the VAT on tickets to festivals has been lowered to 18%.

In 2018, even more state funding (nearly EUR 173 million) for tourism development is planned. Together with the support of EU co-financing, in the financial period of 2014-2020, more than EUR 1.6 billion will be devoted to tourism development in Hungary.

Tourism policies and programmes

The Government objectives for tourism are based on seven pillars:

• Destination based product and attraction development,

• Effective promotion and personalised marketing communication,

• Dedicated professionals and professional hospitality,

• Reliable data and measurable performance,

• Transparent, objective regulation and incentives,

• Governance and co-operation with industry, academic and other governmental stakeholders,

• Strengthening the Hungarian identity and attachment to homeland.

Based on legislation introduced in 2016, a new approach to tourism development has been introduced in Hungary, based on the identification of priority areas as the basic units for the planning of tourism development. Tourism in Hungary over the past decade could be characterised as product based, singular developments in different tourist regions. The new approach involves the concentration of development activities in designated areas based on current or potential tourism performance, coordinated by a single governmental body instead of various institutions. To ensure focused and sustainable tourism development, the Hungarian Tourism Agency in co-operation with local municipalities and stakeholders is now responsible for coordinating all publicly funded investments in identified priority areas for tourism development.

To date, five tourism development areas have been identified – Dunakanyar, Lake Balaton, Sopron-Fertő, Debrecen and Tokaj – with other areas in the pipeline. Within these priority areas, the key tasks are to:

• Prepare a unique development program with the necessary allocation of resources,

• Renew or develop the destination brand for the area, as a basis for attracting visitors and influencing the development of suitable products and experiences.

The creation of priority tourism development areas affects the labour market and vocational training needs of the regions. It has been necessary to determine the quantity of labour and the types of skills required to sustain the planned tourism development areas.

In 2017, the National Tourism Development Strategy 2030 was introduced as the core document defining targets and methods for the management of tourism up to 2030. The document covers every future sub-strategy and programme in the tourism sector, and defines the short-, medium- and long-term tasks by identifying key intervention points and strategic goals. It puts great emphasis on the newly introduced destination-based approach, as well as the new concept behind state-supported attraction development and the development of basic infrastructure.

Statistical profile

Table 1. Hungary: Domestic, inbound and outbound tourism

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Table 2. Hungary: Enterprises and employment in tourism

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Table 3. Hungary: Internal tourism consumption

Million HUF

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