Hungary's Tourism Industry

Hungary has had a special appeal for travellers and visitors for several centuries, mostly thanks to the vibrant cultural life that Budapest had as the capital of the Austro-Hungarian empire. However, large-scale tourist operations in Hungary did not start until the late 1990s. How has the tourist industry fared in Hungary and what is its current status? Continue reading to learn more about the past, present, and future of the tourist sector in this Central European nation.

A brief history of the tourist sector in Hungary

The origins of the modern tourist sector in Hungary date from the 18th century, when the country became popular among the European middle classes thanks to its affordability and to its excellent transport links with other parts of the continent. Initially, the main attraction for tourists in Hungary was the multitude of spa centres in cities like Budapest and Heviz. As a result, by the 19th century, Hungary was a well-established destination for those interested in medical tourism.

The growth of the Hungarian tourist industry came to a halt during the first half of the 20th century, as the country was immersed in the two world wars. Following the wars, the number of tourist arrivals continued to be negligible, as Hungary was behind the Iron Curtain and the authorities tried to discourage all contact with the West. Tourism existed during these years, but it was limited to domestic visitors and those from neighbouring countries, such as Romania, the former Czechoslovakia, and the Soviet Union. The vast majority of tourists headed to state owned holiday resorts, mostly around Lake Balaton and the Tisza region.

The transition from communism to a market economy was particularly important for the development of the tourist industry in Hungary. The Iron Curtain fell in 1989, and by 2001 the World Travel and Tourism Council estimated that tourism accounted for nearly 11 per cent of all jobs in the country. The inclusion of Hungary in the European Union in 2004 further facilitated the growth of the local tourist sector, and over the past 9 years the Hungarian government has made efforts to strengthen the importance of the industry by devising strategies aimed to attract visitors interested in business, health and well being, and cultural tourism. A year later, Hungary was among the world's top 15 most visited countries.

By 2005, the tourist industry generated revenues that accounted for 9.3 per cent of the country's gross domestic product. Jobs in tourism and hospitality continued to be an important percentage of the labour market. The tourist trade has also been beneficial to the general economy, since the revenues generated by this sector cover almost 74 per cent of the country's foreign trade deficit.

Tourism in Hungary: a three-fold strategy

Since the 1960s, business tourism has accounted for a large number of visitors to Hungary. The local government recognises the value of this sector, which typically brings in higher revenues. In 2004, Budapest was the 9th most popular city in the world for conventions and conferences. However, it appears that business tourism has slowed down since, mostly due to lack of funding that has caused a stall in the construction of new business and conferencing facilities.

On the other hand, cultural tourism continues to be a strong sub-sector. The growth of this sub-sector has been particularly evident since 2004, when the number of visitors increased by 16.9 per cent when compared to the previous year. More recently, the country's tourist industry has focussed on developing wine tourism. The efforts have been successful and have contributed to the development of a tourist network away from large cities and into countryside regions that were previously unknown to the majority of visitors.

The third sub-sector that constitutes the tourist industry in Hungary is health and medical tourism. For centuries, Hungary has been known for its beneficial medicinal springs and spas. Tourists who visit the country for these reasons are likely to stay longer and to make return visits. This has prompted those involved in the tourist industry to invest in the so-called wellness hotels, whose capacity increased by nearly 50 per cent in just one year (2005).

Future developments in the Hungarian tourist industry

Market analysts affirm that the industry is failing to make the most of its potential, as the local tourist sector has several shortcomings that have not yet been addressed. Some recommendations for future development include strengthening the country's tourist appeal on the Internet and focussing marketing campaigns on dispelling the negative image that tourists often have of Eastern European countries, particularly in terms of health care, transportation, and telecommunications. It is also expected that the increase in the number of airlines who fly to Hungary will be a key factor in making this country more accessible to foreign visitors.