GKI analysis: Increasing guest traffic

Tourism growth can contribute positively to GDP expansion through several channels. On one hand, the increase in the number of guest nights directly boosts the added value of the accommodation and hospitality sector. On the other hand, the multiplier effect of tourism spending – for example, through transportation, retail, cultural services, and leisure activities – generates further demand in other sectors of the economy. Spending by foreign tourists also improves the service balance of the current account, strengthening the national economy’s foreign currency revenue position.

According to HCSO data, despite the outflow of domestic income and the rebound in inbound tourism, the sector has not yet fully recovered from the impact of the COVID pandemic in 2020–2021 and the 2022 energy crisis on guest nights. In 2019, the number of bed places at commercial accommodations exceeded the 2010 level by 12%, while the number of guest nights was 61% higher. Following the collapse in 2020 and the partial rebound in 2021–2022, over the subsequent 2.5 years, tourist traffic grew at an average annual rate of around 4%, reaching 90% of the 2019 level. Assuming a similar annual rate, the sector is expected to reach pre-COVID levels by 2028. The latest GKI confidence index for accommodation services supports further medium-term growth for the sector.

Source: HCSO, GKI calculations

The sector’s recovery after 2021 has been largely driven by inbound tourism, with foreign visitors accounting for 83% of the growth in guest nights during this period. In the decade before COVID, the number of trips by foreigners to Hungary and the days spent here increased dynamically. After the partial rebound in 2021–2022, however, only modest growth has been observed. Nevertheless, inbound tourism in terms of both trips and days spent is still 17% below the 2019 peak performance.