Twenty years ago, Budapest, the capital of Hungary, one of the first wave of Eastern European countries which joined the European Union, was considered, along with Prague, one of the finest destinations in Eastern & Central Europe. It was not only the sheer beauty and vast heritage (arts & culture) of the metropolis, split by the Danube, which was impressive, but also its sophistication as a genuine luxury shopping and dining destination.
The country’s national airline MALEV paid a big role in establishing Budapest as a predominantly upscale destination, with direct flights to the U.S., Canada and China as well an expansive network in Eastern Europe. The nationals of Ukraine, Russia or Romania would be able to travel visa-free before but even after the country joined the E.U. A good percentage of these travellers would be wealthy consumers, hence the impressive sales statistics of luxury brands at the time.
DIOR even hosted an Haute Couture catwalk show in Budapest (among numerous other ready-to-wear) with more than 500 attendees, of which half from abroad. The haute couture collection sold out in hours.
Atrium Hyatt (today Sofitel), Kempinski Corvinus and InterContinental were among the top luxury hotels boasting among the highest rates in the region. In time, despite the lack of investments (none of the three hotels was fully renovated since opening) the hotels would still maintain their ‘five star’ rating but selling at a fraction the rates they used to charge.
Marriott and most recently Hilton Budapest (Castle District) are the only properties opened two decades ago which have undergone complete renovations. When Malev went bankrupt in 2012, the first signs of decline appeared. The national airline was ‘replaced’ by low cost carrier Wizzair, which also brought to Budapest a completely different traveller profile which put pressure on hotel rates, the city becoming a budget destination, where a five star room would sell for as little as EUR 70.
Amid the turbulent economic and political context, a new wave of luxury hotels opened in Budapest, namely Corinthia Budapest, Le Meridien, Buddha Bar Hotel and Four Seasons, each with lower rates that the ones anticipated in the early research of 3-4 years which preceded the openings. 2009 was the peak of the crisis of Budapest as a tourism destination.
Luxury retail had a rather similar downfall. Initial indications and studies showed that Budapest would attract an enough number of wealthy foreign travellers for luxury fashion and watches brands to justify opening mono-brand stores which they would operate directly. Today, stores like Gucci or Louis Vuitton boast turnovers half of their similar brand stores in Bucharest or Kiev. One of the most prominent closures was the highly successful DIOR store which had been operating for almost two decades.
With lower operating costs and a bigger flexibility on pricing, a boom of ‘five star’ independent hotels mushroomed in the past 5 years, Aria Hotel even taking the reign of Tripadvisor. Buddha Bar Hotel closed, while Le Meridien was re-branded as The Ritz-Carlton Budapest underwent renovations, however, without reducing inventory so that accommodations may become larger, more in line with luxury hospitality standards) and Atrium Hyatt (originally opened in 1983) became Sofitel Budapest Chain Bridge in 2011 – not renovated since re-branding.
The Ritz-Carlton Budapest and InterContinental Budapest proved to be a bargain for Emirati billionaire Al Habtoor Group while Four Seasons Gresham Palace Budapest was snapped up by Oman’s Sovereign Fund. Sofitel Budapest was sold by Polish giant Orbis to Starwood Capital in 2017 for USD 75 million, again a bargain considering the location of the hotel (direct views of the Danube and Buda Castle) but also the size of the hotel with 357 keys, an indoor pool, two restaurants and a casino.
With its unrivalled location at the foot of the iconic Chain Bridge, a few hundred meters from the Danube, Four Seasons Budapest opened within a heritage palace building, Gresham Palace, with a spectacular roof-top swimming pool and the largest luxury rooms and suites among luxury hotels in Budapest. Early years were tough, especially because of the confusing F&B strategy which failed to produce a strong restaurant.
Despite the human resources crisis, which saw skilled Hungarian immigrate to Western EU countries for higher salaries, Four Seasons Budapest has successfully maintained its high standard of customer service, remaining to this day, the top luxury hotel in Budapest, also boasting the highest ADR. A few years ago, the main restaurant was also repositioned to a standard that has made it attract both local patrons and hotel guests.
Mentioned must be made that, today, many luxury hotels in Budapest, especially those of a mid / smaller size use outsourced services especially for housekeeping. I was surprised during my stay at one of the hotels that the housekeeping staff would not speak neither Hungarian nor English. I was then told by the management that the ladies are from Ukraine and they are brought by a bus every day to the hotel. Nobody seemed to question that this may be a major mishap for the quality of services, especially in a five star ranked property.
Hilton Budapest (Castle Hill), the first Hilton property to open in Eastern Europe (1997) is located amid a UNESCO heritage site in the Castle / Buda district which has restricted access. The hotel commands breathtaking views of the city and the Danube, rivalring only the Four Seasons, has stubbornly remained dormant until 2018 when the hotel underwent a complete renovation which immediately repositioned the property among the top three luxury hotels of Budapest. Despite a run-down and dated product, Hilton Budapest has always maintained very high customer service standards, over 30% of its staff with the property for over 10 years.
In spite of being housed within a majestic historical building, Corinthia Budapest has gradually lost its early days sparkle, most of the hotel (except a few suites) remaining derelict and dated, of a four star standard. Without views that play an important part in the positioning of its rival hotels, Corinthia has slowly but gradually transformed itself into a predominantly business / conference and groups hotel. The biggest asset of the hotel remains its spectacular Spa which resembles a Roman thermal bath house, while its F&B turning out to be its major challenge. This year, the economic context has kindled a major exodus of middle management staff from Corinthia Budapest to other hotels, including newly opened ones such as Mystery Hotel.
This year, the owners of the former Buddha Bar Hotel, Mellow Mood Hotels, opened Parisi Udvar, a stunning heritage passage building, after 4 years of renovations, restorations and reconstruction works. The hotel opened under a franchise agreement with Hyatt Inc’s newest upscale brand, Unbound Collection by Hyatt which also includes Hotel du Louvre in Paris or Martinez in Cannes – both of a 4 star standard. Parisi Udvar opened with a superb luxury product while it is still fine tuning its service standards.
The biggest challenges which Budapest is facing as a tourism destination are safety and its ailing health system. As for safety, one of the most alarming problems which have thrived on corruption is prostitution, with countless ‘massage salons’ in the heart of the city, most of them with exploited sex workers from Asia, predominantly Thailand and Philippines.
Ladies of these ‘parlours’ pick up foreign tourists in the middle of the street. What is most alarming is that neither hotels nor the police warn tourists about the dangers they face in these salons. The same goes for dodgy Exchange Offices which scam travellers on commissions as well as ATMs which do not belong to any local banks but foreign or local entities authorised by the National Bank which can charge up to 20-30% commission for cash withdrawals. State hospitals are not only in a derelict condition but very few have emergency rooms with foreigners reporting that medical staff do not speak English and even in emergency cases, they do not consider any insurance, all medical services being payable.
On the positive side is the revival of Hungary’s gastronomy, with a wealth of young talented Chef that have been rediscovering and interpreting the country’s immense culinary heritage, with the finest quality ingredients cultivated organically. The 2019 Michelin guide counts no less than six Michelin starred restaurants, including one restaurant (Onyx) with a two Michelin rating. Hungary’s home grown luxury beauty brands such as Omorovicza can now e found globally, especially at luxury hotels and resorts.
Lured by stellar statistics that report on staggering growth in tourist numbers, both W Hotels and Luxury Collection upcoming properties are currently under construction (estimated to open end of 2020 / early 2021) – both within historical buildings located downtown.
CPP-LUXURY.COM’s Budapest luxury hotels ranking
1 Four Seasons Gresham Palace
2 Hilton Budapest (Castle District)
3 Parisi Udvar (Unbound Collection by Hyatt)
4 Kempinski Corvinus Budapest
5. The Ritz-Carlton Budapest
In the coming weeks, CPP will be publishing individual comprehensive reviews for Hilton Budapest, Parisi Udvar and Mystery Hotel.
Oliver Petcu in Budapest
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