The recent announcement from the Hungarian Government regarding the stepping down of its Prime Minister has been fueling market jitters. The Hungarian economy, dubbed as being the most affected by the crisis in the Central and Eastern European region is considered brankrupt by many economists.
The Hungarian luxury market has been constantly dropping since the debut of the crisis mainly due to the steep fall in the number of tourists. Occupancy rates at Budapest five star properties have dropped as much as 30%, some hotels slashing rate cards by 50%. Also, properties partly under renovation have halted all works. Also deeply affected is the luxury fashion sector as a direct result of falling tourism traffic. For instance, Four Seasons Budapest has the lowest rack rates among all its European properties.
Louis Vuitton, Gucci, Burberry, Escada and Hugo Boss are among the most important luxury fashion players, each with a monobrand presence. The largest luxury fashion multibrand on Andrassy, opened in December 2008 (Dior, Lanvin and Versace) also reports falling sales.
We believe the Hungarian luxury fashion & accessories will not see a recovery within the next 2 years, that is why, some brands might consider multibrand distribution instead of monobrand.
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