Issuu

Report 3Special ngary Hu in s ay Holid

BBJ

ry Tourism indust

SPECIAL REPORT:

ARRIVALS & GUEST

NIGHTS AT COMMERCIAL Arrivals

Luxembourg the Netherlands Poland

197,718

Romania

185,523

Russia

119,281

Slovakia

23,210

Slovenia

131,486

Spain

75,609

Sweden

59,066

Switzerland

53,668

Turkey

106,646

Ukraine United Kingdom

273,742 3,245,177

Europe Total Asia

427,590

87,162 from which: China India 13,623 Israel 74,217 Japan 66,798 89,560

Republic of Korea

18,829

Africa

309,759 America 25,577 from which: Brazil Canada 29,621 USA 220,132 Australia and Oceania Total foreign Total domestic

VOL. 23. NUMBER 14

Source: Central

32,676 4,587,634 4,938,146

+25.3%

–8.0% –3.3% +3.3% –2.5% +6.8% +0.7%

118,909 259,452 41,736

+3.6% +6.6% –10.2% +0.3% –0.8% –17.8% +8.4% +2.6% +13.8% +19.5% +32.0% +16.5% –11.9% +39.0% +16.0% +10.3% +1.3% +4.8% +12.1% 0.0% +4.6% +9.8%

NTS, JAN-MAY TION ESTABLISHME vs % change vs IN ACCOMMODA % change Jan–May Jan-May ’14

306,878 211,523 166,027 111,842 216,149 687,175 8,480,103 887,029 150,355 33,627 244,880 140,741 111,621 55,605 761,874 62,573 82,142 535,635 81,091 12,302,988 11,895,853

+1.0% +19.7% –2.3% +0.8% –12.9% –0.3% –0.2% –11.1% +8.8% +1.3% +9.1% +13.2% +27.3% +10.1% –9.5% +32.7% +20.5% +8.9% –1.9% +7.8% +11.1% –2.8% +2.7% +8.3%

1,221,000 by Tourism nights spent international tourists 1,026,000 by domestic Tourism nights spent tourists 2,247 total, thousands Tourism nights, 33.4 (HUF billion) Revenues, total 18,151 average room rate In hotels: Gross (HUF) 10,204 room (HUF) Revenue/available room (HUF) 17,235 Total revenue/available Source: Central

May ’14 1.9%

4.7%

4,242,000

6.1%

7.5%

3,694,000 7,936 123 16,515

3.8% 5.5% 6.1%

6% 8.8% 5.5%

7,810 14,100

7.9% 5.8%

May

+0.5%

754,358

+20.6%

TOURISM NIGHTS

–0.1%

356,906

–3.0%

touristed Váci utca.

+5.8%

35,344

+8.7%

Crowds pack heavily

+1.1%

354,492

+0.9%

60,614

Serbia

+15.9%

146,937

–4.8%

14,699

Portugal

–2.2%

213,000

+5.0%

156,293

–1.3%

7,454

–2.7%

47,264

–1.3%

15,045

–6.1%

85,035

Norway

+2.3%

14,061

+1.4%

2,974

–3.9%

585,470

+0.5%

7,818

Lithuania

+9.0%

54,584

+8.2%

7,110

Latvia

+13.9%

107,100

+2.0%

219,272

Italy

1,483,539

+24.5%

20,484

Ireland

339,878

+19.4%

41,168

Greece

+1.5%

144,827

+0.2%

465,345

–2.2%

13,068

+0.9%

134,488

2014/2013

105,372

+0.2%

48,769

Germany

513,251

–8.6%

5,377

France

71,334

–1.0%

35,105

Finland

177,780

+6.4%

177,899

Estonia

598,393

+17.5%

39,726

Denmark

Guest nights

+9.4%

68,105

Croatia Czech Republic

2014 ACCOMMODATION

+0.7%

245,622

Belgium

2014

2014/2013

2014 Austria

10.4% 8.7%

THE TOURISM INDUSTRY

Statistics Office

Who’s visiting

business. off the tourism to visitors and living is credited with tradition of cateringTourism Ltd., the tourism sector of GDP through Hungary has a long 10% state-owned Hungary GDP directly, and close to According to the than 5% of the country’s of 4,587,634 producing more registered the arrival13,300 per indirect expenditures. accommodation in Hungary spent roughly HUF In 2014, commercial an average of 2.4 nights and number represented Office (KSH). This stayed trend in visitors foreigners, who Central Statistics year. This upward nights spent by according to the for the previous person per day, over the KSH figures this year, as the number of tourism a 4.6% increase of first five months continued in the 4,938,146 registered 4.7% in January-May. 2014 there were , which offered foreigners increased visiting their own country, in commercial accommodations over the As for Hungarians a 9.8% increase tourists at the country’s among arrivals of domestic beds as of May 2015. This represented in travel continued the growth trend by domestic visitors rose by a capacity of 286,461 visitors, nights As with foreign figures for 2013. number of tourism this year, as the to remember that domestic visitors or arrivals, it is important these have grown 7.5% in January-May. of overnight stays reflected, and as nights in such In judging any figures like Airbnb are generally not assumed that guest services page 15), it can be online booking recent years (see an upward trend. Balaton: Stockphotos) phenomenally in on (except for Lake have also been accommodations pages: Jessica Fejos Photos on these

JULY 17, 2015 – JULY 30, 2015

Statistical Office

BUDAPEST

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Property investment volume increasing With better yields than its neighbors, Hungary is attracting more real estate investment, making this the only CEE country to see growth between this quarter and the last. Improving market fundamentals are credited. 7

NEWS

Greek storm just mild breeze in Hungary Economy Minister Mihály Varga expressed sympathy for the country, saying its woes were Europe’s problem. But tell that to analysts, who say Hungary has been well insulated. 3

FOCUS: PROCUREMENT

Rules changing for obtaining EU funds

While Hungary has no national carrier, Wizz Air CEO József Váradi says his airline is unofficially doing the job. The largest airline in the country is constantly growing, and helping to support local tourism. 10

SOCIALITE

Applications for structural funds in Hungary are supposed to be more transparent following changes in procedures mandated by the EU. With €25 billion available, there’s sure to be a lot of interest. 16

BUSINESS

SPECIAL REPORT

Red Bull aces return to race under LanchÍd

NNG founder and CEO Can hotels survive growth of Airbnb? is stepping down

After a five-year hiatus, the popular aerobatic plane race returned to the Danube in Budapest, but the local hope, Hungarian pilot Péter Besenyei, was not able to fly away with the trophy this time. 20

The navigation software firm, a local startup success story, denies rumors that the management change is part of preparations for a sale of the company. Founder Péter Balogh says he will continue to work as an advisor. 6

The sharing economy service, which lists 6,700 short-term rentals in Hungary, claims that it provides local homeowners with extra income without cutting into the traditional accommodation business. 15

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Budapest Business Journal | July 17 – July 30, 2015

Report 3Special Holidays in Hungary

BBJ

Tourism industry

SPECIAL REPORT:

ARRIVALS & GUEST

NIGHTS AT COMMERCIAL Arrivals

197,718 185,523 119,281 23,210

Slovenia

131,486

Spain

75,609

Sweden

59,066

Switzerland

53,668

Turkey

106,646

Ukraine United Kingdom

273,742 3,245,177

Europe Total Asia

427,590

87,162 from which: China India 13,623 Israel 74,217 Japan 66,798 89,560

Republic of Korea

18,829

309,759 America 25,577 from which: Brazil Canada 29,621 USA 220,132 Australia and Oceania Total foreign Total domestic Source: Central

32,676 4,587,634 4,938,146

2014

2014/2013 –2.2% +1.5% +13.9% +9.0% –3.9% +2.3% –1.3% –1.3% –2.2% +15.9% +25.3%

–8.0% –3.3% +3.3% –2.5% +6.8% +0.7%

118,909 259,452 41,736

+6.6% –10.2% +0.3% –0.8% –17.8% +8.4% +2.6% +13.8% +19.5% +32.0% +16.5% –11.9% +39.0% +16.0% +10.3% +1.3% +4.8% +12.1% 0.0% +4.6% +9.8%

ESTABLISHMENTS, IN ACCOMMODATION % change vs Jan–May

306,878 211,523 166,027 111,842 216,149 687,175 8,480,103 887,029 150,355 33,627 244,880 140,741 111,621 55,605 761,874 62,573 82,142 535,635 81,091 12,302,988 11,895,853

+1.0% +19.7% –2.3% +0.8% –12.9% –0.3% –0.2% –11.1% +8.8% +1.3% +9.1% +13.2% +27.3% +10.1% –9.5% +32.7% +20.5% +8.9% –1.9% +7.8% +11.1% –2.8% +2.7% +8.3%

1,221,000 spent by Tourism nights international tourists 1,026,000 spent by domestic Tourism nights tourists 2,247 total, thousands Tourism nights, 33.4 (HUF billion) Revenues, total 18,151 average room rate In hotels: Gross (HUF) 10,204 room (HUF) Revenue/available room (HUF) 17,235 Total revenue/available Source: Central

JAN-MAY % change vs Jan-May ’14 4.7%

4,242,000

May ’14 1.9% 6.1%

7.5%

3,694,000 7,936 123 16,515

3.8% 5.5% 6.1%

6% 8.8% 5.5%

7,810 14,100

7.9% 5.8%

May

+0.5%

754,358

+3.6%

TOURISM NIGHTS

–0.1%

356,906

+20.6%

touristed Váci utca.

+5.8%

35,344

–3.0%

Crowds pack heavily

+1.1%

354,492

+8.7% +0.9%

60,614

Slovakia

146,937

–4.8%

14,699

Serbia

213,000

+5.0%

156,293

Russia

7,454

–2.7%

47,264

Romania

15,045

–6.1%

85,035

Portugal

14,061

+1.4%

2,974

Poland

585,470

+0.5%

7,818

Norway

54,584

+8.2%

7,110

Luxembourg the Netherlands

107,100

+2.0%

219,272

Lithuania

1,483,539

+24.5%

20,484

Latvia

339,878

+19.4%

41,168

Italy

144,827

+0.2%

465,345

Ireland

13,068

+0.9%

134,488

Greece

105,372

+0.2%

48,769

Germany

513,251

–8.6%

5,377

France

71,334

–1.0%

35,105

Finland

177,780

+6.4%

177,899

Estonia

598,393

+17.5%

39,726

Denmark

Guest nights

+9.4%

68,105

Croatia Czech Republic

ACCOMMODATION

+0.7%

245,622

Belgium

2014

2014/2013

2014 Austria

Africa

VOL. 23. NUMBER 14

10.4% 8.7%

THE TOURISM INDUSTRY

Statistics Office

Who’s visiting

business. off the tourism to visitors and living is credited with tradition of cateringTourism Ltd., the tourism sector of GDP through 10% Hungary has a long state-owned Hungary GDP directly, and close to According to the than 5% of the country’s of 4,587,634 producing more registered the arrival13,300 per indirect expenditures. accommodation in Hungary spent roughly HUF In 2014, commercial an average of 2.4 nights and number represented Office (KSH). This stayed trend in visitors foreigners, who Central Statistics year. This upward nights spent by according to the for the previous person per day, over the KSH figures this year, as the number of tourism of a 4.6% increase first five months continued in the 4,938,146 registered 4.7% in January-May. 2014 there were which offered foreigners increased visiting their own country, in commercial accommodations, over the As for Hungarians a 9.8% increase tourists at the country’s arrivals of domestic beds as of May 2015. This representedin travel continued among trend by a capacity of 286,461 visitors, the growth nights by domestic visitors rose As with foreign figures for 2013. number of tourism this year, as the to remember that domestic visitors or arrivals, it is important these have grown 7.5% in January-May. of overnight stays reflected, and as such In judging any figures like Airbnb are generally not guest nights in be assumed that services page 15), it can online booking recent years (see an upward trend. Balaton: Stockphotos) phenomenally in on (except for Lake have also been accommodations pages: Jessica Fejos Photos on these

JULY 17, 2015 – JULY 30, 2015

Statistical Office

BUDAPEST B

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Secretive government damages democracy The amendments to the Freedom of Information Act, passed July 6 in a special procedure that precluded debate in Parliament, inflict more damage to democracy in Hungary than almost anything this government has done. Given the record of Fidesz since it took power five years ago, that’s saying something. For democracy to function, citizens need to know what their government is doing, which is the reason for having a law covering Freedom of Information (FOI). The FOI law is supposed to outline the procedure for requesting official information, and to spell out the government’s responsibility to hand over that information. As described by opposition MP András Schiffer of the LMP party, these new amendments basically mean that, if our leaders unilaterally decide information is important for making a decision, they can choose to ignore an FOI request. Furthermore, the amendments allow the government to charge money for information requests that are determined to require “extensive work” to put together – though the definition of what is a lot of work and how much it will cost is not made clear. Critics have complained that, under the new amendments, virtually all the information about the controversial upgrade of Hungary’s nuclear power plant at Paks can now be hidden from the public. Other important information will also be denied to us. In the past, questions on everything from contracts handed out by the public media authority to the

extravagant travel bills of János Lázár, head of the Prime Minister’s Office, have been successfully investigated through FOI requests. But now we can expect an end to any such checks on the use of public money and public power. The regrettable amendments to the FOI law were passed using another anti−democratic device favored by the current government, “fast−tracking” of proposed laws: Fidesz takes advantage of a loophole that allows them to put bills up for vote in Parliament without any debate. Using this technique after they took power with a two− thirds majority in 2010, Fidesz passed hundreds of laws, and essentially rewrote the Constitution in ways that increased their grip on power and reduced the democratic voice of the populace. In 2013, Fidesz used the fast−track technique to pass its first changes to the FOI law. At the time, Transparency International said the law “heralds a dark age for democratic governance in Hungary. The law will now allow government officials to get away with bias in their actions and could see corruption go unseen and unpunished.” The changes just passed on July 6 finish the work started then, making FOI requests not only difficult to pursue, but practically impossible. As the Fidesz leadership continues its efforts to limit information, the only thing that remains transparent about this government is that they want to maintain their secrecy at any cost, even if it means damaging democracy.

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Above is the hedge maze at Andrássy Castle, located in Tiszadob Hungary, in its early stages of growth back in 1939. At right is an aerial view of the maze now. It was recently ranked tenth best in the world by website DesignCurial, which compiled a list of the world’s ten best mazes, after searching the globe for the top contenders.

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NEWS

March in Budapest protests border fence

NEWS

Absurdist party seems like serious contender

macroscope

Hungarian economy weathers Greek storm Even Hungary’s government securities market came through unscathed, apparently due to interest from small local investors.

partially due to small investors, as households have been providing the biggest part of debt financing in recent times, Borbély added. The currently endorsed rescue package and its expected consequences will not have a substantial impact on the operation of Hungary’s economic and financial systems, Minister of National Economy Mihály Varga said.

ZSÓFIA CZIFRA

Varga: It’s Europe’s problem

László András Borbély of ÁKK. According to him, however, the market for Hungarian government securities has not been affected by the Greek crisis or the general uncertainty concerning Greece. The reason Hungary resisted such affects was that even though foreign investors were selling forint− denominated treasury bills – not necessarily because of the Greek situation – the domestic market gobbled up these papers. This was

Growth of industrial production slows Hungary’s Central Statistical Office (KSH) confirmed July 13 in a second reading of data that year−on−year growth in industrial output in Hungary slowed in May. According to KSH, after adjusting for the difference in the number of workdays, year−on−year growth edged down to 6.2% in May from 6.3% in April, KSH said. Compared to the previous month, the volume of production, adjusted for seasonal and workday differences actually declined by 0.2%, although strong orders appeared likely to reverse that trend, according to reports. KSH data suggest that industrial export sales rose by 4.1% compared to the same period of the previous year. Auto manufacturing continued to be the main driver of the segment, with export of transport equipment, representing 37% of manufacturing exports, increasing by 8.6%, KSH said. Industrial domestic sales fell by 5.8%, and sales of manufacturing practically stagnated (−0.1%), KSH said, adding that total new orders in the observed branches of manufacturing grew by 13% compared to the same month of the previous year. The volume of new domestic orders rose by 7.9%, while that of new export orders increased by 13%, according to KSH, while the volume of total stock of orders was above the level of May 2014 by 13%.

At its July 14 session, ECOFIN ministers were informed of the issues on the agenda of the eurozone leaders’ summit (the Eurogroup), with special emphasis on the management of the Greek crisis. Following the meeting, Varga said that due to economic decisions of the past years and the remedy proposed by international, Greece is no longer capable of dealing with the dire economic situation alone. Fixing the Greek issue, Varga pointed out, has become a European problem. The Eurogroup resolution published on Monday morning does not provide a final cure, as strict preconditions must be met before the next steps can be taken: among others, the parliaments of several countries – including those of Greece and Germany – must approve the plan before the official negotiations on program details can be started. As

Value of industrial production (HUF billions) 3000 2500 2000 1500 1000 500 0

J F M A My Ju Jl Au S O N D J F M A My 2014 2015

Source: Central Statistical Office

While details were still being worked out at the time the Budapest Business Journal was going to press, it seemed likely that Greece would stay in the eurozone, the worst−case scenario would be avoided and Hungary would feel no major impact. In fact, analysts said that, despite the uncertainties, the forint and the Hungarian government bond market were only mildly affected – and both have since recovered. Uncertainty is the biggest problem in any crisis, as investors have no idea which way the market will move and so they choose to wait it out and not invest their money, said László András Borbély, deputy CEO of the Government Debt Management Agency (ÁKK) in a television program on Monday, after the Greek agreement hit the news.

Varga stressed, the direct and indirect impacts of the loan package will place an enormous burden on Greek society. In the meantime, the Central Statistics Office (KSH) released its latest inflation data for June, which, in line with analysts’ expectations, rose to 0.6% from 0.5% in the previous month. In May, consumer prices rose after declining for eight months in a row. The year−on−year increase was lifted by a 3.6% rise in the price of alcohol and tobacco, 1.4% higher food prices and a 1.9% increase in prices of services. Consumer durable prices were up 0.8%, and clothing prices inched up 0.1%, while household energy prices fell 2.7% and prices in the category that includes vehicle fuel dropped 2.3%. Core inflation, which excludes volatile food and fuel prices, was a seasonally adjusted 1.2%. In a month− on−month comparison, consumer prices rose 0.2% in June. Analysts’ views on the inflation path is rather divided: K&H chief analyst Dávid Németh said CPI could rise to around 3% by year end, but put average annual inflation at 0.5%. Erste Bank analysts Vivien Barczel and Gergely Ürmössy put yearend CPI at 2.5% and average annual inflation at 0.3%, while Takarékbank’s Gergely Suppan forecast a yearend rate of more than 2% and a full−year rate of 0.4%.

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Budapest Business Journal | July 17 – July 30, 2015

Approximately 1,000 protesters descend on Szent István tér on July 14 to denounce the building of the Hungarian-Serbian border fence. Márk Kékesi, the head of the civic group Migszol Szeged, as well as other protesters, said they knew that the government would continue to build the fence but they believed that this protest would shift thinking and show that there are other alternatives to the construction of a barrier.

NEWS IN BRIEF Data feared stolen in hacking of secret service spyware The Hungarian secret services were forced to stop using Hacking Team spy software, used to monitor conversations on smartphones and to obtain sensitive data, after service provider Hacking Team reported it had been hacked, Hungarian online daily Népszabadság reported on July 10. “We have lost one of our essential abilities,” the paper quoted a secret service source, who asked to remain anonymous. Népszabadság said that almost 400 gigabytes of data had been retrieved from the servers of Hacking Team by hackers, who could have acquired documents, personal data and source codes. According to euronews.com, the hacking team may have obtained conﬁdential information that could be sensitive for Hungary, along with several other countries.

Hungarian news portal wins trial against MTVA again Hungarian news portal index.hu won its second court decision against Media Service Support and Asset Management Fund (MTVA), after MTVA sued Index for an article that said MTVA manipulated

its viewership numbers, Hungarian online daily hvg.hu reported on July 8. Index wrote in an article on September 27 that, by manipulating data, MTVA, which oversees public radio and TV channels, falsely reported that 19% of the Hungarian population was watching an MTVA show, while only 300,000 people actually watched it. Index noted that the viewership of 1.7 million was calculated by MTVA by adding together all the viewers who were watching all television channels operated by MTVA on that particular day. According to hvg.hu, MTVA sued the news portal over their article, lost the trial, then appealed and lost in the second instance too.

Moody’s: Hungary’s junk rating remains untouched Rating agency Moody’s Investors Service left Hungary’s “Ba1” sovereign longterm foreign and domestic issuer rating, one notch under investment grade, with a “stable” outlook, untouched in a scheduled review on July 10, Hungarian news agency MTI reported. Moody’s listed Hungary among issuers with ratings that were “not updated on the calendar for July 10, 2015”. Previously, most analysts had

expected at least an outlook upgrade to “positive”. Minister for National Economy Mihály Varga said in an interview ahead of the review that, based on its recent results, Hungary “deserves” either a positive outlook, or a one-notch upgrade of its rating. After the publication of Moody’s review, the Hungarian forint eased to 311.93 to the euro from 311.82 on the interbank forex market. Within half an hour, it had climbed back to 311.87. Moody’s downgraded Hungary to “Ba1” from “Baa3” on November 24, 2011.

Constitutional court chairman: Fidesz packed the court Barnabás Lenkovics, the chairman of the Constitutional Court, admitted in an interview with mandiner.hu on July 13 that the ruling Fidesz party had delegated its entourage to the court. In the interview, Lenkovics also spoke about the transformation from politician to member of the court and to what extent one should take into account political motivations. He added that, since he became a member, moral concerns carried greater weight than other factors.

About two-thirds of small Hungarian businesses project growth About two-thirds of Hungarian microand small businesses expect to grow in the coming 1-3 years, according to a survey commissioned by guarantor Garantiqa Hitelgarancia. The survey shows 65-67% of micro businesses and 7682% of small businesses anticipate growth in the coming years. About 84% of small businesses said they had made some kind of investment in the past ﬁve years, while the percentage was just 65% for the micro

businesses. Kutatopont conducted the survey on the basis of a sample of 250 micro businesses, employing fewer than ten people, and 250 small businesses, employing fewer than 50.

Greenpeace: Harvest initiated by Fidesz-friendly company is illegal Fidesz-friendly Mező Vidék Bt. reportedly contracted harvesters to work land in the Kishantos area for which it had illegally acquired rental rights, hvg.hu reported on July 12. Greenpeace told hvg.hu that the land rental contract the company had signed with the Nemzeti Földalapkezelő (National Land Fund Management organization) had been annulled by an appeals court on June 17. According to court documents, Mező Vidék Bt. did not even qualify as a bidder for the land rental tender, since it had no track record in agricultural activity and did not own the machinery required for the activity. Mező Vidék reportedly took over the cultivation of the land from Kishantosi Vidékfejlesztési Központ (KVK) in April 2015 with the support of armed guards, in spite of a judgment delivered by a court of a ﬁrst instance providing the KVK with land protection.

Hungarian government allocates HUF 600 mln for ‘info’ campaign The Hungarian government is planning to launch an “information” campaign, which is intended “to make it clear that Hungarian reforms are working well” and that “the country has beneﬁted from having chosen its own path” by rejecting “austerity measures proposed by international organizations”, government spokesperson Zoltán Kovács was cited saying by Hungarian news agency

Photos: Jessica Fejos

Fence demo in capital

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MTI on July 9. It was reported that the campaign is scheduled to start in a few days and would run until the end of September. Kovács reportedly said that the Hungarian government allocated some HUF 600 mln forints for the campaign. Kovács noted that “it was clear from the past few years” that the “path” Hungary has chosen has lead to the “Hungarian economy’s growth of more than 10% since 2010”. Asked about a counter-campaign by the Hungarian Two-tailed Dog Party, Kovács reportedly dismissed the suggestion that the ruling party’s current “information” campaign was in response to the tongue-in-cheek counter-campaign.

Hungarian vehicle gas sales up 9.3% in H1 Vehicle fuel sales in Hungary rose 9.3% to 1.49 billion liters in the ﬁ rst six months of 2015 from the same period a year earlier, the Hungarian Petroleum Association (MASZ) said on July 13. Sales of petrol rose 3% to 594 million liters and sales of diesel were up 14% at 903 million liters. The sales include those of premium fuel products.

Hungary’s food safety system passes U.S. authority check Food Safety and Inspection Service (FSIS) of the United States cleared Hungary’s system for ensuring the safety of food by passing the scrutiny by FSIS, Hungary’s Ministry of Agriculture said on July 10, according to news agency MTI. The FSIS visited the Agriculture Ministry, food safety authority NÉBIH, laboratories and a number of companies licensed for export during an audit in Hungary between June 17 and July 3, the ministry reportedly said. Hungary’s food safety system was last cleared by the FSIS in an audit two years earlier, MTI noted.

KSH: Hungary’s agricultural producer prices fall 8.1% in May Agricultural producer prices in Hungary saw a year-on-year 8.1% fall in May, with prices of crops dropping by 6.7% and prices of livestock and animal products down by 10.4%, the Central Statistical Office (KSH) said on July 14 in a ﬁrst release of data. KSH said that cereal prices decreased by 16% and price of potatoes by 44%, while the price of fresh vegetables rose by 14% and that of fresh fruits by 25.4%. KSH data show that the producer price level of live animals was 8.1% lower. The producer price index of milk decreased by 23%, KSH said, adding that its purchase price was the highest (114 forints/liter) in February 2014, and it steadily declined from that time, to reach 80 forints in May.

EC launches probes of two Hungarian measures The European Commission (EC) opened two in-depth investigations into Hungary’s supermarket oversight fees and healthcare contributions payable by tobacco companies, the EC announced on July 15, according to Hungarian news agency MTI. The Commission reportedly said it is further examining whether the two recently introduced measures “with steeply progressive

rate structures” are in line with EU legislation regulating state aid, and have prohibited Hungary from applying the progressive rates until it concludes the assessment. “At this stage, the Commission has concerns in both cases that the progressivity of the rates based on turnover provides companies with a low turnover a selective advantage over their competitors, in breach of EU state aid rules,” the Commission said. “While a fee based on turnover does not in itself raise state aid issues, the Commission considers at this stage that the progressivity of the fee rates selectively favors companies with a low turnover and gives them an unfair competitive advantage over others.” The EC reportedly noted that new rules governing the fee came into force at the start of 2015 and the ﬁ rst payments are due at the end of July. The supermarket oversight fee ranges from 0.1% of turnover for stores with lower revenue up to 6% for those with higher sales, MTI said, adding that the rate for healthcare contributions by tobacco companies range from 0.2% to 4.5% of turnover, also depending on the scale of revenue. “The Commission welcomes Member State measures to reduce tobacco consumption. However, it has doubts that the effects of tobacco products on public health increase progressively with the turnover of companies selling them,” the EU’s executive body said.

Increase in rental fees expected in Budapest Accommodation rental fees in Budapest’s city center and near its universities increased by a year-on-year 20% in the ﬁrst half of the year, while prices stayed practically unchanged in eastern Hungary, Hungarian economic daily Világgazdaság reported on July 15. Rental fees in western Hungary, particularly in the environs of Győr, Sopron, and Szombathely, are now almost on par with Budapest prices, Attila Déry, analyst at real estate broker Otthon Centrum told the paper. According to the analyst, the trend is chieﬂy boosted by the Audi plant in Győr and Hungarian workers commuting to Austria. The paper also noted that a reason for the increased rental demand is that many homeowners in central Budapest rent their properties short-term only, providing a kind of bedand-breakfast service to tourists.

Report: Hungary’s Ministry of Agriculture closes loophole Hungary’s Ministry of Agriculture is reportedly closing a loophole that big landowners use to get around an exclusion from European Union farmland subsidies, Hungarian economic daily Napi Gazdaság said on July 15. According to the paper, although owners of farmland greater than 1,200 hectares are not eligible for the EU’s single area subsidies, they have been collecting them by “artiﬁcially” dividing their properties to push each under the threshold. The farm ministry has transposed a 2013 EU directive into national law that sanctions such divisions of land holdings, the paper said, adding that the regulations, in force retroactively from 2011, will prevent landowners who are ineligible for the subsidies from collecting them in such a manner.

Photo: Jessica Fejos

Budapest Business Journal | July 17 – July 30, 2015

Gergely Kovács, wearing a shirt of his own design that puts Hungary in Hawaii, stands next to one of his billboards in Madách tér.

Two-Tailed Dog Party eyes 2018 elections Following a successful billboard campaign that pokes fun at the government, it’s hard not to take this absurdist group seriously. BENCE JANEK

The party’s platform includes “free beer”, bringing Lake Balaton closer to Budapest to make the trip there shorter, and placing scarecrows with the face of Prime Minister Viktor Orbán on the Serbian border, to scare away immigrants. Its leader is a notorious graffiti artist and prankster with a tendency to rankle at serious questions. And yet, its latest billboard campaign is grabbing mainstream attention as it pokes fun at the government’s anti−immigrant messages. Despite, or perhaps because of, its offbeat, absurdist approach, the Two−Tailed Dog Party (MKKP) seems like a political movement whose time has come. At a July 8 press conference, MKKP officials discussed the comic and ironic billboards in many cities in Hungary, including two in Felcsút, Prime Minister Viktor Orbán’s hometown. The signs are designed to counter the government’s anti−immigration billboard campaign through ridicule. MKKP’s billboards include messages like “I have survived the Hungarian anti−immigration campaign”, and “If you are the prime minister of Hungary, you have to respect the law”. The original billboards that sparked MKKP’s campaign were part of the government’s response to the influx of refugees and immigrants, largely fleeing North Africa and the Middle East,

coming through Hungary on their way to other points in the European Union. In June, government funded billboards were posted with Hungarian−language messages that said: “If you come to Hungary you cannot take the jobs of Hungarians”, “If you come to Hungary you have to respect our culture”, and “If you come to Hungary you have to respect our laws and regulations”. The brainchild of Gergely Kovács, who has developed a reputation as a graffiti artist and a poster prankster, the MKKP has stood for some humorous platforms. But the party seriously sought to stand in national elections in 2010 and 2014, and was denied until a court appeal in 2014, but, as Kovács noted at the press conference, the court only allowed MKKP to register 60 minutes before the signature collection deadline for the election of 2014. Now, the party says it is serious about running for Parliament, and for all its jokes, it is hard to ignore its popularity and high profile. Shortly after the government started its billboard campaign, MKKP began an online crowdfunding campaign to raise money for its counter billboards. Although Kovács said the party had been hoping to collect HUF 3 million, within roughly a week’s time the party had raised more than HUF 32 mln. While he sought to keep the July 8 press conference humorous, and seemed annoyed when questions became overly serious, Kovács did express disappointment with the ruling Fidesz−Christian Democrat coalition as well as the opposition Socialists and the Green LMP. At present the only officials in MKKP are Kovács and Zsolt Victora, but the party plans to call upon a ready corps of volunteers and build an organization in time for the next general election. Maybe 2018 could be the year of the Two−Tailed Dog.

BBJ

2Business Founder Péter Balogh stands down as head of NNG The leading navigation software company denies report of plans to sell.

NEWS Two CBA shops slip through Sunday-closing loophole

ROBIN MARSHALL

Péter Balogh, the founder of automotive navigation software developer NNG, stood down as CEO of the company with effect from July 1, and became chief advisor to the board. Péter Szombathelyi, long time COO at NNG, has been made acting CEO, the company announced. “NNG, being at the beginning of massive global expansion, needs a professional and globally experienced CEO with the capabilities of taking the company to the next level,” Balogh said about the change. “This also gives me the opportunity to concentrate on long−term strategies and the vision of the company as an advisor, while pursuing my passion – consulting and supporting other start−up companies.” An article on the GPS Business News website linked Balogh’s stepping down to the shareholders “actively looking after [sic] the sale of the company”. The report claimed private equity funds had been approached and due diligence conducted, before adding “nothing more has filtered until now”. Asked about this report by the Budapest Business Journal, the NNG management denied plans for a sale. In a statement released through its communications agency, Café PR, the management said: “As we continue to work on strengthening our position in the automotive industry, the

COMPANY

NNG founder Péter Balogh. shareholders have no intention of selling the company at this point. To sum up, we are focused on expanding NNG’s strength and global presence and taking the company to the next level. We plan to hire a CEO with global experience in the near future to help facilitate that plan.” The decision was proceded by months of planning and preparation with the company’s stakeholders, NNG said. Szombathelyi will concentrate on coordinating further development of internal processes and streamline work−flow and has been preparing for this task for several months, the company said. Founded in 2004, NNG claims to be one of the fastest growing companies in Europe, maintaining 11 offices worldwide with more than 800 employees – and still growing rapidly. Most of the workers are software developers in the firmʼs Budapest HQ, though it has recently opened another center in Szeged. It’s best known software is the iGO primo navigation program, and it currently supplies seven of the world’s top ten automakers.

Two CBA stores near Lake Balaton have been declared outdoor traditional markets, because they sell goods in their parking lots, Hungarian online daily origo.hu reported on July 3. The designation allows those stores to stay open on Sundays, when their competition must close. Local notary Mónika Tóthné Kiss told commercial channel HírTV that, in line with the Hungarian laws, a notary can grant a store special outdoor market status for a year, and this is what happened in the case of the CBA markets. Many players in the retail industry opposed the Sunday closing law, which came into effect on March 15. Critics have charged that the law hurts foreignowned hypermarkets while providing a boost to local supermarket chains like CBA. CBA is a Hungarian supermarket retail chain owned by László Baldauf, who has reportedly been a major supporter of the ruling Fidesz party.

Lidl will not take advantage of Sunday loophole The Hungarian unit of German retailer Lidl made a strategic decision not to do as its competitors had and declare some of its stores as traditional outdoor markets, the ﬁ rm said in a press release on July 8. Making such a declaration would allow the retailer to circumvent the Sunday closure law introduced earlier this year. “As of March 1, we have extended opening hours in our stores,” Jenő Grósz, chairman of Hungarian Lidl’s management said. “Every player of the retail market has one Sunday to stay open a year, and we are going to accept that opportunity. As a responsible corporation, we are not planning to stay open on any other Sunday,” Grósz noted.

National Instruments, Szeged University sign partnership The Hungarian unit of U.S. measurement and automation company National Instruments Hungary and Hungary’s Szeged University of Sciences (SZTE) on July 10 signed a strategic cooperation agreement in Szeged, southern Hungary, in the areas of education, research and grant applications, national news agency MTI reported. Under the agreement the two

parties are expected to bring together a group of doctors, engineers and IT specialists to help develop technology solutions in the area of healthcare, NI Hungary managing director László Csaba Ábrahám said. He added that the company is also planning to set up an open laboratory in the city that SMEs can take advantage of. According to university rector Gábor Szabó, the open laboratory could be located in the science park next to an EU funded super laser center. NI Hungary set up a manufacturing base in Debrecen, eastern Hungary, in 2001, MTI said, adding that the company also has a shared services center in the country.

Danone halts production in Hungary The Hungarian unit of multinational dairy producer Danone stopped production in Hungary in June, causing the layoff of 139 employees, although 80% have already found new workplaces, Hungarian portal agrarszektor.hu reported on July 10. Danone products will still be available for purchase in Hungary despite production leaving the country, the portal said. It was announced approximately a year ago that the firm would stop production in several European countries, including Hungary, the portal noted. The portal said that the firm created a “support center” in September to help factory workers find new jobs. The center is expected to complete operations by the end of the year and will offer training and consultations until then.

LADA cars return to Hungary As part of AvtoVAZ and Lada Hungary’s joint European pilot program, Lada models will again be available for purchase in Hungary as of November, a press release reported on July 14. Following talks with Russian AvtoVAZ, Hungarian car dealership Duna Autó Zrt. became eligible to distribute Ladas in Hungary as of July 1, when the two parties signed the contract. Distribution will be handled by distributor Lada Hungary Disztribúció Kft., which was founded by the owners of Duna Autó Zrt. The press release notes that before the change of regime in Hungary Ladas were popular cars, however after 1990, the ﬁ rm began concentrating on the Russian market.

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2 Business

Budapest Business Journal | July 17 – July 30, 2015

REAL ESTATE NEWS More good news as investment improves in Q2 With €197 million in investment volume, Hungary was the only CEE country to see growth in the second quarter.

“Domestic funds tend to be interested in €30-40 million lot sizes. However, the challenge is in finding product of €50-150 mln that would attract more international investors.”

GARY J. MORRELL

Hungary has recorded €197 million in real estate investment volume for the second quarter of the year compared to €79 mln for Q1 according to Cushman & Wakefield. Although Hungary continues to lag behind the €365 mln in investment transactions concluded in Poland and €304 mln in Czech Republic in Q2, liquidity in the Hungarian investment market and sentiment towards Hungary is regarded as improving. Investors are increasingly looking to make higher yield acquisitions elsewhere in CEE outside the popular Polish and Czech markets – the currently most favored higher yielding destinations for investors are Hungary and Romania. According to Rita Tuza, head of research at JLL Hungary, improving market fundamentals are fuelling the appetite for Hungarian assets. The most sought after market in the first half of the year was that of offices, representing 34% of the half−year transactional volumes. With regard to market sectors for the second quarter, the office market was number one with €89 mln in deals recorded, followed by retail with €47 mln. Budapest office vacancy could fall to 13−14% by the end of 2016; this would be below levels in Czech Republic and Poland according to Cushman & Wakefield.

PROPERTY INVESTMENT VOLUMES (MILLIONS OF EUROS ) 2015 Q1

2015 Q2

Czech Republic

799

304

Retail

620

185

Office

With the very low pipeline there is growing pressure on rentals. Cushman & Wakefield research indicates that certain CEE office markets are suffering with new net supply outstripping new net demand, which is putting downward pressure on rents. As pricing is pushed higher by the weight of investment capital searching for greater yield, higher returning opportunities further up the risk spectrum are beginning to look like more appealing alternatives. Thus one of the better performing cities in the CEE region is expected to be Budapest.

Most of the clothes there are on sale, but the Premier Outlet itself is valued at €30 mln.

Big deals

Big dealers

A number of big logistics operators are looking at Hungary, however there is still a pricing expectation imbalance between potential vendors and buyers in the view of Mike Edwards, head of CEE investment and valuation at Cushman & Wakefield. Significantly for the Hungarian investment market, product in Hungary formed part of the largest CEE portfolio deal in the second quarter. In the transaction Aviva sold ten office, retail and industrial assets across Central Europe for a reported €185 mln to Lone Star. The Hungarian part of the transaction consists of the 17,000 sqm Premier Outlet center close to Budapest, valued at a reported circa €30 mln, and the DHL logistics facility in Székesfehérvár. The purchase was partly financed by a €125 mln loan from Deutsche Pfandbriefbank (PBB) and UniCredit Bank Austria. The portfolio will be placed in the Lone Star Real Estate Fund 111. Lone Star has previously shown confidence in the Budapest market with the purchase of part of the Office Garden office center.

Major European investors, U.S. private equity and Middle Eastern investors are now actively considering Hungary. “Domestic funds tend to be interested in €30−40 mln lot sizes. However the challenge is in finding product of €50−150 mln that would attract more international investors,” said Mike Edwards. According to Cushman & Wakefield, investment activity in the Central European markets of Poland, Czech Republic, Slovakia, Hungary and Romania maintained momentum with €881 mln invested in the second quarter and a total €2.21 billion invested in the region this year. Given the significant pipeline of transactions, CEE yearend volumes are expected to exceed 2014 levels. “We are optimistic in our forecasts for the region, demonstrated by a strong pipeline of transactions in due diligence. We continue to see strong investment inflows across the office and retail sectors. Prime yields have gone below 6% for landmark properties and retail investment has gained significant momentum. Although the difficult situation in Greece is influencing the eurozone, the evidence to date is that volumes in Central Europe will be stronger this year than last and will reach €7.5 bln,” said James Chapman, head of CE capital markets at Cushman & Wakefield.

Industrial

179

Hungary

197

Retail

Office

Industrial

Other

Warsaw

5.90

6.00

7.25

5.75

5.00

7.00

PRIMARY YIELDS AS OF Q2 (%) Office

Retail

Industrial

Poland

429

365

Prague

Retail

133

138

Bratislava

7.00

6.75

8.00

Office

147

227

Budapest

7.50

8.75

Industrial

149

Bucharest 7.75

7.50

9.50

Source: Cushman & Wakefield

Source: DTZ

Big growth in Q2 The largest single asset deal was concluded in Prague with the sale of the Arkády Pankrác shopping center for

€162 mln. However, Hungary was the only country seeing higher activity than in the first quarter and was also the only country seeing quarterly investment activity volumes above its five−year quarterly average. The DTZ “CEE Investor Survey” for the second quarter has recorded increasing appetite for Central Europe from 40 investors who focus on Hungary, Poland, Czech Republic, Slovakia and Romania. According to the research, concerns with regard to economic stability are considered to be the main risk with regard to Hungary. Overpricing is the key risk in Poland while potential investors in Czech Republic, Slovakia and Romania are faced with a lack of investment grade product. With the strong weight of money chasing investment opportunities across CEE, yields continued to compress in the first half of the year. Budapest provides a yield premium on both Poland and Czech Republic as the second quarter yields in Budapest stood at 7.5% for office and retail and 8.75% for industrial. This provides a clear premium on Prague where yields are put at 5.75% for office, 5% for retail and 7% for industrial. A major deal in Hungary is said to be close to completion. “We expect a much stronger second half that should translate into 2015 full year numbers 20−30% above the 2014 level. The good piece of news is that the liquidity is coming back across all asset classes and for different investment ticket sizes,” concluded Benjamin Perez− Ellischewitz, head of capital markets at JLL Hungary.

BBJ

3Special Report Holidays in Hungary

Tourism industry

ARRIVALS & GUEST NIGHTS AT COMMERCIAL ACCOMMODATION 2014 Arrivals 2014

Guest nights 2014/2013

2014

2014/2013

Austria

245,622

+0.7%

598,393

–2.2%

Belgium

68,105

+9.4%

177,780

+1.5%

Croatia

39,726

+17.5%

71,334

+13.9%

Czech Republic

177,899

+6.4%

513,251

+9.0%

Denmark

35,105

–1.0%

105,372

–3.9%

Estonia

5,377

–8.6%

13,068

+2.3%

Finland

48,769

+0.2%

144,827

–1.3%

France

134,488

+0.9%

339,878

–1.3%

Germany

465,345

+0.2%

1,483,539

–2.2%

Greece

41,168

+19.4%

107,100

+15.9%

Ireland

20,484

+24.5%

54,584

+25.3%

Italy

219,272

+2.0%

585,470

+1.1%

Latvia

7,110

+8.2%

14,061

+5.8%

Lithuania

7,818

+0.5%

15,045

–0.1%

Luxembourg

2,974

+1.4%

7,454

+0.5%

the Netherlands

85,035

–6.1%

213,000

–8.0%

Norway

47,264

–2.7%

146,937

–3.3%

Poland

156,293

+5.0%

354,492

+3.3%

Portugal

14,699

–4.8%

35,344

–2.5%

Romania

197,718

+8.7%

356,906

+6.8%

Russia

185,523

–3.0%

754,358

+0.7%

Serbia

60,614

+0.9%

118,909

+1.0%

Slovakia

119,281

+20.6%

259,452

+19.7%

Slovenia

23,210

+3.6%

41,736

–2.3%

Spain

131,486

+6.6%

306,878

+0.8%

Sweden

75,609

–10.2%

211,523

–12.9%

Switzerland

59,066

+0.3%

166,027

–0.3%

Turkey

53,668

–0.8%

111,842

–0.2%

Ukraine

106,646

–17.8%

216,149

–11.1%

United Kingdom

273,742

+8.4%

687,175

+8.8%

Europe Total

3,245,177

+2.6%

8,480,103

+1.3%

Asia

427,590

+13.8%

887,029

+9.1%

from which: China 87,162

+19.5%

150,355

+13.2%

India 13,623

+32.0%

33,627

+27.3%

Israel 74,217

+16.5%

244,880

+10.1%

Japan 66,798

–11.9%

140,741

–9.5%

Republic of Korea 89,560

+39.0%

111,621

+32.7%

Africa

18,829

+16.0%

55,605

+20.5%

America

309,759

+10.3%

761,874

+8.9%

from which: Brazil 25,577

+1.3%

62,573

–1.9%

Canada 29,621

+4.8%

82,142

+7.8%

+12.1%

535,635

+11.1%

USA 220,132 Australia and Oceania

32,676

0.0%

81,091

–2.8%

Total foreign

4,587,634

+4.6%

12,302,988

+2.7%

Total domestic

4,938,146

+9.8%

11,895,853

+8.3%

Source: Central Statistical Office

Crowds pack heavily touristed Váci utca.

TOURISM NIGHTS IN ACCOMMODATION ESTABLISHMENTS, JAN-MAY Tourism nights spent by international tourists Tourism nights spent by domestic tourists Tourism nights, total, thousands Revenues, total (HUF billion) In hotels: Gross average room rate (HUF) Revenue/available room (HUF) Total revenue/available room (HUF)

May

Jan–May 4,242,000

% change vs May ’14 1.9%

% change vs Jan-May ’14 4.7%

1,221,000 1,026,000

3,694,000

6.1%

7.5%

2,247 33.4 18,151

7,936 123 16,515

3.8% 5.5% 6.1%

6% 8.8% 5.5%

10,204 17,235

7,810 14,100

7.9% 5.8%

10.4% 8.7%

Source: Central Statistical Office

Who’s visiting Hungary has a long tradition of catering to visitors and living off the tourism business. According to the state-owned Hungary Tourism Ltd., the tourism sector is credited with producing more than 5% of the country’s GDP directly, and close to 10% of GDP through indirect expenditures. In 2014, commercial accommodation in Hungary registered the arrival of 4,587,634 foreigners, who stayed an average of 2.4 nights and spent roughly HUF 13,300 per person per day, according to the Central Statistical Office (KSH). This number represented a 4.6% increase over the KSH figures for the previous year. This upward trend in visitors continued in the first five months of this year, as the number of tourism nights spent by foreigners increased 4.7% in January-May. As for Hungarians visiting their own country, in 2014 there were 4,938,146 registered arrivals of domestic tourists at the country’s commercial accommodations, which offered a capacity of 286,461 beds as of May 2015. This represented a 9.8% increase over the figures for 2013. As with foreign visitors, the growth trend in travel continued among domestic visitors this year, as the number of tourism nights by domestic visitors rose by 7.5% in January-May. In judging any figures of overnight stays or arrivals, it is important to remember that online booking services like Airbnb are generally not reflected, and as these have grown phenomenally in recent years (see page 15), it can be assumed that guest nights in such accommodations have also been on an upward trend. Photos on these pages: Jessica Fejos (except for Lake Balaton: Stockphotos)

WWW.BBJ.HU

Budapest Business Journal | July 17 – July 30, 2015

Nightlife

Baths

Consistently named a top party city by travel publications, Budapest’s buzzing District VII brings hoards of visitors to its ruin bars and terraces. While figures are hard to come by, one stag organizer, stagmaddness.hu, boasts serving 5,000 customers a year.

The state-managed baths of Budapest, like the Gellért, above, welcome 3.5 million people a year.

Northern Hungary Lake Tisza

Northern Great Plain

Budapest & Northern Transdanubia Central Danube Western Lake Balaton Transdanubia Hungarian dentists, like this one in Budapest, are much cheaper than elsewhere, making dental tourism popular, especially in western towns like Mosonmagyaróvár, which has a population of only 32,000 but 160 dental offices.

Dentistry

Southern Great Plain

Southern Transdanubia

Where they go, and why

NUMBER OF GUEST NIGHTS BY TOURIST REGION

Lakes

Lake Balaton is the second most popular region after the capital, and the most popular among domestic tourists. Lake Tisza is not as well known, and domestic tourists there far outnumber foreign visitors. (See table.)

Domestic

Foreign

Total

Lake Balaton

3,082,484

1,804,518

4,887,002

Budapest and the Central Danube Region

1,724,376

7,393,423

9,117,799

Southern Great Plain

1,142,085

341,790

1,483,875

Southern Transdanubia

738,839

203,741

942,580

Northern Great Plain

1,255,580

565,168

1,820,748

Northern Hungary

1,692,427

329,384

2,021,811

Central Transdanubia

662,309

281,237

943,546

Western Transdanubia

1,395,077

1,318,549

2,713,626

Lake Tisza

202,676

65,178

267,854

Source: Central Statistical Office

WWW.BBJ.HU

Budapest Business Journal | July 17 – July 30, 2015

Wizz Air acting like a national carrier Started 11 years ago to provide rock−bottom ticket prices, the airline has added extras, for those who don’t mind paying more. It still offers cheap flights, and serves more destinations than anyone else flying from Hungary.

“Consumers have a choice now, and may tailor their travel experience as they wish. If you are on a budget, you may just buy a seat at a low cost. If you want more amenities, you can add services to the base fare at very reasonable costs.” willing to spend more in the country,” he said. “Currently we do not spend enough on popularizing the country, therefore we put our competitors into an advantageous position.” Henry Kallan, who has just opened the five−star Aria Hotel Budapest (see page 14), said that the definite benefit of a true national carrier would be state subsidies to support more direct flights to Budapest. “There is no question that not having direct flights does not encourage people to come here,” said Kallan, who is based in New York City. Although Wizz Air has direct flights from many European capitals, it does not yet serve the United States. “It is hard for Budapest to compete without having direct flights, having to change flights always makes it less pleasant – you could miss your flight at the connection, and it just takes longer,” Kallan said. “It would be easier if there was a national carrier, like there used to be with Malév. It makes it difficult for the luxury market. However, for people who can afford it and have the desire to come here, they will.”

CHRISTIAN KESZTHELYI

The biggest airline based in Hungary seems to be flying ever higher; in the fiscal year ending March 31, Wizz Air’s passenger numbers rose 18%, to 16.4 million, and its net profit rose 67%, to €146 million. Started as a cheap alternative airline based in Budapest, Wizz Air is still remarkably affordable. But since the 2012 demise of the former national carrier Malév Hungarian Airlines, Wizz also provides more service to Hungary than any other airline. “Wizz Air is Hungary’s de facto national carrier. We fly the Hungarian flag. We offer the most airline seats to the Hungarian market. We offer the most destinations from Budapest and Debrecen – 47 right now and that number is rising constantly,” CEO József Váradi told the Budapest Business Journal. Indeed, the growth of Wizz Air means that evermore people are arriving in the city, providing a boon to everyone in the tourism business, including Budapest’s Liszt Ferenc Airport, which served a record 9,155,000 passengers last year. The Wizz formula used to be based exclusively on being the cheapest service in the air. It is still usually the cheapest ticket in or out of Budapest, but it also allows its passengers to upgrade their services – whether its with priority boarding, through reserving seats, buying in−flight snacks or increasing the maximum size of their carry on bag. “Our drive is to deliver a great service at the lowest possible cost. Consumers have a choice now, and may tailor their travel experience as they wish. If you are on a budget, you may just buy a seat at a low cost. If you want more amenities, you can add services to the base fare at very reasonable costs. People clearly like this proposition,” Váradi explained. According to the CEO, air travel is becoming a “commodity more and more”, and what definitely puts Wizz Air among the market leaders is that the “lowest cost wins and Wizz Air is one of the lowest cost producers in the European airline industry”. However, he insists that low cost does not mean low quality. “With Wizz Air it is just the opposite; it is actually very high quality. We fly modern Airbus A320 aircraft, delivered brand new from the manufacturer, one of the youngest fleets in Europe, and we operate very efficiently with high on−time

Wizz Air CEO József Váradi.

Building capital

A new, rebranded Wizz Air jet. performance,” Váradi said. In celebrating its 11th anniversary this year, Wizz Air launched a rejuvenation and rebranding campaign, even changing the design of its planes. According to Váradi, the market is also changing. “Eleven years ago, it was all about democratizing air travel, getting people into the franchise and at the time we said ‘now we can all fly’. Today is more about the opportunities air travel may bring to people, what you can do as a result of traveling. Therefore, we are saying ‘welcome to the world of opportunity’. This is our way of remaining relevant to the consumer,” he said.

Missing the big spenders While Wizz Air may indeed be the country’s de facto carrier, some in the tourism industry, like Bálint Erdei, president of the Association of Hungarian Travel Agencies (MUISZ), say they miss the days when the state helped support

Malév in offering passengers from many destinations the convenience of direct flights, even if those flights were more expensive. “It is really positive that there are many low−cost airlines, like Wizz Air, connecting European cities to Budapest, making Hungary a cheap, achievable destination. This also helps Hungarians in traveling around. This very fact indeed raises the number of tourists arriving to Hungary,” Erdei told the BBJ. “However, the country needs tourists who are willing to spend more in the country. Business tourism could also be beneficial for the country, which would require the existence of a national carrier. Since Malév was grounded, the lack of a national carrier can be felt in the market.” Erdei maintained that a fancier airline would bring big spenders, who would be a boon to tourism here. “I believe more money should be spent on advertising the possibilities the country can offer in order to attract tourists who are

In fact the 2012 grounding of Malév, which held a monopoly on the best terminals at Budapest’s airport as well as certain routes, really helped Wizz Air grow, and Váradi promised that the number of destinations will continue to increase. To help fund further expansion, the company has listed itself on the London Stock Exchange, with shares trading since the beginning of this year. “Now we can have access to capital should the development of the business require it. Being a London listed company gives us a much improved credit standing to benefit from lower−cost asset financing, and we have a lot of aircraft to be delivered,” Váradi said. “Also, our enhanced liquidity makes us a more formidable competing force. All these will benefit the consumers as we will be able to do more for less.” For the future, Váradi said the path forward is clear. “We will continue to grow our business and offer more destinations, more services and products, and deliver all of that at the lowest possible cost. We will remain focused on the core disciplines of the ultra−low−cost business model,” he said. “We have 140 aircraft to be delivered in the next decade. That will create plenty of opportunities for those who want to get great value while traveling – and who doesn’t?”

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Budapest Business Journal | July 17 – July 30, 2015

Hungary hopes to fill country roads with cyclists EU funding can help improve Hungary’s network of bike trails, encouraging a lucrative and environmentally friendly form of tourism.

Off the beaten bike path

ZSÓFIA VÉGH

With its forgiving flatlands and the relatively short distances between towns, Hungary is a wonderful place to ride a bike, and has the potential to becoming a cycling tourism destination in Europe. The government would like to encourage that, but attracting bikers here first requires overcoming shortcomings like gaps in cycle routes, a disconnected national network and the poor quality of many of the existing bike trails. Developing new bicycle routes can be expensive – around €100,000 per kilometer – but, according to Ádám Bodor, EuroVelo director at the European Cyclists’ Federation (ECF), an NGO based in Brussels, that is for the most− costly type of trail, a three−meter−wide separated lane. “Those parameters are justified on the Danube biking route in Austria, where you will find lanes on both side of the river to serve the high volume of traffic,” Bodor told the Budapest Business Journal. “Yet by no means would I suggest that, for example, for the Hungarian part of the EuroVelo 13 trail.” The EuroVelo routes are a network of long−distance trans−European cycle routes that are being developed by Bodor’s cyclists’ federation using EU funding. EuroVelo 13, the so−called “Iron Curtain Trail”, is a partially completed cycling route that will run along the entire length of the frontier that once divided Europe. According to Bodor, extending this route through Hungary is often a simple matter of choosing the right roads, and setting and signposting the route. Only once the number of bikers is high enough is there a need to widen the road or build a separate trail, he said.

Biking becomes the point of travel Given the growing interest in bicycle− based tourism in Europe, the “Iron Curtain Trail” is likely to need expanding some day. Once considered more of a complementary activity, cycling has now become the core purpose for many vacations. The attractions are obvious: It fits nicely into the new global movement of slow tourism; it is eco−friendly; and it is relatively inexpensive. In Budapest, there is already a growing group of health−conscious and environmentally aware people who commute by cycle, and the government tourism agency, Hungarian Tourism Ltd. (Magyar Turizmus Zrt. or MT Zrt. for short) is seeking to direct these bikers to the countryside. MT Zrt. is reaching out to these younger, more aware cyclists with targeted advertising, and the agency is also planning to launch

Cycling infrastructure and signage is generally in good shape in Budapest, but trails in the countryside need work.

“EuroVelo 6, the 293 km route connecting Austria with Budapest, is uninterrupted and signposted, but it often goes along roads with heavy traffic. ” an online system showing all the biking routes in Hungary. Unfortunately, knowing the cycle routes is not enough, as the quality of these trails is inconsistent. The maintenance of existing routes, including replacing signs, mowing the grass nearby, and other such work, is often neglected. An even bigger problem for Hungary is the lack of connections between various routes, to create one single network. “A lesson learnt during the 2007−2013 period is that a connective network cannot be achieved by spot developments,” Balázs Szirányi, department head at the Hungarian Transport Administration (KKK), an organization reporting to the Ministry of National Development, told the BBJ. “This is something that needs to be changed.” Often problems with longer, continuous routes can hinder the growth of tourism. EuroVelo 6, the 293 km trail connecting Austria with Budapest, is uninterrupted and signposted, but it often goes along roads with heavy traffic. While that’s not a problem for a young couple, you cannot sell such a route to tourists with families, who might otherwise come from Austria, Bodor noted. Certain portions of the Balatoni Bringakör, the 248 km route

around Lake Balaton, are too narrow to bear the growing traffic, he added. The estimated cost of development on the Balaton route, along with that of EuroVelo 6 and a planned route to connect Budapest with Balaton (covering a distance of 106 km), is HUF 19 billion, according to a feasibility study by KKK. As government investments of special designated importance, these projects are to be financed from both national and EU funds.

A good investment It would seem to be a good investment. A 2011 study on the subject by the European Parliament found that cycling tourism generates €44 bln annually for Europe. That compares very favorably to the €39 bln a year that the cruise ship industry is said to generate. And unlike cruising, revenues generated by cyclists benefit local tourism businesses and SMEs, said Bodor. “While a cruise passenger dines and spends mostly on the ship, cyclists will eat, stay and spend at local bed and breakfasts, restaurants and shops,” he explained. Studies show that building biking routes offers a better cost−to−benefit ratio than most other kinds of transport infrastructure developments. Thanks to concerns about climate change and lobbying by biking groups, cycling is now higher on the EU’s transport development agenda. Last December, cycling was included in the EU’s Trans−European Transport Network (TENT−T) program guidelines, a grant scheme supporting transport projects in the European Union. Even so, currently only those cycling−

Less frequented parts of the country are in line to become cycling tourism destinations through an initiative by the Hungarian Cyclists’ Club (Magyar Kerékpárosklub or MK), an organization that promotes cycling in Hungary and is affiliated with the European Cyclists’ Federation. Összetekerünk, a HUF 4.5 million project running from this June until next is setting, signposting and testing bike routes in Székesfehérvár, Pécs, Kecskemét and the South Pest area. “Our aim is to convince decisionmakers at local levels that it is worth investing in cycling,” Ákos Dominus, the project’s expert leader told the Budapest Business Journal. He explained that HCC looked at locations with attractions and sights that are suitable for cycling but have little or no infrastructure. “You will find plenty of routes going to, say, Lake Balaton or Szentendre but hardly any to Bakony or Csepel-Sziget, although they are also spectacular,” Dominus said. Financed by the Norwegian Fund, the project hopes to tap the resources of local businesses from spas, to restaurants to wineries. Once MK’s regional outlets have finished sizing up demand this summer, they will propose potential routes to local authorities this fall. From next April until June, the club will run a campaign to invite bikers to test the new routes, according to Dominus.

related developments that are part of another type of project – such as the construction of a new highway or railway line – are eligible for funds. The circle of eligible project may widen, however, as an amendment to the TENT−T rules is already on the European Parliament’s agenda. If approved in September, it would mean cycling projects could have an independent budget. Already Hungary is in line to receive EU funds for improvements to its cycle infrastructure. There is a specific mention of the country regarding EuroVelo routes 6, 11, and 13 in the Economic and innovative Operational Program (GINOP), the EU grant scheme for tourism projects. If this funding is put behind improvements to cycling in Hungary, it will be an even more wonderful – and safer – place to ride a bike.

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Budapest Business Journal | July 17 – July 30, 2015

City has big plans for its hottest attractions People have been happily using the city’s thermal waters since before Roman times, but officials managing the baths today say improvements underway will make these luxurious facilities more attractive than ever.

The work sounds ambitious: a complete makeover to install a professional swimming complex at the Dagály baths, better quality English−speaking staff and a covered pool to make the Palatinus a year−round swimming complex. These are among the short−term changes promised by Budapest Gyógyfürdői és Hévizei Zrt. (BGYH), the city−owned company in charge of the capital’s public baths and pools. “We have a five−year development plan that will be completed in 2020 and once this is done, it will be the biggest renovation the baths have seen in the history of Budapest, and all this is being carried out from our own coffers,” says László Szőke, CEO of BGYH. What sets Budapest apart from many other European capitals is the wealth of functional thermal springs contained in the city center – 118 to be exact. It all began millions of years ago, when the tectonic plates shifted below what is now Budapest, causing a fault line to emerge followed by the eruption of several thermal springs. The Celts who then lived here were among the first to discover the springs, while the Romans made use of their medicinal properties by building baths in northern Budapest’s Óbuda district. These days hot water is an important attraction for visitors, and maintaining the baths and spas where the water can be found is vital to the local tourism industry. “The BGYH currently manages 12 bath complexes, of which five are historical thermal baths: Széchenyi, Gellért, Lukács, Király, and Rudas; all of these have a strong tourist draw,” marketing director Szilvia Czinege says. Every year, approximately 3.5 million visitors go to the baths, she says, adding that an estimated 90% of day−pass visitors to the Széchenyi and Gellért baths come from outside Hungary. According to Szőke, keeping those guests coming is the reason for the current round of developments, which are designed to bring the facilities up to a standard that is on par with the expectations of foreign visitors.

Changes start at the HQ One of the biggest changes will be happening to the BGYH headquarters,

Photo: Jessica Fejos

ANIKO FENYVESI

Széchenyi baths, above; László Szőke, below left.

Every year, approximately 3.5 million visitors go to the baths [...] an estimated 90% of daypass visitors to the Széchenyi and Gellért baths come from outside Hungary.

which will be leveled, along with much of the neighboring Dagály baths, to make room for the building of a professional complex for the World Swimming Championships, which will be hosted here in 2017. “The Hungarian state will acquire the site, including Dagály from the capital, and it will build the swimming center here. The new owners will determine what will happen with the rest. The project is expected to cost the state approximately HUF 40 billion,” Szőke says. As for the complexes that BGYH still manages, plans for these include making sure that all the strands and baths have indoor and outdoor facilities, so that they run year−round. Even the Palatinus strand on Margaret Island, a summer institution, will have a covered pool and stay open all year.

As Szőke notes, this will mean that the staff at these facilities can be hired on a permanent, rather than seasonal basis, which should make it easier to recruit better staff, he says. Among improvements they are planning for staff are more English speakers to serve tourists, Czinege says.

Better marketing, and big parties With a 100−year history, Budapest’s baths can pretty much sell themselves, but to increase visitor numbers to fund the ongoing ambitious developments it doesn’t hurt to get a little help from one’s partners. “It’s one thing that our services continuously need to develop to meet visitors’ expectations, but to reach foreigners we’d need to spend a great deal of money on marketing, that unfortunately we don’t have, and this is where our partner Magyar Turizmus Zrt. comes in. They’re able to spread the word to many parts of the world we otherwise

couldn’t reach,” explains Czinege. Having a good product certainly is an advantage but choosing how to differentiate is key. “Our waters have just as many medicinal properties as elsewhere but we don’t push that aspect. Instead we focus on the wellness and recreational aspects,” says Szőke. The mere fact that Budapest has five functioning historical baths also makes it very unique. “What’s amazing about these baths is that you can actually bathe inside a 100−year−old building and there are really so few of these in the world,” Czinege points out. Another big draw for the baths are the parties. The first Cinetrip spa party or “sparty” was held in the Rudas baths ten years ago and they were unlike any party the city had seen before. Picture a historic Turkish bathing hall with elaborate laser and visual projections and visitors clad in nothing but bathing gear bobbing in the water to an all−night DJ soundtrack. “Eventually it became so popular that the Rudas could not accommodate the event,” Czinege says, adding that the party later moved to the Széchenyi baths. “The Széchenyi can accommodate 1,860 guests and we always have a full house, in fact we’ve had to turn some guests away,” according to Czinege. “There are even charter flights from Spain just for this party,” Szőke adds. It is certainly a happening scene, and quite different from what the Celts and Romans might have experienced back in the day.

WWW.BBJ.HU

Budapest Business Journal | July 17 – July 30, 2015

New Aria is something to sing about The successful businessman behind the capital’s newest five−star hotel visits Budapest to talk about the accommodation industry and his latest venture.

point of view it is also not a good thing. There is a certain liability when you stay in somebody’s apartment. If they carry no liability insurance and there is a fire, for example, who is responsible? There are all kinds of issues like safety, liability and the lack of regulations. That is not good. Is it good for people who do not have a big budget to travel? Absolutely. Does it undermine the hotel business? Absolutely. Not at this level, but the ‘economy−class’ accommodations are suffering.

How hard is it to attract people to Hungary who can afford luxury services? The capital’s newest five star A: We are very fortunate as we opened establishment, the Aria Hotel Budapest, our hotel four months ago and we are is a music themed composition, offering doing quite well. Our average rate is luxury while also promising a family− probably double that of a typical five− friendly atmosphere. Still in its “soft star hotel. We are running around opening” stage according to a company €300. The only competition we have is official, the Aria is already getting the Four Seasons, and for the last two top rankings from TripAdvisor, and is weeks we took over the number one spot on TripAdvisor, so we go back and drawing the attention of media from around the world. forth, depending on how many reviews The hotel’s owner is Henry Kallan, who Henry Kallan at his newest hotel in Budapest. we have. What I find very encouraging founded the unique boutique Library Hotel here is that we were able to bring in very in New York City, and also owns three completely non−functioning, and the the $30 mln that is financed is something high quality young people for our staff. other NYC hotels, one in Toronto and the group that owned the building did not you are just paying over a period of I always say that staff is the biggest Aria Hotel Prague. After leaving Czech know what to do with it. So it required time, and this is a certain value against asset when running any business. You Republic in 1968, and playing professional some imagination, some hard work and depreciation and you amortize the value. can have the greatest project with the soccer in Austria, Kallan made his way to a little bit of money, which finally ended The $20 mln in equity is what you are most creative ideas, but what makes it a New York where he became the general up being $50 million – with very little really interested in recouping. So it can be success is having the ability to finance done either by refinancing or selling the it, and once you open the business manager of the old Gotham Hotel at the financing. Most of it was equity money. age of 27 – making him the city’s youngest hotel. We certainly have no plans to sell. there is nothing more important than hotel GM at the time. Do you consider this a long− the people you work with. It seems that Following the press opening of his How much does Airbnb cut Hungarians have the education and term investment? How long talent within the service and hospitality hotel on July 13, Kallan took some into the hotel business? do you think it will take for A: I think very much. Not industry to do what needs to be done, time to talk to the Budapest Business you to get back what you put in? Journal about the hotel business, and A: Hopefully not more than ten years. necessarily at this level. But I believe and to attract visitors. the latest addition to his “Library Hotel But there are many ways to recoup the that it cuts into the typical tourist type of Obviously one of the reasons I am Collection”. investment. It depends on what the capital travelers, who look up Airbnb and try to here is because, although I have lived structure is. One way, as always, is to get a reasonable deal with someone who in the States for more than 47 years, Why did you choose sell the hotel; another way is if the hotel is willing to share their place. So if you there is a certain sentimental value Budapest as the location for does really well, as we expect, you can own an apartment in New York, Budapest, for me to come here, and I like to give your next hotel, and why refinance. The way we look at it is this: Prague, or London, it is an economic back to Budapest. The city is close What is the return on my cash investment way to travel. If you end up staying at a to my heart, as I speak the language, this exact place. A: First of all I have always been fond of on the equity portion of the deal. If you nice place with nice people, it obviously and I like to be in a position to give Budapest. I came here a lot as a young spend $50 mln, of which you put in $20 is a good thing. Is it good for the hotel young people opportunities. I think boy. But as you may know, I own four mln and finance $30 mln, then obviously business? Absolutely not. From a legal this allows me to do so. hotels in New York, one of which is the Library Hotel, where the concept is all about books. What I have learned is that all of us can relate to books, sports, music and fashion – so I believe that creating a concept is a good idea, as it sort of sells itself. Every magazine, every newspaper and every television channel is looking for some type of material connected to these themes. Therefore you mostly get free advertising. In Budapest we have the music concept, as there are four major types of music here: opera, classical, contemporary and jazz. The way I arrived at this is that, after the library concept, I came up with the idea to do something with music in Prague, because it has a rich history in music. So I think it is very appropriate to do it not only in Prague, but also in Budapest. As for the location, it was just a coincidence. I met someone who asked if I was interested in Budapest, since they knew I had a hotel in Prague. So I said let’s take a look at it. I came here and I recognized that this location is probably one of the best, if not the best. This building used to be a bank, and it was just sitting here Harmonious design: The Aria Hotel Budapest. CHRISTIAN KESZTHELYI

Photos: Jessica Fejos

WWW.BBJ.HU

Budapest Business Journal | July 17 – July 30, 2015

Airbnb says it doesn’t hurt hotels The number of bookings by travelers staying in homes listed on Airbnb went up 145%, which means travellers are excited by this unique travel experience and want to experience Hungarian hospitality.

existing tourism industry in Hungary and spreads the economic benefits across cities to new communities and business that haven’t previously benefitted from tourism.

Do you think that the Do you think that the broad availability of broader participation in accommodation that Airbnb the sharing economy made The sharing economy website Airbnb. provides is beneficial to the local possible by Airbnb provides an overall com lets people rent out their flats online, tourism industry? boost to the local economy? providing tourists with an alternative to A: Airbnb hosts are regular, local people A: Airbnb gives travelers the chance booking a hotel. who share their homes and use the to rent unique places, to stay in The service reports that more than 40 additional income to afford living costs. countries around the world, and makes million guests have used Airbnb since They provide guests with the opportunity communities better places to live, work its founding in 2008. Until three years to book unique listings and to experience and visit. ago, most of the users were in the United Hungary like a local. Across the world, 81% Travelers get to live like a local and States, but today the majority of Airbnb of hosts share only the home in which they explore neighborhoods and small stays are in Europe. live, and 74% of properties are outside of businesses they might have missed if While it offers an accommodation the main hotel districts. they stayed in a hotel. Countless Airbnb service, Airbnb insists it does not take hosts have used the money they earned business away from the hotel industry. Do you think that the city’s sharing their space to pay their bills, stay Patrick Robinson, a spokesman for hotels see a drop in business in their homes or pursue their dreams. Airbnb in this part of the world, spoke to This is also good news for the cities due to Airbnb? the Budapest Business Journal about use A: Hospitality is a growing industry around the world. Airbnb data shows of the service in Hungary. and there is enough room for everyone. that the average Airbnb guest is over Hotel occupancy rates are higher than 30 years old, educated and professional. Can you give a rough ever and we strongly believe we’re They stay longer than hotel guests and estimate of how many people helping more people to travel, which is are more likely to return. They also want provide flats and homes good news for everyone. Recent figures to live like locals and spend their money through Airbnb in Hungary? show that Hungary has experienced a at local businesses. This is spreading the A: Currently there are more than 6,700 growth in revenue per available room of economic benefits of tourism and having a substantial positive economic impact listings in Hungary (3,800 of them in 18.6% compared to the previous year. Airbnb is complementary to the on local communities. Budapest), with a yearly growth of 70%. BBJ STAFF

Spreading love on top of Budapest Imagine a romantic date on a rooftop, where you and your partner are served fine wine and nibbles while watching the sun go down from a panoramic location atop a building in Budapest. Ksenia Knyazeva Wallenstein, imagined the idea, and after some searching located a few buildings where she could access the rooftop for a fee. It is a sharing economy scenario, like Airbnb, but the person letting out the location is only borrowing it herself. The service costs €99 and has proven to be popular, among Hungarians and foreigners. Book the service, through: www.facebook.com/datesonroofs

PROMOTION

How many miles in your feet? Summer is the season to be in the great outdoors: trekking distant trails and roaming the streets of your favourite holiday destination. So much fun, unless you have fallen arches or other foot problems. Not to worry, doctors to the rescue and you are back on track! Your foot is a finicky contraption of 26 bones, 33 joints, more than 120 muscles, tendons and strands of nerves. What are the odds that these guys work in perfect harmony, you may ask. With age, excess weight and neglect you are more likely to end up with some rather painful orthopaedic deformity. The worst time to find out about it is your hard-earned holiday. Every step you take exerts a load three times your actual body weight on your foot. On average we take 3-5 thousand steps a day even when working in the office. When sightseeing, on the other hand, one easily takes 10-12 thousand steps a day, mostly on hard surfaces: paved streets, concrete and stone.

As a result, your metatarsal bones start aching. If goes untreated, the pain spreads further up the leg, up to the lumbar region. The excess tension stretches the leg muscles while the affected joints stiffen up. Fallen arches easily overstretch tendons and connective tissue that attach to the heel bone, causing heel spur: a benign but all the more painful bone protrusion on the heel bone. It hurts even when you put your feet up. Fallen arches might cause pain in your soles simply because the deformity stretches the fatty tissues thinner, giving less protection for your feet on impact.

Bunions and hammer toes are not only painful and uncomfortable but quite unsightly as well. The main The most common orthopaedic culprit behind bunions are shoes deformities are flatfoot, fallen arches, that torture your feet, such as high heel spur, bunions and hammer heels and pointy toes. Women are toes. The first two are caused by the more affected than men. The forced flattening of the natural curve of the position shortens the tendons of inner longitudinal arch of your foot. your big toe, gradually pulling it to

the side. The joint starts growing excess bone tissue to compensate for the deformity. The shoes exert more pressure on the bulging joint, causing inflammation and more pain. There you have it. Hammer toe is a condition when the bending muscles force the toe into a curved, claw-like position. Such deformities of the feet do not manifest overnight – it takes years to form. Treatment usually involves a surgical procedure, which brings good results and thanks to modern medicine is less of a strain than it used to be. You can save yourself the trouble with regular orthopaedic check-ups, consulting a specialist every few years. If you are planning a summer holiday that involves excessive walks it pays off to consult a specialist about what precautions to take. Every minute counts when you are packing up for the great adventure. You can jump the queue at Dr. Rose

Private Hospital and get expert advice on a short notice about the best treatment options or even good advice on the right shoes to endure those 10 thousand steps a day.

TEL: (+36) 1 377-6737 WEB: www.drrose.hu ADDRESS: Széchenyi square 7/8, 1051 Budapest

NOTE: ALL ARTICLES MARKED PROMOTIONAL FEATURES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

The service already lists 3,800 flats in Budapest, and more are signing up.

BBJ

4 Focus: Procurement More transparency expected in assessing bids for EU funds The new European Union budgetary period offers piles of cash for those who tender successfully. Altered procedures are meant to guarantee fair and transparent allocation of the available EU funds.

EU Structural and Investment Fund allocations 2014-20 (million €) 100000

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LEVENTE HÖRÖMPÖLI-TÓTH

40000 Local businesses have reason to cheer: A €25.03 billion infusion is to enter the Hungarian economic bloodstream in the form of European Union funds between now and 2020, and the ﬁrst calls for proposals have been published. Some things are bound to change, though. To start with, due to Brussels’ behind− the−scenes political conﬂicts, the volume of money will never be so generous again. That means it is important to improve the efficiency of how the money is used by increasing the percentage of refundable funds over non−refundable, in order to guarantee that only viable projects are carried out which generate revenues for the state later on.

Going down the road of transparency With future fund scarcity in mind, the need to ensure transparent use gains more significance than ever. In a campaign last fall, the roughly 46,000 entities that received funds between 2007 and 2013 were required to file declarations about their ownership structures. Some 600 companies and NGOs were requested to provide additional data, and a list of those whose transparency still cannot be determined is now available online. As a result, around HUF 50 bln−100 bln is expected to be paid back to the government. This money will either finance new projects or end up in the central coffers. Another boost for transparency is a change in the way organizations can apply for funds. As opposed to two methods in the previous European budgetary period, there will now be five. “We have realized that the projects of SMEs, the public sector and regional actors need to be handled differently,” the press service of the Prime Minister’s Office told the Budapest Business Journal. “Development by micro− and medium−sized firms with total eligible costs not exceeding HUF 300 million is supported under a simplified regime, which is a huge relief for them.” Péter Kolossa, EU grants director of MultiContact Consulting Kft. says, “According to the applicable rules, assessment of proposals must be made on the basis of criteria not subject to discretion. This regulation practically rules out the possibility

20000

BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK

Source: European Commission Directorate-General for Regional and Urban Policy

“We have realized that the projects of SMEs, the public sector and regional actors need to be handled differently,” the press service of the Prime Minister’s Office told the Budapest Business Journal. “Development by micro- and medium-sized firms with total eligible costs not exceeding HUF 300 million is supported under a simplified regime, which is a huge relief for them.” to inﬂuence the outcome of assessments.” Predictability is further enhanced by the fact that the schedule of publishing calls for proposals must be made 12 months in advance, rather than the former three. The new electronic interface to submit proposals is yet another asset to make things smoother. “Rules on security provision will change as well since an exemption may be granted upon request if an applicant has no outstanding taxes and has completed one business year,” Kolossa notes. “And ﬁnancing is facilitated by the delayed payment of the entity’s own contribution.” Efficiency can grow a great deal by maximizing so−called indirect costs at 12.5%. “Expenses related to project management or public procurement or the like used to eat up as much as 40% of the total budget,” the government’s press service explains.

Hungary excels The success rate of actually accessing potential resources, however, is also of key importance. Hungary excels at this by having drawn down 87% of funds earmarked

for 2007−2013, according to KPMG’s annual report entitled “EU Funds in Central and Eastern Europe”. Only Estonia performed better at 88%, while the regional average is a mere 77%. The government takes credit for that performance and is certain that measures such as the introduction of a simpliﬁed procedure to settle accounts or the exemption for security provision played a big role. By abolishing the National Development Agency (NFÜ), applicants were also directly connected with policy makers. However, accessing crucial funds for development has a lot to do with the quality of proposals submitted. According to Kolossa, tendering companies that have been around for long years can provide premium service. “It’s very important to entrust a tendering consultant with the execution of our project that doesn’t only help win the funds, but is also engaged in calling them down properly and gets involved in a regular implementation. A competent ﬁrm knows what rules may pose a risk for failure in any given situation for any particular applicant,” Kolossa adds.

Péter Kolossa, EU grants director of MultiContact Consulting Kft.

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Budapest Business Journal | July 17 – July 30, 2015

Focus: Procurement 17

PROMOTION

Tender consultants: Quality will drive the market A wealth of EU grants will become available soon, and bidding for a piece of this funding successfully requires solid expertise. Gábor Harsányi, owner and managing director of GoodWill Consulting Kft., the market leader in the field of tendering consulting, spoke about the importance of providing quality services and the role of GoodWill’s foreign offices in generating further growth. The GoodWill company group became the largest tendering firm in the CEE region in the past 10 years. It employs more than 200 staff in five countries and the amount of funds it has won on behalf of its clients exceeds HUF 104 bln. On the basis of its 2014 revenues, GoodWill Consulting Kft. operating in Hungary became the leading tendering firm in the country. Q: What new rules have been introduced for Hungarian firms applying for funds in the EU budgetary period 2014-2020? A: One of the novelties is that submitting applications takes place now electronically only. It is an ideal solution for many; however, technical problems inevitably emerge in the initial phase of launching such interfaces. Another issue is quickness. Since applications are time-stamped and funds are allocated on a first-come-first-served basis, filing them as fast as possible is of essence. That’s where the importance of firms like ours kicks in: professional preparation becomes crucial. Q: Enterprises can also plan better due to modified scheduling of calls for proposals. A: Indeed, it is known beforehand what is due when. It’s another issue that calls are published with delay. Q: Will the decreased amount of refundable funds available not be an overall problem? A: It’s part of a European Union strategy that aims to give preference to projects that generate real yields. Loosening regulation on providing security or facilitating pre-financing both serve the same purpose. Q: Which calls for proposals are expected to be popular in particular? A: Hungarian entrepreneurs behave in an ever more conscious manner. The concept of so-called free entrepreneurship zones has grabbed the imagination of many, as in those more deprived areas it’s not imperative to pursue activities related to the processing industry. Therefore, a lot of businesses will settle in such rural regions. Investments in the field of energy efficiency or IT should attract many applicants this year.

Net revenue in 2012-2014

Innovation is another safe bet, with resources becoming available from the second half of 2015 on. Some HUF 600 bln will be up for grabs. Q: Pundits fear that such unprecedented amount of money allocated for R&D will make it hard to come up with enough meaningful projects. How can these funds be tendered efficiently in order to ensure their adequate use? A: Company executives should realize that if they have any idea that can be perceived as a unique product, process or service, and it can prevail on a European level, then it’s worthwhile to file a proposal. It doesn’t need to be groundbreaking. An essential factor is to have a competent team and the ability to cooperate with big corporations and universities as they might be the ones that help that idea turn into reality. Free money by itself will not do, resources must be utilized to produce added value. Q: GoodWill’s business profile gives the impression of diversity. What area would you highlight apart from your main focus, tendering consulting? A: We deal with innovation management and audit, among other areas, under which the potential of an applicant for applying for funds is assessed. As a result, when the day comes for submission, the audited entity will know its chances. GoodWill is further involved in partner matching, for which significance is bound to grow under Horizon 2020, the EU’s direct funding program where applicants are expected to form cross-border consortia. Our presence abroad should make this search easier. Our offices set up in Croatia, Bulgaria, Romania and Germany also support Hungarian firms with their export efforts.

Gábor Harsányi

Q: Having branch offices in different countries is not typical for consulting firms with your area of expertise. How successful are they? A: Our latest launch took place in Hannover and we are confident that our know-how can be used by German businesses as well. Our first office on foreign soil was set up in Romania and it was meant to be a pilot project. It worked out great, even though many other companies with a similar profile failed after Romania’s EU accession. Luckily the structure of calls for proposals there overlaps with the Hungarian requirements. On the other hand, the basic infrastructure must be built up first, so resources for economic development still represent a mere 9% of total funds. Q: In Hungary, funds allocated for economic development make up 60% of total EU resources. What will be the impact of this funding in terms of the GDP? A: The European Union concentrates on companies specialized in manufacturing and processing. In Hungary there are 55,000 of them and they are responsible for 22% of the GDP. If money hits this target group, it can result in a multiplier effect. Again, in this case there is some skepticism in the air, as people ask: How are we going to be able to tender that tremendous amount of funds? After all, there is only five and half years to

proceed. Maybe the target group could have been defined a bit more broadly. Q: There are rumors tht the government might decide to centralize the tendering industry, and consulting services would be provided free of charge in Széchenyi Program Offices, the regional outlets of the tendering administration. How would the market be altered as a consequence? A: Quality does matter a lot when applying for funds and putting together solid documentation that brings in the funds requires expertise. I believe the government has realized that this is an activity that companies can choose to freely outsource. The market will be driven by quality. The crisis has cleansed the landscape already. Those that were not professional enough were forced to quit in the past one and a half years since there were no calls for proposals and their revenue dried up. Only those tendering firms that can maintain their operation, that offer quality service, and that have a succesful track record in tendering can succeed.

www.gwconsulting.hu

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Focus: Procurement

Budapest Business Journal | July 17 – July 30, 2015

Practical implications of the new tendering laws Péter Lakatos, managing partner of Lakatos, Köves and Partners law firm, discusses the legal implications of the new legislation impacting the tendering and public procurement process in Hungary. BBJ STAFF

The new law on procurement that is being developed is said to involve extensive changes to the process. Do you expect the changes will make the playing field more or less transparent? A: New legislation generally seeks more transparency. However, irrespective of any new regulation, those who are less interested in transparency always find a way to interpret the applicable regulation in a more creative and flexible way, and they do not insist on the strict regulation. I think that the current changes will not significantly affect the actual public perception of public procurement transparency.

What are some of the important changes you are anticipating that might impact transparency? A: The new regulation on business secrets, the introduction of the Public Procurement Database and the publication obligation for the contracting authorities on their websites will definitely increase transparency. Unfortunately, a draft amendment was rejected that suggested, in case of a negotiated procedure without prior publication – which is one of the main concerns in relation to transparency – the contracting authority would have to publish the contract notice on its home page. The adoption of this provision would have significantly contributed to increased transparency.

What do you think firms will have to do differently when tendering under the new law? A: Due to these changes, participants in public procurement must re−organize their internal procedures and precisely adapt these new rules, especially taking into account the methods for calculating the estimated value of procurement, the shortening of procedural deadlines, the investigation of exclusion options and the proposed changes to the threshold limits. This would require professional advice to submit a fully compliant bid.

Péter Lakatos, managing partner of Lakatos, Köves and Partners.

The new rules are supposed to set quality standards, which must be considered when rating various bids. Do you believe that members of the business community are able to influence what the quality standards will be? A: I believe that quality standards – generally and also in public procurement procedures – are influenced by those standards available on the market. Those provisions that define the “best value for money” criteria, for example, may help to increase the quality of the products/services to be procured. However, this flexible and subjective regulation may give rise to abuse. Practice will show whether such changes help the procurement process.

How can a law firm help in dealing with changes? How is your firm equipped to help? A: Advising clients how to meet the formal requirements of a tender or a public procurement is one of the most important tasks of lawyers. That will continue to be our main focus, with special attention on the new rules. For example, we once had to advise a client, who was a foreign investor tendering in a public procurement process, that a declaration under oath had to be obtained in order to meet the formal requirements. We will need to be careful with the new rules on formalities. Following the publication of the new act, our firm will also provide our clients with a newsletter focusing on the main changes.

Is there anything else you would like to add? A: The real practical implementation of the new Hungarian public procurement law will very much be affected by the general business and legal culture of our country. The conclusion of any business assumes trust and flexibility; meanwhile, the public procurement rules relating to the use of public funds creates strict rules to be followed. These two different approaches are often in conflict with each other. Therefore, to create a perfect public procurement system is a very ambitious plan.

The Budapest Business Journal’s Restaurant Review 2015 is avaliable now! Best Restaurants of Hungary Business Dining The sweet city European Vacation Special Offers Order now from the publisher! +36 1 398 0344 circulation@bbj.hu

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Budapest Business Journal | July 17 â€“ July 30, 2015

Focus: Procurement 19

Tender consultants YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON JUNE 1, 2015 OF THESE, CONSULTANTS

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE TITLE MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

2004 50 32

GĂĄbor HarsĂĄnyi (80), AndrĂĄs IstvĂĄnnĂŠ AratĂł (20) â€“

GĂĄbor HarsĂĄnyi (QLNĹƒ +RUYiWK Ilona Veres

1162 Budapest, Timur utca 74. (1) 321-1173 (1) 413-1461 info@gwconsulting.hu

2002 10 10

OTP Bank Nyrt. (100) â€“

Ă ron Boros â€“ â€“

1134 Budapest, DĂŠvai utca 26â€“28. (1) 412-3520 (1) 238-0981 otphp@otphp.hu

2003 11 9

Attila Veres (85), /DMRV 9HUHV Ibolya Krisztina KovĂĄcs (5) â€“

Ibolya Krisztina KovĂĄcs â€“ â€“

1135 Budapest, PetnehĂĄzy utca 55. (1) 413-7995 (1) 413-7996 RIĂ€FH# rollingconsulting.hu

Enterprise development, municipality investment, agriculture 6]pO &ViUGD .IW *HUĹƒ .IW Hamar BarkĂĄcs Center Kft., Szigma B Kft., GyĂśrgy SzakĂĄly, GĂĄbor-Pack Kft.

2009 12 10

Erik TamĂĄs (50), Fanni TamĂĄs (50) â€“

Gabriella NĂŠmeth â€“ â€“

1073 Budapest, KertĂŠsz utca 22. (57) 407-794 (57) 407-794 gabi@solerte.hu

Premises development, industry establishment, machine procurement and technologiFDO PRGHUQL]DWLRQ 5 ' MRE preservation and creation, energetics and environment protection LĂĄszlĂłpack Kft., AutĂłpress .IW &ViV]iUL 3pNiU~ 6Â WĹƒ Kkt., No-Be Sweet Kft., Uniotech Kft.

2004 3 2

AnikĂł GyetvainĂŠ ZovĂĄth (100) â€“

AnikĂł GyetvainĂŠ ZovĂĄth â€“ â€“

2120 Dunakeszi, Pallag utca 26. (27) 200-871 (27) 200-872 info@uniotender.hu

â€“

R+D, equipment procurement, premises development, foreign market access Doherty Hungary Kft., LovĂĄsz ForgĂĄcsolĂł Kft., Florin Zrt.

2010 2 2

Bence SzabĂł (100) â€“

Bence SzabĂł â€“ Melinda SzabĂł-Varga

1118 Budapest, TorbĂĄgy utca 11. (20) 371-1961 (20) 371-1961 info@europalyazat.hu

KrisztiĂĄn Keszthelyi (100) â€“

KrisztiĂĄn Keszthelyi â€“ â€“

*|G|OOĹƒ SzabadsĂĄg tĂŠr 12â€“13. (70) 341-7924 (28) 420-590 info@emva.hu

NA NA

Alessandro Farina â€“ Barbara Ă cs

1056 Budapest, VĂĄci utca 81. (1) 269-5679 (1) 269-5625 info@kopernikusz.hu

MAJOR FIELDS OF TENDER CONSULTING MAJOR CLIENTS IN 2014

KEOP, GOP, EMVA, ROP, TĂ MOP, GINOP Dunapack Kft., Cu-Imoex Kft., Gloster Kft., SĂĄrospatak municipality, SzentgotthĂĄrd municipality, AVE ZĂśldfok Kft.

â€“

R&D, innovation management, agricultural enterprise development, energetics, IT Csaba MetĂĄl Zrt., MOL Nyrt., Ericsson MagyarorszĂĄg Kft., Evonik Zrt., JĂĄsz-Plasztik Kft., .99 .ĹƒRODMYH]HWpNpNpStWĹƒ =UW

COMBINED

SUCCESS FEE

PROJECT MANAGEMENT

PUBLIC PROCUREMENT

TENDER WATCH

CONFERENCE MANAGEMENT

FIXED FEE

TENDER FEE MATHODS

ACTIVITIES ADMINISTRATION CONSULTATION

1,425

1,782 327

NET REVENUE IN 2014 FROM JOINT HUNGARIAN AND EU-FINANCED TENDERS (HUF MLN) FROM HUNGARIAN TENDERS SUCCESS RATE BY NO. OF CASES IN 2014 (%) AVERAGE SUM OF SUBSIDY REQUESTED PER TENDER (HUF MLN)

TOTAL NET REVENUE (HUF MLN) IN 2014 IN H1, 2015

COMPANY WEBSITE

NET REVENUE FROM TENDER CONSULTING IN 2014 (HUF MLN)

RANK

Ranked by net revenue from tender consulting in 2014 (HUF mln)

GOODWILL CONSULTING PĂ LYĂ ZATI TANĂ CSADĂ“ KFT. 1

www.gwconsulting.hu

OTP HUNGARO-PROJEKT KFT. www.otphp.hu

Âť

218 â€“

ROLLING CONSULTING HUNGARY KFT.

156 43

146 â€“

218

146

www.rollingconsulting.hu

218

1,395 45

SOLERTE TENDER KFT. www.solerte.hu

UNIO TENDER EUROPA TENDER AND PROJECT FINANCING CONSULTING KFT.

60 30

60 â€“

95 38

91 45

91 17

95 15

â€“

www.europalyazat.hu

EMVA KFT. NR

www.emva.hu

KOPERNIKUSZ INNOVATION ASSOCIATION

Âť Âť

9 6

Âť

98 39

Âť

Âť Âť

â€“

Âť Âť

100 â€“

90 50

â€“

GINOP, EKD Human BioPlazma Kft., Lumber-Fa Kft., C.Tessile Kft.

1,066

Âť Âť

Âť

www.kopernikusz.hu

MULTICONTACT NR CONSULTING KFT. www.multicontact.eu

FORMATIC HUNGARY KFT. NR www.formatic.hu

Âť

14 8

â€“

www.uniotender.hu

EURO PĂ LYĂ ZAT KFT.

GINOP, KEHOP, VEKOP

Âť

145

Âť

â€“

Âť

â€“

Machine procurement

Âť

2007 5

Âť

2002 1 1

2002 42

Âť

2009

Âť Âť

1115 Budapest, EuroDeal Holding *iERU $QGUiV 3HWĹƒ BartĂłk BĂŠla Ăşt 105â€“113. Szabolcs KustĂĄn Kft. (Âť) , (1) 666-3750 â€“ Attila IstvĂĄn Som (Âť) , (1) 666-3749 â€“ â€“ info@multicontact.eu

PĂŠter GlofĂĄk (51), Ă gnes GlofĂĄk (49) â€“

PĂŠter GlofĂĄk â€“ â€“

2092 Budakeszi, GĂĄbor Ă ron utca 35. (23) 450-466 (23) 450-466 formatic@formatic.hu

BBJ

5Socialite Red Bull Air Race returns to Danube The acrobatic aircraft race series, which was essentially conceived in Hungary, wowed thousands of spectators on its return after a five−year break. CHRISTIAN KESZTHELYI

Péter Besenyei flies the Red Bull course over the River Danube. For Besenyei, the stunt is well known. “The first time I flew under it was 15 years ago. Since then I have been under the bridge more than 120 times. I had a passenger with me many times, and also I have flown under it upside down, so frankly the bridge does not give me any extra adrenaline rush,” the Hungarian pilot told the Budapest Business Journal. “You have to prepare for flying under the bridge mentally, the key is to have a plan for what happens if things go wrong,” British pilot Paul Bonhomme told the BBJ. “So if the engine stops just before the bridge you have to go under it, or if there is a bird strike you have to plan for that, but it is okay. If the

Authentic Japanese Restaurant

Where taste and harmony meet in a special environment. Adress: 1036. Budapest, Bécsi str. 58. Table reservation: +36/1 240 4065 +36/30 435 0567 info@sushisei.hu www.sushisei.hu

124x77-6.indd 1

2015.07.13. 14:03:52

gap was any smaller it would be quite exciting, but it is okay; however, it is extra work.” For American Michael Goulian, “Flying under the bridge takes quite a lot of focus, at a time when you need to be focusing on a lot of other things. The bridge is a distraction. It is always there. It does give a little adrenaline rush, as you know you cannot miss it.” In the end, fortunately, no one hit the bridge – in fact no one ever has; that fact, plus the size of the crowd, which included thousands of enthusiastic spectators, should mean there is no reason not to continue the race next year. Thus far, however, no definite plans have been announced.

Photo credit: Moni Lazar

Following a five−year hiatus, the Red Bull Air Race series returned to its cradle, Hungary, for a spectacular meet over the River Danube, in front of the imposing Parliament building on July 4 and 5. Hungarian pilot Péter Besenyei, who is often called the godfather of the race for his work in setting up the rules, flew his new plane for the first time, and with just a few flight hours with it in his log he was almost able to get into the final four, being edged out by Canadian Pete McLeod in the Round of Eight. Hannes Arch of Austria took first place in a tight race, in which pilots use a uniform−sized engine and propeller for their small agile planes. Talking to the pilots before the race, it became evident that Budapest, with its spectacular scenery, is a favorite racing venue for many. The requirement that they fly under the Lánchíd (Chain Bridge) is definitely a landmark of the Hungarian race. While some pilots seemed relaxed about navigating the ten−meter gap between the underside of the bridge and the river, some mentioned serious mental preparations in order to pull off the maneuver.

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5 Socialite

Budapest Business Journal | July 17 – July 30, 2015

Wines from wet 2014 take the heat out of summer The washout of a 2014 vintage has actually resulted in some nice lighter but not necessarily lightweight wines that may not be made for long−term cellaring but are just the stuff for cooling off with in summer 2015. We offer some pleasant choices for slow sipping on those long summer evenings. ROB SMYTH

In the sweltering, dusty heat of a typical Budapest summer, unlike the wet excuse for one we experienced last year, I tend to chill out with aromatic white wines that also have thirst−quenching and tongue tingling acidity, backed up by lots of fruit to prevent the wine from being too sharp, prickly or sour. From the cool northern climes of Eger, zippy acidity is ensured in all but the hottest of vintages, and the Egri Csillag white blend is starting to meet my summer wine requirements to a tee. Böjt’s Egri Csillag 2014 is a wine that starts out with floral, zesty citrus fruit and grape soda aromas and follows up with all the promise of the nose on the very fruity palate. So many fragrant wines lack the goods they exude on the nose and fade quickly when it comes to the all− important business end of the palate, but this one holds the excitement all the way. It probably has something to do with the mega aromatic varieties of Cserszegi Fűszeres, Zefír, Irsai, Tramini, and Muscat – Ottonel being limited to a maximum of 30% in the blend, which was established as a wine category and brand in the 2010 vintage. Local flavor is guaranteed by the requirement that Egri

Csillag must be composed of at least 50% of the Carpathian basin grape varieties of Olaszrizling, Hárslevelű, Leányka, Királyleányka, Zengő and Zenit. Another fine Csillag comes from Tibor Gál, who made his out of a blend of 11 varieties in 2014, with Leányka and Királyleányka in the starring roles. Gál’s 2014 has a nice touch of jasmine on the nose and lots of juicy stone fruit, especially peach. With its blockbusting bouquet and mouth−watering acidity, Sauvignon Blanc is a grape that is just made for summer. Etyeki Kúria’s is as exciting as ever with its gooseberry, mango and passion fruit notes held firmly together by its tight structure, while Gilvesy’s has a touch of Badacsony’s savory character alongside gooseberry, with some tropical fruit peeking out on the finish. Tasted blind recently, the usually excellent Pannonhalmi came out somewhat non−Sauvignon Blanc− like in 2014, though it’s still a decent wine. A better choice for summer imbibing from this winery of the famous Benedictine Monastery in the northwestern region of Pannonhalma would, in fact, be the Riesling (Rajnai rizling) 2014, which is currently drinking very nicely. Pannonhalmi decided that the fruit had not been sufficiently blessed to make its flagship Prior Riesling in 2014. Nevertheless, some very good grapes that would normally have gone into the Prior made it into

Pannonhalmi’s basic Riesling 2014, which oozes class and delightfully cool Riesling character. This has typical cool climate Riesling notes of fresh green apple, pear and peach, and that scent of a freshly opened can of tennis balls that can characterize young Riesling before it turns to a more petrol direction with age. It’s got enough fruit and body hanging off the firm acid backbone to make a very round and enjoyable wine that has a soft and smooth landing thanks to a touch of residual sugar on the finish, which is nothing to be scared of in a Riesling. Incidentally, Riesling (or Rajnai rizling in Hungarian) shouldn’t be confused with Olaszrizling, although the two can get along fine

Pannonhalmi Rajnai Rizling, left; Etyek’s Sauvignon Blanc, above; Bakonyi ‘RÓZ’, right.

together blended in wines like the edgy and exhilarating Rizling 2014 from Káli Kövek. A bad year for reds often spells a good year for rosé and 2014 is no exception. This comes about when some of the grapes from the best plots that were originally intended to be made into reds didn’t quite ripen enough and went to make rosé instead. Pannonhalmi’s rosé 2014, which is made from Pinot Noir and Merlot, has an inviting medium salmon color, and then a very full but smooth and round mouthful with strawberry and cherry. Another good rosé is Bakonyi “RÓZ” 2014 from Villány, which is a blend of Zweigelt, Pinot Noir, Portugieser and Cabernet Franc, from the promising young winemaker Péter Bakonyi. It has good weight (possibly due to a fair bit of skin contact) and focus, giving off grapefruit, a bit of tutti frutti, followed by unusual but immensely appealing notes of rose water and rose hip. Etyeki Kúria’s rosé 2014 in fact mainly comes from Sopron fruit. This blend of Kékfrankos (also by itself a fine grape for rosé), Merlot, Zweigelt and Pinot Noir is cooling, crispy and classy with pure wild strawberry and peach notes. Those who love red wines should not even think about giving them up in summer, which is a time when lighter bodied reds come into their own, especially when cooled for a few minutes in the fridge. Heimann’s great value Kékfrankos 2014 from Szekszárd has a vibrant purple color and lovely fresh primary aromas and flavors of sour cherry, raspberry, rose hip and blackberry, plus some black pepper. Going back to the 2012 vintage, Wow from Eger’s Csutorás és AÉS Szőlőbirtok – a blend of Kadarka and Pinot Noir – is “wow!” indeed with its feather light body but deep flavors.

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5 Socialite

Budapest Business Journal | July 17 – July 30, 2015

WHAT’S

Fun things to d o in Budapest for the nex t t wo weeks.

FÉLIX LAJKÓ July 18, Zichy Castle, Óbuda

RAKÉTA FESTIVAL July 20− 26, various venues

Violinist and zither player Félix Lajkó has been known for pushing the musical envelope with his emotive improvisations. Lajkó leans heavily on traditional folk but frequently meanders over to classical, jazz and even blues, and is known for his colorful and varied compositions. lajkofelix.hu

Somewhat like the Hungarian equivalent of SXSW, albeit on a much smaller scale, the Rakéta Festival takes place over one week and features as many as 50 up−and−coming underground acts from Hungary performing at some of the city’s coolest venues and nightclubs. The festival is free to enter. facebook.com/ events/701936536544937/

PALOTANEGYED FESTIVAL July 18−19, various venues An intimate music festival with a local feel, the Palace Quarter festival features folk and world music acts from Budapest and beyond. The event is free to enter and takes place at various venues along the café−lined street in District VIII’s Palace Quarter. jozsefvarosigaleria.hu/event. php?id=325 ADVERTISEMENT

THE ACID July 23, A38 The Acid unites British−based DJ−producer Adam Freeland, Californian artist Steve Nalepa, and Australian producer Ry X. The trio presents what they refer to as a genre−less brand of music – a blend of noisy electronics, meditative acoustic guitar and heavy electronic percussion. a38.hu

The Acid. VIVE LA FRANCE July 23, Margaret Island Open−Air Stage As part of the Budapest Summer Festival, this evening of symphonic soundtracks puts France in the spotlight, in particular the music of French songstress Edith Piaf with special guest Élodie Frégé, known as the lead singer of Nouvelle vague. She will pay tribute to the greatest French popular singer of all time, while the film music portion of the evening will feature songs by Maurice Jarre, Michel Legrand and Alexandre Desplat, all set to a backdrop of film projections in the French cinematic vein. eng.szabadter.hu BUDAPEST VONOSÓK July 27, Vajdahunyad Castle Formed by graduates of the Liszt Ferenc Music Academy back in 1977, the

Budapest Vonosók (string orchestra) will perform as part of the Vajdahunyadvári Summer Music Festival taking place in City Park. The evening’s concert features works exclusively by Mozart including Divertimentos in D major and F major, Piano concertos in F major and A major as well as Mozart’s Symphony in A major. TOKYO-BUDAPEST ENSEMBLE July 30, BMC Tokyo−Budapest has been performing concerts every summer since it first formed in 2002. The ensemble is led by artistic director Kálmán Berkes, who is also a teacher at the Musashino Academia Musicae and the artistic director of the Győr Philharmonic Orchestra. Members are from both Hungary and Japan and are interchanged every year. On this evening they will perform Schubert’s String Quartet No. 13 in A−minor and Brahms’ Clarinet Quintet in B minor, Op. 115. bmc.hu

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Budapest Business Journal | July 17 – July 30, 2015

5 Socialite

Sushi Sei: Home-style, quality cooking Sushi restaurants became popular in Budapest in a big way a few years back, and the number of eateries offering maki, nigiri and sashimi increased, but many of these were more like fast food places, and few outlets offered serious quality. One of the exceptions was the original Óbuda home of Sushi Sei, a top-quality restaurant that gathered a loyal following of regulars, including a lot of Japanese residents, who came to enjoy the kind of food they used to get back home. The chef and founder of that restaurant Seiichi Kusumoto recently sold the establishment to a local owner, but he remains as executive chef and now concentrates on running a kitchen that produces what is probably the best and most authentic Japanese cuisine in the capital. The restaurant has moved a few doors down from its original location to a larger and more elegant site. The cuisine features excellent preparations – from the delicate crust

of the tempura, to the perfectly sliced, or their authentic kaiseki – a traditional the chef and his cooks at work, helping build your appetite for the delicious exquisitely textured sashimi. Every multi-course Japanese dinner. treats to come. dish, starting with the subtle flavors of the octopus salad and ending with They also boast authentic Japanese the hearty miso soup, is consistently beverages, ranging from Kirin Beer to There is also private parking and a satisfying and delicious. Ranging beyond sake, served hot or cold, to different family-friendly children’s play room, so sushi and sashimi, there are also highly varieties of the Japanese hard liquor parents can enjoy a leisurely meal. recommendable versions of cooked shochu. Japanese dishes, like saba no shio yaki (grilled mackerel) sake no kabuto yaki The new location, with its covered (broiled salmon head) and kamo no stake terrace and spacious interior, features Sushi Sei, (duck breast with vegetables). separate rooms, where as many as 25 III. Bécsi út 58. guests can have businesses lunch or tel: + 36 1 240 4065 To enjoy a broad range of tastes from the dinner, and their own private parties. mobile: +36 30 435 0567 web: www.sushisei.hu kitchen, you can try a combination plate, And the open kitchen lets you watch

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