Hungary's tourism sector posted a modest decline in June, with the number of guests at commercial and private accommodations falling 2.2% y/y to 1.86mn, while guest nights dropped 2.5% to 4.33mn, the Central Statistics Office (KSH) said on its webpage.

Domestic tourism weakened more sharply than inbound travel. The number of domestic guests fell 2.6% to 982,000 and their guest nights declined 3.6% to 2.18mn. Foreign arrivals slipped 1.8% to 874,000, while guest nights by international visitors eased 1.3% to 2.14mn. Gross accommodation revenue edged down 0.5% to HUF108bn (€300mn).

Commenting on the data, state development agency (MGFU) analyst Daniel Molnar said the decline in domestic tourism came despite rising real wages and favourable summer weather. Weaker data may be linked to the severe heatwave that struck Hungary in the last week of June and to the stronger forint, which has made foreign travel more attractive to Hungarian households.

Foreign tourism also weakened, but the decline was limited to private and other accommodation providers, while commercial establishments continued to post growth. According to analysts, this shows that recent regulations on short-term rentals in some districts of Budapest may have shifted demand to hotels.

Guest nights by travellers from Asia fell 9.2% to 239,200, while North American guest nights rose 9%, supported by the resumption of direct flights.
European guest nights declined 1.1%, as weaker demand from Germany, the UK, Romania, the Czech Republic and Austria outweighed growth from France, the Netherlands, Poland, Italy, Slovakia and Spain.

Germany remained Hungary's largest foreign source market with 275,500 guest nights, followed by Poland with 202,700 and the UK with 127,200.

Accommodation providers registered lower traffic at Hungary’s popular resort site, Lake Balon. One of the steepest declines was seen in western regions near Austria, with some analysts suggesting an asbestos scandal may have played a role.

Hungary's tourism sector remained broadly resilient in H1 despite the weaker June data, as guest numbers increased by 1% to 8.35mn, although guest nights edged down 0.4% to 19mn in the January-June period.

The sector retains significant long-term growth potential but faces mounting challenges.

According to MGFU, rising household incomes should continue to support domestic tourism, but the stronger forint is encouraging outbound travel, while persistent drought and low water levels at popular destinations could further dampen domestic demand. For inbound tourism, he said, Hungary's competitiveness will depend on maintaining its attractiveness despite changes in regional air travel and increasing competition from other destinations.