Tourism in Budapest 2025: Rising numbers, luxury hotel boom and short-term rental slowed down

New hotel projects and openings

Several new luxury hotels will open in Budapest in the coming years, including the transformation of the iconic Gellért Hotel into a Mandarin Oriental. In addition, well-known brands such as St. Regis, Radisson Collection, Voco, Vignette Collection, Moxy, So and Swissotel will open new locations in the city.

Budapest is expected to add up to 22 new hotels with around 3,000 rooms in the next few years. Nine new openings with a total of 800 rooms are planned for 2025 alone.

Conversion of office buildings

Given the high demand for accommodation and the growing vacancies in the office property market, it can be assumed that office buildings will increasingly be converted into hotels, as new buildings in the center are hardly possible due to a lack of vacant lots. This strategy helps to further expand the hotel offering and meet the increasing demand for accommodation.

What does this mean for landlords in Budapest?

The opening of new hotels and new rules for short-term rental in Budapest could have a significant impact on the short-term rental market and student housing. But the noticeable focus on the luxury segment is likely to mitigate the effect, as a Mandarin Oriental is simply not an option for students or tourists with average incomes.

Impact on the short-term rental market

Competition from hotels

With 3,000 additional rooms in the next few years, competition in the accommodation sector will increase. This could put pressure on short-term rental in particular, as tourists will have more alternatives in the form of hotels, which often offer more professional services. However, experience has shown that the room prices in such hotels are far above the average overnight prices in private Airbnb accommodations (which in turn are sometimes at and above the level of 3 and 4 star hotels). Studies also assume that tourism in Budapest will grow at least 5% per year and that demand will therefore increase more than supply.

Moratorium and tax increase

The two-year moratorium (2025-2026) on new Airbnb registrations as well as the quadrupling of the flat tax per room (from HUF 38,400 to HUF 150,000) will reduce the supply of short-term rental. On the one hand, some existing providers will cease their activity and switch to long-term rentals, but on the other hand, the moratorium will mean that every time an apartment is sold, the existing license will be lost because the new owner will no longer be issued with it.

Local economy fears shift in tourism

Since almost 40% of overnight stays in Budapest have so far been short-term rental, the restrictions could have a negative impact on tourism. Travelers who prefer budget or local accommodation and cannot afford the new and expensive luxury hotels will consider other destinations. This could in turn impact local businesses such as restaurants, cafes and cultural institutions that rely heavily on tourists.

Impact on student housing

Relief for the housing market in the center

Making Airbnb apartments available to long-term renters can also benefit students - especially those who are interested in single apartments and are willing to pay rents around 500 euros. Such apartments could become more affordable in the future, particularly in central districts where competition from Airbnb offers was high.

Investment in living space in university locations remains interesting

The demand for housing for international students, whose number in Budapest recently rose to 37,500 (2023/2024), is increasing year after year. As a result, investments in specialized housing options for students will increase. Projects like the DEAN’S College Hotel already show that there is a growing interest in modern, well-equipped student accommodation.

At the same time, larger shared apartments (4-5 rooms) in particular will continue to be very suitable as an investment in the future, despite the shifts in the market. Students with smaller budgets (around 300 euros) will continue to be more interested in a shared apartment (shared apartment) near the university - former Airbnb design apartments in the party district are not an option.

Conclusion

The hotel industry in Budapest is in a phase of strong growth. After a successful 2023, this trend is expected to continue in 2025. The market is particularly driven by increasing demand from neighboring countries and China. With the opening of 22 new hotels and the conversion of empty office buildings into accommodation, the offer for tourists will be significantly expanded. These developments strengthen Budapest's position as an international travel destination and reflect the city's growing importance in the global travel market.

At the same time, the new regulation of short-term rental is already leading to a noticeable change in the market. The two-year moratorium and increased taxation have already led to a complete halt to related construction and renovation projects and could force many private providers out of the market, increasing the supply of long-term rental housing. This could reduce pressure on rental prices and reduce competition for housing in central locations.

The combination of new hotel projects and conversions of office buildings into accommodation shows that Budapest is growing as a dynamic metropolis. But as the city expands its tourism offering to hotel guests, it remains to be seen how a decline in available short-term accommodation will impact travelers on smaller budgets and what impact it will have on local businesses that rely heavily on tourists.

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