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 gain up to 22 new hotels with around 3,000 rooms over the next few years. Nine new openings with a total of 800 rooms are planned for 2025 alone.
Conversion of office buildings
In view of the high demand for accommodation and the growing vacancy rate in the office property market, it can be assumed that office buildings will increasingly be converted into hotels, as new buildings in the city center are hardly possible due to a lack of vacant lots. This strategy will help to further expand the supply of hotels and meet the growing demand for accommodation.
What does this mean for landlords in Budapest?
The opening of new hotels and new rules for short-term rentals in Budapest could have a significant impact on the short-term rental market and student accommodation. However, the recognizable focus on the luxury segment should mitigate the effect, as a Mandarin Oriental is not an option for students or tourists on average incomes.
Effects 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 rentals 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 of such hotels are far higher than the average overnight prices in private Airbnb accommodation (which in turn are sometimes at and above the level of 3- and 4-star hotels). In addition, studies assume that tourism in Budapest will grow by at least 5% per year, meaning that demand is likely to rise faster than supply.
Moratorium and tax increase
The two-year moratorium (2025-2026) on new Airbnb registrations and the quadrupling of the flat-rate tax per room (from HUF 38,400 to HUF 150,000) will reduce the supply of short-term rentals. On the one hand, some existing providers will cease their activities and switch to long-term rentals; on the other hand, the moratorium means 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
As short-term rentals account for almost 40% of overnight stays in Budapest, 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 affect local businesses such as restaurants, cafés and cultural institutions that are heavily dependent on tourists.
Effects on student housing
Relieving the housing market in the city center
If Airbnb apartments are made available to long-term tenants, this could also benefit students – especially those who are interested in single apartments and are willing to pay rents of around 500 euros. Especially in central districts, where competition from Airbnb offers has been high, such apartments could become more affordable in the future.
Investment in residential space in university locations remains interesting
The demand for accommodation for international students, whose number in Budapest has recently risen to 37,500 (2023/2024), is increasing year on year. As a result, investment in specialized student housing will increase. Projects such as 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 (approx. 300 euros) will continue to be more interested in shared flats close to the university – former Airbnb designer 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 year in 2023, this trend is expected to continue in 2025. Rising demand from neighboring countries and China in particular is driving the market. With the opening of 22 new hotels and the conversion of vacant office buildings into accommodation, the offer for tourists is expanding considerably. These developments are strengthening Budapest’s position as an international destination and reflect the city’s growing importance on the global travel market.
At the same time, the new regulation of short-term rentals is already leading to a noticeable change in the market. The two-year moratorium and increased taxation have already led to a complete halt in corresponding construction and renovation projects and could force many private providers out of the market, increasing the supply of long-term rental apartments. 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. However, as the city expands its tourism offering to hotel guests, it remains to be seen how a decrease in available short-term accommodation will affect travelers with smaller budgets and what impact this will have on local businesses that rely heavily on tourists.
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