In an interview conducted by ImmoTrading GmbH in February 2025, Krisztian Koch, CEO of a Duna House franchise partner in Budapest, discusses the current situation of Airbnb and boutique hotels in Budapest.

Let me describe the situation regarding Airbnb and the future of small hotels in Budapest in a few sentences, based on my experience as a Duna House franchise partner.

1. Rise and Influence of Airbnb (2013–2024): Over the past ten years, Airbnb has become a dominant player in Budapest, especially in the central districts (V, VI, VII, VIII), where short-term rentals accounted for a significant portion of the housing market.

By 2024, the number of properties listed on the platform reached 16,000, although only about 10,000 were actively operated. A downtown Airbnb property could generate annual income of 4–8 million HUF, with average occupancy rates of 70–85% in the summer and 50–60% in the off-season. Tourists—especially younger generations—favored Airbnb for its flexibility, affordability, and homey atmosphere, making it a major competitor for traditional hotels. However, the growing supply and market saturation have led to declining revenues for hosts.

2. Regulatory Changes and Their Impact: Stricter regulations for Airbnb starting in 2024 marked a turning point. Voters in District VI approved a complete ban on short-term rentals from 2026 onward. Nationwide measures are also expected, including a freeze on new licenses, tax increases, and restrictions limiting operations to 120 days per year. These steps aim to stabilize the housing market and reduce illegal rentals, potentially decreasing the number of Airbnb units by 30–40% by 2026. For tourists, this means fewer alternatives and a rising demand for traditional accommodations, especially smaller hotels.

3. Why invest in small hotels? Regulatory changes are creating a favorable environment for small hotels and investments. Tourists are likely to look for alternative accommodations, which will increase the occupancy rates and revenue potential of boutique hotels and guesthouses in city centers. 

• Increased demand: The shrinking short-term rental supply is likely to boost demand for small/boutique hotels, especially in central Budapest districts.

• Stable pricing: Reduced competition enables more sustainable pricing with continued high occupancy.

• Diversified guest base: Small hotels can attract not only tourists but also business travelers, groups, and long-stay guests.

• Predictability: Hotels offer more transparent and stable operations compared to Airbnb, which is often subject to regulatory uncertainties. 

4. Business Potential and Long-term Outlook: A boutique hotel with 15–20 rooms in a central location could generate annual revenues of 160–250 million HUF, with operating margins of 20–30%. Small hotels are more adaptable to market shifts and can rely on steady demand due to Budapest’s international popularity, drawing over 10 million visitors per year.

5. Message to Investors: Restrictions on Airbnb are creating favorable conditions for traditional accommodations. Small boutique hotels offer stability, growing demand, greater pricing potential, and lower risk for investors.

As a top tourist destination, Budapest guarantees long-term growth and profitability in the hospitality sector. Tourists usually book accommodations in districts known for their attractions, accessibility, and vibrant atmosphere.

Examples:

Most sought-after due to its proximity to major attractions (Parliament, Basilica, Váci Street, Danube).

Accommodation types: Luxury hotels, boutique hotels, exclusive Airbnbs.

Target audience: Tourists of middle and older age, business travellers.

Attractive thanks to Andrássy Avenue and surrounding areas, particularly for those interested in culture (e.g., Opera) and shopping.

Accommodation types: Airbnbs, small apartments, mid-range hotels.

Target audience: Younger tourists, couples, families.

Famous for nightlife, ruin bars, and lively atmosphere, especially the Jewish Quarter.

Accommodation types: Many Airbnb units, hostels, small hotels.

Target audience: Young people, backpackers, friend groups.

Although less frequently mentioned, it’s a popular destination due to the Castle District and Fisherman’s Bastion, appealing to those seeking a quieter, historical setting.

Accommodation types: Boutique hotels, small apartments.

Target audience: History lovers and older travellers.

Other popular districts:

• District IX (Ferencváros): Preferred for riverside hotels and proximity to the National Theatre.

• District XIII (Újlipótváros): Near Margaret Island, with modern apartments and hotels, ideal for business travelers and families.

Conclusion:

Yes, most accommodations are concentrated in these areas because tourists prefer to stay close to attractions. Past Airbnb data also showed that Districts V, VI, and VII dominated bookings, indicating that experience, sightseeing, and location heavily influence travelers' lodging choices.

For example, if we're talking about a 10-room hotel generating approximately €1,000 per room per month, that amounts to €120,000 per year. This results in an ROI of 9.6% on an investment of €1,250,000. Of course, this is an estimated value and does not take into account possible economic changes.

Investing in a mini-hotel in Budapest is about more than just operating income and calculated ROI. It’s important to remember that real estate prices in Hungary, especially in Budapest, have been steadily rising. Over the past 10 years, they’ve increased by a factor of 6 to 7. A similar trend is expected in the future, as property prices are still lower than in other parts of Central and Eastern Europe—not to mention the European average.

Therefore, property appreciation is a far more meaningful indicator of wealth growth than just return on capital.

Thank you for the interview, Mr. Koch, and for the insightful investment information