Introduction
1
INTRODUCTION
Hungary has become a Member State of the European Union on May
1
st
2004, taking to the end a process of economical and political changes
begun 15 years before with the abandon of the former Socialist Block. During
this period of transition, tourism has steady been one of the more dynamic
sectors of the economy of the country, providing today a contribution of 10%
to the domestic GDP and employing 390000 people (10% of the active labour
force). However, significant changes in trends characterizing world tourism
demand are taking place and an increasing competition among world tourist
destinations forces professionals of the sector to make the finest efforts to
continue attracting visitors from the traditional markets as well as to make
Hungary attractive to the more dynamically growing source markets.
Therefore, this work aims to focus on the role of Hungarian institutions
in making the tourist destination competitive and in promoting it abroad,
taking Italy as the main area of analysis.
Personal interest for the tourism sector, the fall semester of 2002 spent
at the Budapest University of Economic Sciences as exchange student and a
three months internship in 2004 at the Italian Chamber of Commerce in
Budapest has constituted the starting point of this work.
In the first chapter the latest statistical figures concerning the role of
Hungary in world tourism will be presented and commented. Despite the
country figures in the ranking of the top fifteen visited destination it suffers
from low earnings from tourism. Further breakdown of data aims at highlight
the most significant changes occurred in the sector during the transition,
Introduction
2
considering separately the supply and the demand side. In particular, the
analysis of the main source markets both at national and regional level will be
a basis for the issues discussed in the following chapters.
Finally, the contribution of the sector to the domestic economy will be
taken into account.
In the first part of the second chapter the different institutions involved
in tourism management at national and regional level will be presented in the
framework of a model of destination competitiveness.
In the second part the focus will shift on the most significant tourism
development policies adopted by the Hungarian governments during the
transition. In 2000, the Tourism Development Program (TDP), part of the
broader medium term economic plan called “Széchenyi Plan”, constituted a
considerable step in accelerating the integration with the Western European
countries. In 2003, the Hungarian government prepared the National
Development Plan (NDP) which has represented the necessary large-scale
economical document for joining the EU and for taking direct benefits from
the EU funds. Hence, the particular instruments for the tourism sector
contained in the NDP will be introduced and commented, focusing on the
specific measures to develop the under-utilized tourism potential of the single
tourist regions.
At the end of the chapter, the attention will be on the first attempt to
write a long term development plan only for the tourism sector. The document
will be presented at the beginning of 2005 and will be the result of a large
scale cooperation of institutions, professional organizations and individuals at
every level.
The third chapter will analyze in depth the promotional role and the
operations of the Hungarian National Tourist Office (HNTO), the public
owned body with national competence for promotion and marketing of
Introduction
3
inbound international tourism. The organizational framework of the company
will be considered before the analysis of its total and promotional budget.
HNTO disposes of consistent funds compared to the other Eastern European
national tourist offices (NTOs). Afterwards, the marketing plan for 2004 will
be taken into analysis in order to highlight the marketing strategy of the
company and the guidelines for the development of the single tourist products.
Finally, a detailed examination of the promotional activities carried out
internationally will evidence the specific initiatives addressed to the trade and
the general public.
In the forth chapter the attention will move on the specific research
activity made by HNTO abroad. In year 2000 the organization started to
investigate the perception and image of Hungary as a tourist destination in the
most important source markets and in dynamically growing markets as well.
After a review of the theory of destination image, the present work will
consider the study conducted in Italy in 2002 which was already acutely
analyzed in class at the Budapest University of Economic Sciences. First, the
objectives and the structure of the research will be presented, followed by
specific considerations on the focus group phase and by the results. Thanks to
the direct participation to the 13
th
incoming workshop Welcome to Hungary
held in Budapest in March 2004, personal considerations have been prepared
to value effectiveness of the promotional messages and channels that HNTO is
implementing in Italy. Finally, an analysis of the latest data about specific
inbound flows from Italy has been conducted in order to see what
consequences the latest promotional efforts had.
In the last part of the work personal conclusions will be presented. In
accordance with a top down approach, the final evaluation of HNTO
operations will first consider the involvement of the company in the most
noteworthy international tourism bodies and then its activities in Hungary. The
Introduction
4
know-how achieved internationally results in a strong cooperation and
communication with all the partners of the Hungarian tourist industry.
However, gaps of communication between the head office and Milan and the
narrow organizational structure of the Italian foreign representation seem to be
obstacles to some potential promotional opportunities in the source market. It
is personal belief that there is a significant undervaluation of the promotional
circumstances that Internet offers to compete stronger in the Italian market.
Ideas will be provided at two levels, on one hand giving incentive to a better
management of the editorial contents already provided by the foreign
representation, on the other hand taking into consideration the possibility of
facing the skill shortage through the outsourcing of particular promotional
projects to a web marketing agency.
Chapter 1
5
CHAPTER 1
HUNGARY: TOURISM STATISTICS
AND TOURISM IN THE ECONOMY
1.1 INTERNATIONAL TOURISM AND HUNGARY
At the end of the 1980’s political and economic changes of historic
importance occurred in many Eastern European nations as a result of the
collapse of the Soviet Union. In 1989 the new Hungarian Republic took the
place of the former Popular Republic, carrying the country definitely out of
the Socialist Block. These events absolutely influenced the course of the
Hungarian economy and the structure of the tourism sector in the following
decade.
In this paragraph, the main changes occurred in world tourism and in
the international position of Hungary from 1990 till the recent EU enlargement
process will be analyzed. The latest figures are provided by the World
Tourism Organisation (WTO).
Hungary: Tourism Statistics and Tourism in the Economy
6
1.1.1 CHANGES OF WORLD TOURISM IN THE TRANSITION
Two main dimensions are used by the World Tourism Organisation
(WTO)
1
to evaluate changes in inbound tourism
2
worldwide: the number of
international tourist arrivals and the number of international tourism receipts.
They will be considered separately.
International Tourist Arrivals
According to official statistics, between 1990 and 2003 the number of
international tourist arrivals
3
grew by one and a half times, from 456 to 691
million people, thanks to an annual average growth of 4% (figure 1).
In 2003 Europe confirmed to be the most important destination with
399 million international tourist arrivals and 57,7% of market share, but grew
at a modest speed, still suffering the decreases in long haul traffic occurred
since 2001 and the slow economic performance of some major intra-regional
source markets. Asia and the Pacific was the second biggest region, receiving
119 million tourists in 2003 (17,2% of market share), ten million less than the
previous year due to the “SARS effect” on world tourism. Americas, third,
1
WTO is a special agency of the United Nations (UN) and represents the leading international
organization in the field of travel and tourism.
2
According to WTO official definition, tourism comprises “the activities of people travelling to
and staying in places outside their usual environment for not more than one consecutive year for
leisure, business and other purposes. (…) Inbound tourism involves the non-residents received by
a destination country from the point of view of that destination”.
3
For a proper understanding of this unit, two considerations need to be taken into account:
Data refer exclusively to overnight visitors, travellers who stay at least one night in a collective
or private accommodation in the country visited. Same-day visitors are not included.
Data refer to the number of arrivals and not to the number of persons. The same person who
makes several trips to a given country during a given period will be counted as a new arrival each
time, as well as a person who travels through several countries on one trip is counted as a new
arrival each time.
Chapter 1
7
registered 113 million tourists and 16,3% of market share. Africa had 31
million (4,6% of market share), continuing the positive trends of the recent
years. Finally, 29 million tourists (4,2% of market share) visited the Middle
East, the strongest performance of the year (+ 10%), with many countries
successfully opening to tourism and intra-regional tourism demand steadily
rising. Figure 2 illustrates the regional market shares in 1990 and 2003.
Number of International Tourist Arrivals, 1990-2003 (million tourists)
0
200
400
600
800
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Figure 1 – Source: World Tourism Organization (WTO), 2004
Market share by region of International Tourist Arrivals, 1990 and 2003
Figure 2 – Source: World Tourism Organization (WTO), 2004
Middle
East
4,2%
Africa
4,6%
Americas
16,3%
Europe
57,7%
Asia and
the
Pacific
17,2%
Middle
East
2,1%
Africa
3,3%
Americas
20,4%
Europe
61,5%
Asia and
the
Pacific
12,7%
2003
1990 2003
Hungary: Tourism Statistics and Tourism in the Economy
8
International Tourism Receipts
Because of exchange rate fluctuations, it is always difficult to evaluate
trends of financial data over time. When interpreting the results it should be
considered that international tourism receipts
4
are expressed in US $ based on
the annual average exchange rate and that data can be strongly influenced by
fluctuations. Receipts expressed in local currencies at constant prices (i.e.
taking the inflation into account) usually help to appraise the figures of the
single regions or countries.
According to official statistics, in the 1990s international tourism
receipts increased by an annual average rate of 7,3%, growing from 264
billion US $ registered in 1990 to 514 billion US $ in 2003 (figure 3).
Once more, Europe was in the lead in 2003 realizing the major income
representing 54,9% of market share. Americas held a 22,5% market share,
Asia and the Pacific registered 17,2%, while Africa and Middle East were
responsible for 2,7% each. As Americas is characterised by a comparatively
high receipts per arrival, it still maintains the second position and the lead over
Asia and the Pacific in this kind of ranking. Considering rate-adjusted values
in local currencies at constant prices, only the Middle East increased with
respect to the previous year (+ 17%) while the other regions slightly
decreased, except Asia and the Pacific which seriously dropped (- 11%), due
to the “SARS effect”. Figure 4 shows the regional market shares in 1990 and
2003.
4
According to WTO official definition, International Tourism Receipts are “the receipts earned
by a destination country from inbound tourism”. The category covers all tourism receipts
resulting from expenditure made by foreign visitors as lodging, food and drinks, fuel, transport in
the country, entertainment, shopping, etc. This concept includes receipts generated by overnight
visitors as well as by same-day visitors; however, it excludes the receipts related to international
transport contracted by residents of other countries (for instance ticket receipts from foreigners
travelling with a national company). These receipts are accounted in a separate category,
International Fare Receipts, which for most recent years is estimated at about 18 % of the overall
data.
Chapter 1
9
International Tourist Receipts, 1990-2003 (billion US $)
0
100
200
300
400
500
600
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Figure 3 – Source: World Tourism Organization (WTO), 2004
Market share by region of International Tourism Receipts, 1990 and 2003
Figure 4 – Source: World Tourism Organization (WTO), 2004
Middle
East
1,7%
Africa
2,0%
Americas
26,2%
Europe
54,5%
Asia and
the
Pacific
15,6%
Middle
East
2,7%
Africa
2,7%
Americas
22,5%
Europe
54,9%
Asia and
the
Pacific
17,2%
1990
1990 2003
Hungary: Tourism Statistics and Tourism in the Economy
10
1.1.2 MOST IMPORTANT WORLD TOURIST DESTINATIONS.
HUNGARY IN THE WORLD RANKING.
International Tourist Arrivals
The ranking of the fifteen most important world tourist destinations
based on international tourist arrivals has undergone some changes since 1990.
Most of all, there has been a spreading of the geographical concentration of
tourism shown by the fact that in 1990 68,1% of all tourists chose the fifteen
most popular countries, while in 2002 this figure was 59,9% (-8,2%). Among
the twelve nations found in both rankings, only China has increased its market
share while all the other destinations saw it drop or remain stable. Three
countries in the list for 2002 – Russia, Poland and Hong Kong (China) – were
not in the chart for 1990.
Looking at the situation in 2002 (figure 6), France firmly leaded the
ranking with 77 million international tourist arrivals and 11% of market share.
Spain consolidated the second position, occupied by the Unites States before
the negative impacts of the “September 11
th
”. Italy followed in the list with
almost 40 million tourists, whereas China, which occupied the 5
th
position,
confirmed its importance as a growing world tourism destination and achieved
the fastest growth among the top five (+11%). Based on the WTO, temporary
figures of year 2003 shows that the most noticeable variation has been
experienced by Canada, moving from the 7
th
to the 10
th
position as a result of
the 13% decrease suffered in the last year. The benefiting destination are
Austria, climbing two positions to 7
th
, and Germany, climbing one to 9
th
.
China also has fallen due to the “SARS effect” but WTO expects the rising
trend to resume back in the next periods.
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