Background information

Under government decree 485/2020 published on 10 November 2020, business dealing in activities related to the provision of accommodation are offered a reimbursement of 80% of net losses on cancelled bookings due to the COVID-19 pandemic. Only businesses and their bookings registered with the national Tourism Data Supply Centre and made before 8 November 2020 (but pertaining to stays before 11 December) are eligible.

In addition, under the European Commission’s Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (2020/C 91 I/01), businesses are also eligible for aid to cover their expenses as “temporary limited amounts of aid to undertakings that find themselves facing a sudden shortage or even unavailability of liquidity” (Section 3.1) or, “Member States may envisage contributing to the uncovered fixed costs of those undertakings for which the COVID-19 outbreak resulted in the suspension or reduction of their business activity.” (Section 3.12).

Content of measure

The measure applies to the following economic activities:

• Hotel and similar accommodation services (NACe 5510),
• Holiday and other short stay accommodation services (NACE 5520),
• Camping ground, recreational vehicle park and trailer park services (NACE 5530)
• Other accommodation services (NACE 5590).

Other criteria:

1. The accommodation provider as employer must keep headcount as on 8 Nov 2020 level for at least the month of November 2020 and pay full wages to all employees.
2. In a second type of subsidy, businesses in the above activities may also receive grants for covering up to 70% (or 90% for small and micro companies) of their expenses in shortages of liquidity.

For this type of subsidy the businesses eligible are:

• those not classified as ailing businesses on 31 December 2019 (or for ailing small and micro businesses if they are not subject to collective insolvency procedures and have not received rescue or restructuring aid)* those whose revenue in November 2020 fell by 30% or more compared with November 2019.

• The overall aid should not exceed €3 million per undertaking.

• In a third type of subsidy, temporary aid is granted to those businesses that were not eligible for the other types of subsidy.

Criteria:

• those not classified as ailing businesses on 31 December 2019 (or for ailing small and micro businesses if they are not subject to collective insolvency procedures and have not received rescue or restructuring aid)* should not exceed €800,000.

Decisions on the above two types of aid can be made until 30 June 2021.

Use of measure

A survey by the MKIK economic research institute found that the proportion of businesses with no financial reserves is especially high in catering (71%) and accommodation services (62%). It is estimated that out of an average of 400,000 people employed in tourism, some 150,000 have already left the sector due to COVID-19.

A government official estimated that 928,000 guest nights in a value of HUF 15 billion (€41.7 million) could be involved in the reimbursement programme. The bookings were made at 11,000 hotels, which is about one-third of all registered in the official system, so this is how many hotels could be getting the compensation. Many hotels, especially in Budapest, chose not to apply for the support, as they do not want to agree to a ban on laying off staff . Tourists spent 115,000 nights at hotels in January 2021, down 86% as compared to the same period in the previous year, with revenues falling by HUF 31 billion (€86 million) or 91% to HUF 3.2 billion, according to central statistical office data.

According to the central statistical office, the tourism sector’s contribution to GDP fell from 6.4% in 2019 to 5.1% in 2020. The number of employees in the accommodation and catering sub-sector fell by 8% from 2019 to 2020. Working with a wider range of data for tourism, data from the World Travel and Tourism Council showed that the total contribution of travel and tourism to GDP fell from 7.8% in 2019 to 3.8% in 2020. International visitor spending fell by 64.1% and domestic tourist spending by 47.1% in the same period.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Sector specific set of companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government	European Funds National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Only employers' organisations
• Main level of involvement: Sectoral or branch level

Involvement

The employers’ organisation Association of Hungarian Hotels and Restaurants (MSZÉSZ) was involved in talks with the government on the measures, but the nature of their involvement is unknown. MSZÉSZ chairman Csaba Baldauf said that the tourism contribution waiver for 2021 was the Association's initiative and it was successful.

Views and reactions

An MSZÉSZ official said owners of small and medium-sized hotels are likely to be left without any savings by the end of 2020. The industry agrees that the wage subsidies, case Wage support for job creation/workforce support programme for companies (2021) , extended until January may be more helpful to the sector.

In early 2022 MSZÉSZ chairman Csaba Baldauf said that it was the association's merit at its initiative, the tourism contribution was waivered for 2021, however he expressed concern that the [Employee bonus scheme SZÉP card limit rise] (static.eurofound.europa.eu/covid19db/cases/HU-2020-17_1266) will take away revenue from the already ailing tourism sector.

In January 2022 General Secretary of the National Association of Entrepreneurs and Employers (VOSZ) László Perlusz said that the tourism sector is faced with a big labour shortage after many people left the sector during the COVID-19 lockdowns. About 25% of businesses are thinking about hiring a foreign national, he said. Other options are drawing people from poor regions into the sector or keeping workers on beyond retirement.

Sectors and occupations

This case is not occupation-specific.

Sources

• 20 March 2020: Temporary Framework for state aid 2020C 91I01
• 13 October 2020: 4th amendment to the Temporary Framework 2020C_7127
• 10 November 2020: Government decree 485/2020 (English)
• 13 November 2020: Government decree 498/2020
• 26 November 2020: Looking at Orban's aid package (mfor.hu)
• 09 December 2020: Can tourism be saved? (www.portfolio.hu)
• 18 March 2021: Hotels lose HUF 31bn in January (A hazai szálláshelyek alsó hangon 31 milliárd forintot buktak januárban (hvg.hu)
• 09 June 2021: Govt decree 318/2021
• 23 January 2022: MSZESZ chair looks back on 2021 (turizmus.com)
• 23 January 2022: WTTC.org: Hungary 2021 (wttc.org)
• 23 January 2022: Wage wars in Hungary (www.portfolio.hu)