Some recent adjustments in Hungary's hotel sector are placed in the context of the country's changing political economy, its broadening external relationships and trends in the wider tourism environment, Developments within Hungary's main hotel chains are summarized and examples of growth, diversification and re-organization are provided, Changes in tourism flows and in hotel ownership are clearly demonstrated and the geographical pattern of hotels is discussed, A distinction is drawn between the privatized major hotel chains and the many other hotels throughout Hungary, The latter now operate in a more competitive environment having lost much of their market providing accommodation for subsidized groups, These hotels require investment and need to adapt to new markets, Go-operation to promote special interest programmes and the provision of good quality accommodation at moderate cost for self-organizing international visitors and the domestic market are ways forward in a country unlikely to experience mass tourism. (C) 1997 Elsevier Science Ltd.