BUDAPEST - For many thousands of young people around Europe, the second week in August means a trip to Budapest and the Sziget festival.

This year marks the 20th anniversary since the first Sziget (the Hungarian word for island) festival in 1993, and on Wednesday it all gets under way again - a week-long extravanganza of eclectic music and culture on a wooded island on the river Danube.

The event has steadily grown into one of Europe's biggest and most popular festivals over the past two decades, regularly drawing up to 400,000 visitors to Budapest. In January, almost half a million voters chose Sziget as the Best Festival in Europe at the European Festival Awards.

The appeal lies not just in the headlining bands and vast range of visual arts, theatre, and film, but the festival's relaxed and multicultural atmosphere.

"The unique feeling you get here makes it special," said Karoly Gerendai, managing director of the company which operates the Sziget and one of the founders of the festival 20 years ago.

"It's like a micro-society where culture is the common language, it doesn't matter if it's music or visual arts or simply just chatting with whoever you meet or sit down next to," Gerendai said.

More than 1,000 acts are lined up this year on over 50 stages scattered around the island playing host to genres such as electronic, alternative, Roma and world music as well as the main stage for the bigger names.

The festival's proximity to the bustling Hungarian capital is another draw, while add-ons like the boat which brings festival-goers to the island from the centre of the city, a cash-free voucher-card payment system, and a myriad of services including restaurants, shops, a post office and a bank all smooth the experience for Sziget-dwellers many of whom make the event an annual pilgrimage.

"Lots of people live here on the island for the whole week," said Gerendai. "It's like a new city of several thousand people is created in Hungary for a week. We provide the framework and the people provide the atmosphere."

Attention to detail is a key part of Sziget's success. Gerendai pointed out the well-equipped backstage facilities for performers behind the main stage which would be used this year by bands such as The Stone Roses and The Killers.

"Often groups are here only for a few hours, so we try to make sure that time is as comfortable as possible and that they feel good," he said.

Sziget has travelled a long way from its bohemian roots in 1993. A group of artists and rock enthusiasts from the underground music scene decided to organize a festival in their spare time, under the slogan "One week together."

"We decided on a one-week camp with not just music but different types of culture on the side," Gerendai recalled. In 1993, he used a loan from his father, originally intended to buy an apartment, to set-up a company to operate the event.

While the early festivals were successful in terms of attendees, they lost money and in the absence of state support, Gerendai and the other organizers began to work on a more viable business model. In the second half of the 1990s, sponsors like Pepsi came on board, giving Sziget the financial clout to attract crowd-pulling names like David Bowie, Radiohead and Prince.

These days, it has an operating budget of around 3 billion forints (approximately $13 million). "There is much more responsibility and more risks now than back then," Gerendai says, "But you can do much more with more money."

His team had to make cuts this year after making a loss in 2011 but he insisted the Sziget experience would not be diluted as a result. Some of the stages and venues were scrapped, while Gerendai admited some of the bands they wanted to invite weren not able to come, but new elements were brought in to give the event new momentum.

"The international music festival field is highly competitive and to survive you have to be one step ahead, always thinking about the future," he said.

Around 100 million forints (about $450,000) are being spent this year on visual arts and spectacular installations. Modelled on the London Eye, a 42 meter-high Sziget Eye will provide a new view on the revelry below for up to 200 people at any one time.

A team of designers, artists and architects from nine countries have created eye-catching wooden structures around the island. A new 4,000 square metres performance space has been added, the largest covered area ever on the Sziget, where alternative bands like The Ting Tings and Lamb will play. Also, for the first time, a live stream of the major acts will be broadcast on YouTube.

Despite the 20-year anniversary, there are no plans for a big birthday party. "The goal is to have a modern, contemporary event, looking forwards not backwards," Gerendai said. "Sziget is now a major international event which can not allow itself to be buried in nostalgia or live in the past."

This willingess to change with the times may be one reason for Sziget's success, but one result of the commercialization of the Sziget over the years has been the rise in ticket prices which has deterred many local people from going. The majority of Sziget visitors in recent years may have been western Europeans but Gerendai believed the festivals pricing still represented value for money for local people.

"A beer at Sziget costs around a third of what you pay at an average festival in western Europe, plus you get a great experience with your ticket," he said. "Everything would cost much more if we were only doing it for western Europeans as we are often accused of."

As to whether Sziget will be around in another 20 years, Gerendai said if it depends on him then it will be, but conceded there were a myriad of variables such as the economic climate, support from the municipality, and trends in festival-going. The Sziget's track record in innovation suggests it will not be disappearing anytime soon.

"The Glastonbury festival has been going for 40 years now and no-one talks about whether or not it is going out of fashion," he said. "If you can tap into what an audience is looking for then there's no reason not to keep on going."

As workers put the finishing touches on this year's Sziget preparations and local bands move in for warm-up concerts, the original slogan "One week together" may no longer be visible around the island, but the spirit, it seems, lives on.