With Europe's biggest pop festival taking a break, Glastonbury's Michael Eavis advised music fans that one way to escape from the Olympics crowds in London would be to follow him to Budapest and attend Sziget, which takes its name from the Hungarian word for the Danube River island where it is held.

"They've got the Stone Roses, they've got the Killers, the Vaccines and all the wonderful bands that we are familiar with," the founder of the festival in western England told Reuters.

"I just want to see the overall impression of the whole site and the city of Budapest and the Danube," he added. "It sounds irresistible."

With the 20th edition of the Sziget set to open on August 5, the festival that started in the years just after the collapse of communist rule has changed over the years.

Instead of long-haired, guitar-toting youngsters sitting on the grass sipping beer, there are dozens of state-of-the-art stages with more than 150 international acts. Guests can buy just about anything in a completely cash-free payment system.

A light-rail line connects the island to central Budapest, where the festival ticket doubles as a transport pass. The more adventurous can take a Danube riverboat to the festival gates.

"The Sziget is all about ambience, it's a feeling. You must be there as that's a place to get together, where young people meet," said Viktor Barna, 17, who will build stages at the festival this summer.

"It's absolute freedom, that's it really," added Andras Rusz, 21, a regular attendee for seven years.

KEEPING THE RIGHT AMBIENCE

Sziget founder Karoly Gerendai said he has been careful to make sure that improvements each year do not detract from the atmosphere. The secret, he added, is to create a place where guests feel they belong, rather than just have a good time.

"At the first Sziget, people started to form impromptu drum ensembles, playing on trash cans," he said. "In later years we brought trash cans specifically for them to do that ... It's a small thing but shows how the fans have owned the place."

Atmosphere is important because Sziget cannot compete financially with other festivals for star power.

Gerendai said the festival was unlikely to invite acts such as David Bowie, who has played Sziget, or the Red Hot Chili Peppers, U2 or Madonna, who haven't. A day featuring Prince last year made the festival's biggest one-day loss.

"In the 1990s it was conspicuous that huge stars appeared on Sziget, but the whole festival genre was new in Europe then," he said. "Today festivals abound and they compete for the stars. With our prices, our resources are limited in this contest."

But that is not to say the music quality is lower. Sziget scouts talent continuously and has featured many stars, including the Foo Fighters and Green Day, who then became so big Budapest could no longer afford to book them.

Anima Sound System, Hungary's acclaimed techno-folk group, is a perennial main-stage act. In the early days band leader Zsolt Prieger brought along his then 3-year-old daughter Fanni. She is now grown up and has joined the band and will perform this year with her father.

"We started out playing at some back-end stage," Prieger said on the festival's website. "We never thought we would play alongside the likes of Lou Reed or Iggy Pop. It was awesome."

Many political and business leaders who went to the festival as students, still come back. Vice Governor of the National Bank of Hungary, Ferenc Karvalits, hopes to attend this year.

"Definitely I will try ... it will be a great event, once again," he said.

Peter Oszko, a former finance minister, played at the festival soon after his term ended in 2010. He shocked the crowd on a rain-soaked night when he played harmonica in a blues band.

"Thousands of people were listening to our music and they immediately enjoyed it very much ... We really fell in love with Sziget and this is why we want to go every year."

(Editing by Michael Roddy and Patricia Reaney)

(This story corrects 13th paragraph to say that the Red Hot Chili Peppers have not played in Sziget)

• A Permanent Economic Emergency