Is this the end? Hotels and restaurants in Europe's largest economy prepare for massive closures

Is this the end? Hotels and restaurants in Europe's largest economy are preparing for massive closures

Pessimism and existential fears, that is, fears for one's existence, are the main moods in the German hospitality industry. Which, according to a survey conducted by the German Hotel and Restaurant Association (DEHOGA Bundesverband), “worsened sharply” compared to August. In general, the essence of their assessment of the current situation and the short-term prospects is as follows – either somehow it will be possible to ensure energy supply and an early decline in energy prices, or hotels and restaurants will have to prepare for mass closures.

“Due to a sharp increase in costs and a decrease in sales, 66.1% of enterprises again fear for their existence, especially due to high energy prices. Compared to August, there are almost 30 percentage points more companies with existential fears, a month ago this figure was 37.7%. Almost every third company or 29.6% is afraid to go negative in 2022, by 2023 more than every second company 53.5% predicts such risks,” the report says.

As a result, the heads of DEHOGA called for an acceleration of measures to provide assistance and ensure energy security. “It is necessary to prevent the closure of enterprises and bankruptcy. We need to be clear about what kind of support we can count on,” they tell the government. They also argue that for the tourism business to survive, “energy supply and the speedy implementation of energy price containment must now be a top priority.”

No wonder: the industry is seeing unprecedented growth in energy, food and personnel costs, according to the DEHOGA survey results. Electricity costs have risen by an average of 55% since October 2022, and growth will reach 96% from January 2023. At the same time, approximately 7% said that their costs as a whole increased by more than 200%. For 92.3% of companies, extreme energy price fluctuations are the most serious current problem.

The second number is the sharp increase in food and beverage prices +26% in September and personnel costs +19%. “In most establishments, exorbitant cost increases can only partially be passed on to guests in the form of price increases,” the report added. However, a potential consumer still votes in rubles – that is, the euro. Restaurant and hotel sales fell 7% in September, and for the January-September period, the industry reported a 10% drop in sales compared to the same period in 2019. As a result, according to the Federal Statistical Office, 2022 threatens to become the third consecutive unprofitable year for the industry.

For those who care about a healthy lifestyle, we recommend reading: “Doctor of Medical Sciences reveals how much water you need to drink and how calculate it.”

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