A significant number of hotels and restaurants in Germany are reportedly on the verge of financial collapse, despite showing relatively good occupancy rates. This is according to a special survey of the German Industry and Trade Chamber (DIHK), which was reported by the Funke Media Group’s newspapers (Monday editions).
According to the survey, 60 percent of companies in the hospitality industry are reporting a problematic financial situation, which is seven percentage points more than in the previous survey in the fall of last year. Within the gastronomy sector, only 21 percent of businesses currently rate their own situation as “good”, while 29 percent come to a negative assessment. “As a result, the industry is slipping from a plus four balance point in the fall of 2024 to a minus eight point in the current assessment” the special survey states. A total of 2,500 companies in the tourism sector were surveyed across Germany.
The accommodation sector is particularly affected, with the balance of the current business situation falling from +6 in the fall of 2024 to -9 points at the beginning of the year. The main reasons for the cooling of the business situation and the pessimistic expectations in the hospitality industry are primarily high costs for electricity, personnel and food. Almost four out of five hospitality businesses name rising energy and raw material costs (79 percent) as a business risk and almost as often, labor costs are mentioned (73 percent).
Due to high labor costs and uncertain economic framework conditions, 23 percent of hospitality companies plan to reduce staff, while only six percent plan to hire more employees.
Despite the fact that the industry should still be profiting from the record number of overnight stays in the past year, with 496.1 million overnight stays in Germany in 2024, according to the Federal Statistical Office, the industry is now reporting a decline in business. Eleven percent of the surveyed travel agencies reported a deterioration in the business situation. The desire for travel among Germans has, however, not yet decreased significantly, according to the DIHK.
The chamber concludes that the margins of the companies are still under strong pressure due to the high costs and the companies are considering passing on the price increases to their customers in order to remain profitable, as stated in the special survey further. Additionally, many consumers are currently practicing self-restraint in consumption due to the economic situation, with 42 percent of hospitality businesses also seeing the domestic demand as a risk.
“The reports from the companies paint a bleak picture. Many businesses are fighting for survival despite being fully booked” said DIHK tourism expert Dirk Binding to the newspapers of the Funke Media Group. “As often assumed, the problem is not a lack of demand – the businesses are well-occupied. The problem is rather the strongly increased costs.”
According to the survey, a growing number of restaurateurs also see themselves threatened by insolvency. “Experience shows that when pubs and restaurants close their doors for the first time, they usually stay closed. We are losing valuable jobs and meeting places. In particular, in the rural area, this also means a loss of location quality” Binding added further.