“Many companies are afraid of winter”

The federal head of the hotel and restaurant association raises the alarm: one in three companies in the industry could go bankrupt because of Corona – despite buzzing tourism in Germany in the summer.

It is the year of home leave: Instead of lying on the beach in Turkey, Greece or Mallorca, hundreds of thousands are traveling within Germany this summer. With Bavaria and Baden-Württemberg, the last two federal states have now also received summer holidays. Therefore, once again in the coming weeks, 20 million people are likely to go on vacation on the North and Baltic Seas, in the Lüneburg Heath or in Saxon Switzerland.

This is good news for hoteliers and restaurant operators in Germany. After the corona lockdowns recently saw the hospitality industry drop in sales by up to 75 percent compared to the previous year, many businesses can now look forward to greater capacity utilization.

But is the situation the same in all regions? How many hotels, pubs and restaurants may still go bankrupt – and what does the lower VAT actually bring to the catering trade? spoke to Ingrid Hartges, General Manager of the German Hotel and Restaurant Association (Dehoga). Ms. Hartges, you have just returned from vacation – where have you been in Germany?

Ingrid Hartges: At the North Sea. It was wonderful!

And how full was it there?

It was already full, but the hotels were not fully booked. On site I got the impression that many members of the association also tell us: The Germans are discovering their home country this summer, they are getting to know Germany from a new angle. And above all: you enjoy it. Where else abroad was on the program, many people are now taking the opportunity to travel to cities and regions that they have always wanted to visit. This is a very nice development that has strengthened the Germany tourism trend of recent years.

That sounds as if the situation of the hotels in Germany is better than expected. Will they even become crisis winners?

No, we are far from that, despite all the encouraging signals. The fact is: most companies were closed for ten weeks in the spring and generated no sales at all. These lost sales can no longer be made up for. Many hoteliers and restaurateurs already have huge gaps in the balance sheet. The hotel and catering industry will definitely incur large losses by the end of the year. Our industry continues to be very bad.

Dehoga general manager Ingrid Hartges: “The restaurants are grateful for the VAT reduction.” (Source: Dehoga Bundesverband / Svea Pietschmann)

What does that mean in concrete numbers?

It’s hard to say at the moment. As in all sectors of the economy, it depends heavily on whether there will be a second wave or not. In addition, you cannot pull all the companies together: While the restaurants and hotels in the tourist destinations, for example on the North and Baltic Seas, currently generate 70 to 80 percent of the previous year’s sales, businesses in large cities like Berlin often only manage 30 up to 50 percent of sales in the comparable period of the previous year – because there is a lack of tourists from abroad, but above all also visitors to trade fairs, congresses and conferences.

The loss of sales from the spring can be extrapolated. How big will the minus be for the whole year – how many bankruptcies threaten?

I fear that the existence of 70,000 companies in the hotel and catering industry is threatened, i.e. almost every third business in Germany. For sales reasons, the projection is very difficult because of the reasons mentioned, as I said. On the premise that there are no further lockdowns, I would aim for the thumb but say: The entire industry will generate around 30 to 40 percent less sales this year on average. But that is a very rough forecast. In the catering trade in particular, sales also depend very heavily on the weather. The longer the restaurants, pubs and cafes can serve their guests outside, the better for them. Conversely, if it gets cold earlier, it looks worse. Many companies are therefore very afraid of winter.

What must politics do to avert such a wave of bankruptcies?

Politicians have already done a lot, which has helped not only us but the entire economy. In view of the many hoteliers and restaurateurs who are currently earning less, we should adjust the right to rent and lease in the next step. It cannot be the case that a hotel that has no sales or is only 15 percent full must continue to pay the lease. Here we advocate an appropriate distribution of risk between the lessor and the lessee. Specifically, we would like a statutory regulation in the form of a lease reduction claim due to the corona pandemic. This would be a great relief, especially for companies in the big cities, where 20 to 30 percent of sales leases. Due to the corona pandemic, the business foundation has disappeared. We also expect bridging aids to be extended – especially for companies that still have no prospect of reopening, i.e. discos, clubs, but also pubs and bars in some places. The situation is also dramatic for event caterers.

The fact that there have not yet been too many bankruptcies is also due to the fact that companies are not obliged to file for bankruptcy until the end of September. Should the exemption be extended?

There is no question about that now. One thing is clear: the true extent of the crisis will only become apparent in late autumn.

The federal government also wanted to help the industry by cutting VAT. How much does this measure help companies?

The reduction in VAT on food is of fundamental importance. We have always called for such a reduction. In the crisis, however, it is of course all the more important to strengthen the companies with this measure and it will help to repay the loans in the medium term. The restaurants are grateful for that.

The guests are not necessarily: Many restaurants and hotels deliberately do not pass on the reduced tax.

That’s true. But that was exactly the political plan. Federal Finance Minister Olaf Scholz expressly said that this measure should serve to strengthen the catering trade. We are the industry most affected by the Corona crisis. Almost all hotels and restaurants did not make a euro turnover for ten weeks, and now the situation is far from being as good as it was before the crisis due to the distance rules. We therefore need every euro that we can save by reducing taxes. But my impression is also: The guests have great understanding for this.

Back to the second wave again: How are restaurants, pubs and hotels preparing for another lockdown scenario?

This is a difficult question, which depends heavily on when it comes and what causes it. However, what I notice is that many companies are currently consistently investing in hygiene and protective measures and are making sure that the rules are observed. It is also important. Because we will have to implement a distance and mask requirement for a while to contain Corona until a vaccine is found.

That means you don’t expect any further normalization in the foreseeable future?

We welcome the fact that the federal states are gradually allowing family celebrations and conferences again to a limited extent. However, we have to defeat Corona before there can be normal conviviality, togetherness, celebration.

Thank you for the interview, Ms. Hartges.


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