Economy & Politics

Summer business cannot save German hotels

The corona crisis is hitting the hotel industry hard. Despite the summer business, many have to fear for their existence. Photo: dpa / Uli Deck

Vacation in the home country was the big travel trend in the Corona summer. But that couldn’t make up for the lack of business trips. The industry is facing a wave of bankruptcies.

Wiesbaden – The Corona crisis hit the German hotel industry with full force. Even the summer business with many domestic tourists cannot close the gaps that a lack of business travel has torn in the operators’ profit and loss accounts. Among other things, there is a lack of large trade fairs and small conferences, so that the first houses like the “Hessischer Hof” in Frankfurt have already announced their closure.

Full beaches, empty inner cities: even in the main travel month of August, the German tourism industry felt the consequences of the corona pandemic. In the accommodations with at least ten beds, 49.6 million overnight stays were registered that month, 14.2 percent less than a year earlier, as the Federal Statistical Office reported on Thursday. Above all, the foreign visitors stayed away: The number of overnight stays fell year-on-year by 56 percent to 4.7 million.

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Even if almost everyone has taken a vacation in Germany and the local destinations have increased significantly, according to ADAC: The number of overnight stays by residents fell by 4.7 percent to 44.9 million. Missing business trips could not be compensated here. In the first eight months, the hotels and other businesses are now with 212.2 million overnight stays 37.4 percent behind the same period in the previous year, including the months of January and February, which were still normal.

Hotels also rely on business travelers

The general manager of the Hotelverband Deutschland (IHA), Markus Luthe, sees a “dramatic wave of insolvency” rolling down the industry if only the holiday regions have reasonably normal numbers of guests. In August, the average room occupancy in the German hotel industry was 38.9 percent, he said on Wednesday at a hearing in the Bundestag. However, the profitability zone only begins at 60 percent. Even with discounts, the demand could not be stimulated, so that 14.3 percent of the business hotels expected to close this autumn.

The head of the German National Tourist Board (DZT), Petra Hedorfer, does not believe in a quick recovery. According to forecasts, the German holiday travel sector will grow again by six percent in 2023, while sales in the business travel segment will still be a quarter less, she also said in the Bundestag. For many companies, Corona is “financially and structurally a threat to the existence”, said Hedorfer. In many cities, the tourism sector is more than 50 percent dependent on business travelers.

Weak occupancy is threatening to exist

As a result, the property market for hotels has also declined sharply, as the consultancy firm Jones Lang La Salle (JLL) reported on Thursday in Frankfurt. Since the outbreak of the crisis there have been fewer and fewer deals, and for the year as a whole the broker expects a halved transaction volume on the German market.

The weak occupancy rates are threatening the very existence of many operators, says JLL expert Heidi Schmidtke. She expects distress sales, the extent of which is not yet clearly visible. Market uncertainty and more difficult financing conditions would have to lead to price discounts. At the moment, however, the sellers are still looking for other uses: In particular, smaller properties in a price range of up to 5 million euros are currently being acquired with the aim of converting them into residential buildings. This trend could also spread to larger houses in the coming months.

Current reports, background information worth knowing and useful tips – in our dossier we bundle all articles on Corona.


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