Association complains about difficult situation
Hospitality increases prices and accepts more
January 18, 2024, 4:34 p.m
The German hospitality industry has increased its prices by a fifth in the past four years. In 2023 the markup was also higher than annual inflation. The industry association still sees the companies in a tense situation. Because sales are still below the level before the Corona crisis.
Hotels, restaurants and caterers earned more last year despite the economic headwind and thanks to significant price increases. The German hospitality industry had 9.6 percent more in its coffers than in 2022, as the Federal Statistical Office announced. However, adjusted for inflation (in real terms), the increase shrank to 2.6 percent. For the year as a whole, the industry’s inflation rate was 8.1 percent, which was above the general inflation of 5.9 percent on average last year.
“The situation in the hospitality industry is and remains extremely tense,” said Managing Director Ingrid Hartges of the German Hotel and Restaurant Association (Dehoga). “As the costs of energy and food continue to rise, it will be difficult for many to do business successfully.”
Since the beginning of this year, companies have been suffering from the expiry of tax relief and have therefore largely increased their prices further. “At the start of the new year, skepticism prevails in the industry,” said Hartges. Last year, this did not yet return to the level of the pre-Corona year 2019: according to the statistics office, real hospitality sales were 9.9 percent lower, whereas nominal sales rose by 9.8 percent. This signals that prices in the industry have risen by around 20 percent over the past four years.
Every third company expects losses
“The overall positive balance compared to the previous year can be explained by the particularly high real growth at the beginning of the year,” emphasized the statisticians. There was an increase of 15.9 percent in the first quarter of 2023 compared to the same period last year, which was still heavily influenced by the corona pandemic. After that, the development weakened. “The reason for this is likely to be, among other things, the significantly increased price level in the hospitality industry, to which, among other things, the increased prices for food, personnel and energy contributed,” explained the statisticians.
At the end of December, the VAT on food, which was reduced as a result of the Corona crisis and rising energy prices due to the Russian attack on Ukraine, expired. Since then, 19 percent has been due again instead of 7 percent. Three quarters of restaurateurs have therefore already increased their prices, as a Dehoga survey shows. Eleven percent of restaurateurs want to follow suit during the first quarter, and 6.2 percent want to do so over the course of the year. A third expect to slip into the red this year.
IFO: “Expectations have crashed”
Hartges once again appealed to politicians to ensure fair competition conditions and to tax food uniformly at seven percent. “The unequal treatment of our restaurants and cafés compared to delivery services and food to go must be eliminated.”
A recent survey by the IFO Institute also showed how bleak the industry’s prospects are. The business situation in the catering industry improved in December, explained IFO President Clemens Fuest. “However, expectations have plummeted.”
Inflation caused by rising costs has not only put a strain on businesses, but has also dampened the purchasing power of customers in hotels, restaurants and cafés. Private consumption fell by 0.8 percent in 2023, the first time since the Corona year 2020. People living alone with low incomes were hit hardest by inflation, as shown in the monthly analysis by the trade union-affiliated IMK Institute. The annual average inflation rate for this household type was 6.3 percent. Singles with very high incomes had the lowest inflation rate of all households at 5.3 percent.