“Only War Worse”
2022 is also a lost year for the hotel industry
02/19/2022, 4:09 p.m
The hotel industry has been struggling to survive since the Corona pandemic. Even decreasing numbers of infections will not change that anytime soon. In addition, even if bookings should pick up again soon, the industry is lacking in staff.
The hotel industry is one of the sectors that has been hit hardest by the corona pandemic. Almost two years after the first lockdown measures, there is still little hope of a quick return to the old numbers. “Even after 24 months of the pandemic, we are in complete uncertainty and have no control instruments whatsoever to prepare for anything,” said Otto Lindner, CEO of the Lindner hotel group in Düsseldorf. “When employees ask me how long the short-time work will last, I can’t give a clear answer.”
Having no planning parameters is an extreme burden. “The uncertainty of business guests is the biggest problem,” said Lindner, who is also chairman of the German Hotel Association. “At the moment we are largely living off tourist trips because business trips, meetings, conferences, trade fairs, everything has been completely canceled for the first quarter.”
According to current figures from the Federal Statistical Office, the number of overnight stays in 2021 was 310.3 million, 37.4 percent below the level of the pre-crisis year 2019. Compared to 2020, there was an increase of just 2.7 percent. According to Dorint Supervisory Board Chairman Dirk Iserlohe, the pandemic was the worst crisis in the hotel industry in recent decades.
Demand could pick up again in April
“For our industry, only war is worse,” he said. “We are currently at an occupancy rate of around 25 percent. You don’t earn either the salaries or the fixed costs with that,” says the head of the Dorint Hotels based in Cologne. “Expenses continue to rise due to inflation, so expect a big loss in this first quarter.”
Iserlohe assumes that domestic tourism will initially return to the level of 2019 – and probably even higher. “Next will be the private events,” he said. “After that, the trade fairs will follow again and, at the very end, international, intercontinental business trips will take place again.” It is not yet possible to reach the level of 2019 overall. “2022 is a lost year.” He doesn’t see the industry back to where it was before the pandemic until 2024.
The general manager of the German Hotel and Restaurant Association Dehoga, Ingrid Hartges, calls the current situation dramatic. “This primarily affects the city and conference hotel industry,” said Hartges in Berlin. According to a Dehoga survey of more than 7,000 members in January, there was a drop of 59 percent in the conference hotel industry compared to January 2019, and around 40 percent in the holiday hotel industry. Hartges sees the chance that demand, especially in the tourism sector, will pick up again from April.
“In individual summer months it will be possible to get back to the sales level of 2019.” The development in the business sector is dependent on many factors. “But I’m optimistic that we’ll see a relevant increase in family celebrations, conferences and larger events from April onwards.”
The need to meet again and to travel can be felt everywhere
Dehoga expects that sales will not reach the 2019 level until 2023. From the point of view of the Motel One hotel chain, the start to 2022 was cautious. “Trade fairs and events were postponed or canceled at the beginning of the year.” The pandemic also hinders business travel, the Munich-based company said. “As of today, we don’t expect to reach the pre-pandemic level again until 2024 at the earliest.”
Marcus Bernhardt, CEO of the hotel company Deutsche Hospitality, to which the Steigenberger hotels belong, expects strong demand as soon as the corona-related restrictions are relaxed. “Bookings for 2022 are developing better than predicted in the first few weeks.” The need to meet again and to travel can be felt everywhere.
“We assume that by the end of 2023 Deutsche Hospitality should be able to generate the figures from the pre-pandemic year 2019 again.” “Will we be back to pre-pandemic levels in 2023?” Otto Lindner is not sure. “I think we have a chance to match 2018 levels in 2023 and 2019 levels in 2024,” he said. “We are seeing a significant increase in demand in the area of meetings, conferences and events from March, but this is extremely vulnerable,” says Lindner. “If the pandemic restrictions are not lifted, then it will be pushed further and further back.”
Staff shortages are a challenge for the hotel industry
The calendars for the major trade fairs are full for the second half of the year. “The challenge for the trade fair locations is to find free dates at all and to organize them”. From Lindner’s point of view, one problem – as in other industries – is the lack of staff: “Around ten percent of the employees who are subject to social security contributions left the German hotel and catering industry during the crisis, and the situation with temporary workers is far more dramatic.” Iserlohe mentions staff shortages, rising energy costs and repair backlogs as challenges for the hotel industry. “The issue of human resources will certainly become the biggest problem in the industry in connection with the increase in personnel costs,” he said.
Specialists migrated to other sectors. Unions and employees legitimately demanded pay rises. “If we can’t increase sales, we can’t pay the salary demands,” said Iserlohe. “The margins are too small to be able to finance investments in renovation, restoration, sustainability and also the tariff increase.”