Even the name of the house sounds like business: Congress Hotel am Stadtpark. The location right next to the congress and event center in Hanover could hardly be better for business travelers. But most of the 258 rooms have been vacant for more than a year, and most of the almost 90 employees are still on short-time work. Hotel director Cord Kelle does not want to gloss over anything. He doesn’t expect his guests to be back anytime soon.
According to a study by the German Economic Institute, companies saved at least eleven billion euros last year because they rarely sent their employees on business trips due to the pandemic – money that the tourism industry missed. There can be no talk of a recovery this year either. “Above all, hotels in cities that live from so-called conference or congress tourism suffer due to the oversupply of hotel rooms,” says Professor Christian Buer, who teaches at Heilbronn University and also works for Horwath HTL, the world’s largest consultancy for the hotel industry .
If you ask around at German DAX companies, you don’t exactly get the impression that the desire to travel is slowly returning – on the contrary. “In principle, all business trips are to be limited to the necessary amount and, where possible, replaced by alternative means of communication, such as Skype,” says BMW, for example. When asked by SZ, Siemens also announced that it had had very good experiences with virtual meetings: “For this reason, future business trips will also be checked to determine whether a personal meeting is necessary or whether the topic in question is not resolved sensibly and in a resource-saving manner via a video conference or the like can be.”
While many company bosses are happy about a big plus in the balance sheet and their employees get in the mood for fewer business trips, this trend is putting enormous pressure on the business hotel industry. “The basis of my business is meeting people,” says hotel manager Kelle. “If that goes away, I’ll have a problem.”
Virtual conferences can also take place in the hotel
About 650 kilometers away from Hanover, hotel director Alexandra Radwan stands in the large conference room of the “Prinzregent” hotel in Munich-Riem and looks at an 86-inch touch display on a trolley. “Weframe” is the name of the new device that your employees set up that day. With this, hotel guests will be able to work together with people from outside on a kind of virtual board. On the one hand, with this hybrid format, Radwan may miss overnight guests who prefer to only attend meetings online. On the other hand, the hotel manager has little choice but to adapt to the wishes of her customers.
“The conference business has been up and running again for a few weeks,” says Radwan, “but there is still no question of planning security or even recovery.” The room occupancy fluctuated extremely. On good days, up to 70 percent of their 90 rooms are fully booked, but there are still too many days on which only 15 percent of the rooms are occupied. Radwan has been thinking about what to do with the empty rooms for a long time. Maybe convert the walls so that you can move them around to become even more flexible? Or create artist studios? Or rent the rooms to fit seniors who don’t want to be alone? The attempt to sublet the rooms to people who have the ceiling on their heads at home as a replacement home office was unfortunately only partially accepted.
Cord Kelle is a little less busy. “What should I do? Put the bed upright in the room? Then no more guests come,” he says. You need a room to spend the night and shower – a classically planned hotel like the Congresshotel am Stadtpark is not designed for anything else. Even a conversion to storage rooms is not an option for insurance reasons. And concentrate on leisure guests, after all, tourism in Germany is extremely popular right now? Difficult too, at least in Hanover. “I can’t put my hotel under my arm and rebuild it on Timmendorfer Strand,” says Kelle. In economic terms, his company has just gotten away with it because of the solid management of the past ten years, but also thanks to bridging aid and short-time work benefits. But the mental stress is enormous for him and his employees. “There have already been a lot of tears.”
Kelle is not only the hotel director, but also the chairman of the hotel sector of the German Hotel and Restaurant Association (Dehoga) in the Hanover region. He looks forward to the expiry of the bridging aid at the end of the year with concern. He fears that many hotels will then not be able to survive on their own: “Then the great death begins.”
Experts estimate that some business hotels will soon have to close
Experts like Professor Buer from Horwath HTL or Markus Heller from the Munich management consultancy Dr. Fried & Partner also anticipate that some business hotels will soon disappear from the market. The forecast that 20 to 30 percent fewer business trips will take place in the next few years than before the pandemic are both plausible. At the same time, they believe that the industry will look up again in the foreseeable future. “2022 will be like opening a new hotel for many hotels. A stabilization phase will begin in 2023 and in 2024 or 2025 we will have figures as before the pandemic, albeit with a different focus,” predicts Buer. He assumes that the three- to four-star segment will shrink. “The hotel that tries to offer full service, with a bit of conference facilities and still a full restaurant, is getting fewer.” For Buer, the future of business hotels lies on the one hand in large conference and congress hotels and on the other in hotels with so-called “co-working and co-living areas”. By this he means in particular cheaper accommodation with functional rooms and modern common rooms in which guests can meet for meetings as well as to work and relax.
The business hotel industry is still a long way from writing off Heller. At the moment, he believes that companies are living primarily on the good customer relationships they had built before the pandemic. But making new customer contacts and building trust is difficult via digital media. “At the latest when the first competitor starts to visit his customers again personally and build a social bond there, others will get on the plane again,” says Heller. In his opinion, digitization could even have advantages in the long term. In the pandemic, it has become a matter of course for many people to always have their own office with them on their laptop. As a result, it is now much easier than before to stay in contact with colleagues in the company and work productively even during a business trip – provided the hotels are prepared for it.
Planning uncertainty, says Radwan, is one of the greatest challenges of this crisis. The hotel manager would like to give her employees a reliable perspective: “To be able to say very clearly, from then on you are out of short-time work. That was and is not possible.” Nevertheless, there are bright spots: The catering is now running really well again, almost the entire staff is already fully employed again. And there is something else that gives Radwan courage: With a few exceptions, all employees have remained loyal to her so far. She even got the impression that the loyalty of most of them had grown: “Because we persevered.”
Just giving up is out of the question for the 40-year-old hotel director Kelle from Hanover. He hopes that he will be able to work in the hotel industry until he retires, i.e. at least another 25 years. Kelle says: “A strategy and – and this is very serious – is to persevere and see what is left afterwards.”