Pandemic, energy crisis, inflation, shortage of skilled workers: the hospitality industry is under pressure. The industry is slowly recovering, but at the end of the year new adversity threatens – in the form of VAT.
Actually, the holidays are just over, but the summer is doing an extra round. Nice for the guests who check in at “Jordans Untermühle” in Köngernheim in Rhenish Hesse at the weekend. Your program: A few days of wellness, splashing around in the pool, exploring the rolling hills by bike, enjoying a three-course meal in the evening. A little time out – fittingly, the address of the hotel is “Outside 1”.
Feel-good days instead of business conferences – Gerhard Jordan has completely turned his business concept inside out with the pandemic. “The conferences were the first thing to be cancelled. There are already existential fears that arise. Nobody knew how this would continue? We then said: We are concentrating on the core business of wellness. Our employees are being trained accordingly.” The concept works – Jordan’s 45 rooms are well booked all year round.
“The Living Room of Society”
But by no means everyone in the industry can draw such a positive balance. In 2022 there were a good 45 percent more overnight stays nationwide than in the Corona year 2021. Similar figures to 2019 are expected for the current year, but the general conditions are no longer the same. Inflation, the energy crisis, high prices for food and wages, plus the shortage of skilled workers – companies are under pressure.
Before Corona, the German Hotel and Restaurant Association (DEHOGA) had 220,000 member companies. Today there are still 186,000, according to DEHOGA Managing Director Ingrid Hartges. “Gastronomy in particular fulfills other purposes than just serving food. Our businesses are something like the living room of society. People meet here. We missed it so much during Corona. The guests were happy when we returned where restaurants die, part of the soul of the place dies.”
Inner cities become deserted as a result, in the country day-trippers would avoid the regions if one could no longer stop off. “And then there are a number of other sectors involved. Farmers, winegrowers, bakers, for example.”
DEHOGA warns of a wave of bankruptcies
Politicians did a lot for the industry during the pandemic – for example, reduced VAT for restaurant meals from 19 to seven percent. But this should be over by the end of the year. Hartges warns that this is “a threat to the very existence” of many companies. “The landlords will pass this price increase on to the guests. And the guests will come less often or stay away. Incidentally, the higher tax rate also applies to food in daycare centers – it should be healthy, but please also affordable.”
Only seven percent sales tax would still be due on to-go meals or packet soup from the discounter – “that’s absurd”. Up to 12,000 companies would have to close, warns DEHOGA and is currently mobilizing against the traffic light plans.
Economists for recovery
However, there are also voices in favor of raising the tax rate again. “The tax cut was a measure taken during the pandemic to support the catering industry, which was hit by the crisis,” said the President of the Munich ifo Institute, Clemens Fuest, the “Handelsblatt”. “The pandemic is long gone, so the relief effort should end.”
DIW President Marcel Fratzscher points out that prices in the catering trade have already risen sharply in recent years and suspects that the higher VAT would only have a minor impact. In addition, there is no reason to only relieve restaurants, but not hotels or retail stores.
“To recognize a positive development”
“We need a real tax reform where everything is put to the test,” says restaurateur Jordan. But since that is not in sight, the low rate must be maintained in the long term, at least for the catering trade. “An increase would be catastrophic. But there is also a gap between expectations and reality in other areas. The employment of foreigners who have arrived here should be easier and less bureaucratic, so that everything can be done more quickly.”
However, he does not yet feel the shortage of staff that many of his colleagues complain about. Appreciation for his employees is important to him, he emphasizes, as is social recognition in his industry: “I think there’s a positive development there. Discussions like this about this VAT – that would just set us back a long way.”
Editor’s note: The author of this text is neither related nor related by marriage, nor friends with Gerhard Jordan.