German hospitality sector remains behind pre-Covid levels

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Germany’s hospitality industry increased its real turnover in 2023 by 2.6 per cent year-on-year, according to an estimate published by the Federal Statistical Office (Destatis). The price-adjusted turnover therefore remained 9.9 per cent below pre-Covid levels in 2019, the year before the outbreak of the pandemic in Germany, Destatis said.

The “overall positive performance” in 2023 compared to the previous year was due to particularly high real growth at the start of the year, reports Xinhua news agency. As the year progressed, Destatis said, higher prices for food, staff, and energy impacted the industry.

“The situation in the hospitality industry is and remains extremely tense,” Ingrid Hartges, managing director of the German Hotel and Restaurant Association (DEHOGA), told Xinhua on Thursday. In order to relieve the catering sector during the pandemic and the energy crisis, the German government temporarily reduced the tax rate for food in restaurants from 19 per cent to 7 per cent.

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Since the beginning of this year, however, the regular tax rate has applied again. Hartges called for “fair competitive conditions” through the uniform taxation of food at 7 per cent, as is the case for supermarkets, delivery services, and takeaway food. In view of rising costs and “high price sensitivity” among consumers, “it will be difficult for many to operate successfully.”

One in three companies fear making losses in 2024, according to a recent DEHOGA survey. Three out of four have already increased their prices as a result of the VAT increase. Meanwhile, business expectations for the next six months in the German restaurant industry “took a nosedive”, the ifo Institute for Economic Research said last month.