The hotel industry has been struggling with great difficulties for two years. Will everything be fine again as the number of infections decreases? It doesn’t look like it. Some problems could remain for a long time.
The hotel industry is one of the sectors that has been hit hardest by the 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,” says 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 any clear answers.” Not having any planning parameters is an extreme burden.
“The uncertainty of business guests is the biggest problem,” says Lindner, who is also chairman of the German Hotel Association. “At the moment we live largely from tourist trips.” Business trips, meetings, conferences and trade fairs have been completely canceled for the first quarter.
According to 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 2.7 percent. According to Dorint Supervisory Board Chairman Dirk Iserlohe, the pandemic was the worst crisis in the hotel industry in recent decades. “For our industry, only war is worse.”
“We are currently at an occupancy of about 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. “The costs continue to increase due to inflation, so that a large loss must be expected in this first quarter.”
Iserlohe assumes that domestic tourism will initially return to the level of 2019 – and probably even higher. “The private events will follow next,” he says. “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 get to 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, sees the situation as dramatic. “This mainly affects the city and conference hotel industry.” 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 division depends on many factors. “But I’m also optimistic that we will see a relevant increase in family celebrations, conferences and larger events from April onwards.” Dehoga expects sales in 2023 to be at the 2019 level.
From the point of view of the Motel One hotel chain, the start to the year was subdued. “Trade fairs and events were postponed or canceled at the beginning of the year.” The pandemic is also hampering business travel, the company explains. “As of today, we don’t expect to reach the pre-pandemic level again until 2024 at the earliest.”
Internationally, hotel operators are also hoping for a quick improvement in the situation. “We are optimistic that the recovery will accelerate across all business areas in 2022,” said Hilton boss Christopher Nassetta on Wednesday. Like its rival Marriott, the group was able to report a profit in the past quarter, while both operators were in the red at the end of 2020.
Marcus Bernhardt, head of 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?” Lindner is not sure. “I believe that we have the chance to build on the level of 2018 in 2023 and on that of 2019 in 2024,” he says. There will be a significant increase in demand for meetings, conferences and events from March, but this will be “extremely vulnerable”. “If the pandemic restrictions are not lifted, then it will be pushed back further and further.”
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”. One problem from Lindner’s point of view – as in other industries – is the lack of staff. Around ten percent of employees subject to social security contributions left the hotel and catering industry during the crisis. “It looks far more dramatic with the temporary workers.”
Dorint supervisor Iserlohe mentions staff shortages, rising energy costs and repair backlogs as challenges for the hotel industry. “The issue of human resources will certainly be the biggest problem in the industry in connection with the increase in personnel costs.”
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,” says Iserlohe. “The margins are too small to be able to finance investments in renovation, restoration, sustainability and also the tariff increase.”
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
