Hospitality sector's revenue sharply falls short of pre-COVID-19 standards
Restaurateurs saw an increase in revenue by 2.1% compared to the previous year. However, the rise in VAT has led to lower revenues, and sales are still significantly below pre-pandemic levels. Many restaurateurs fear more bankruptcies.
German restaurateurs experienced a decline in business in March, as stated by the Federal Statistical Office. The hospitality industry's turnover dropped in both price-adjusted (-2.4%) and nominal terms (-1.5%) compared to the previous month.
Compared to March 2023, businesses managed to increase their revenues by 2.1% in nominal terms. Price increases were the reason for this growth. On the other hand, price-adjusted (real) revenue decreased by 0.9%.
The German hospitality industry is still struggling to reach pre-coronavirus revenue levels. Revenue in March of this year was down 13.3% when compared to the same month in 2019 in real terms.
Due to the resumption of the 19% VAT rate for food in the catering industry from January 1st, 2024, customers are facing higher prices. As a result, industry experts predict further insolvencies in the sector. During the pandemic, the German government provided support to the hospitality industry by reducing the VAT rate. Despite the industry's protests, this assistance ended at the beginning of the year.
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Despite the minor revenue increase in nominal terms for some businesses, the overall value added tax (VAT) still impacts the revenue negatively in the German gastronomy sector. With the upcoming resumption of the 19% VAT rate for food in the catering industry, further insolvencies are likely, echoing the concerns of many restaurateurs.
Source: www.ntv.de
