What's next for the European hospitality?

Published: 16/11/2020

FoodDrinkEurope spoke to Marie Audren, Director general of HOTREC, to find out how the hospitality sector is faring with Covid-19 and the sector’s outlook for sustainability.

The importance of the hospitality sector in Europe

The European hospitality sector provides millions of travellers and guests with life experiences, fun and unique stories to tell. Prior to COVID-19, the hospitality industry has been a pillar of the tourism sector in Europe and counts over 2 million companies – 90% SMEs or micro-enterprises (i.e. employing less than 10 people). Behind these numbers, there are 12.5 million workers running businesses, investing in the sector and accommodating guests. These companies were also providing billions in vital tax revenues.

With 30.2% of workers relatively unskilled and 20.2% of workers under 25 years, the industry facilitates social inclusion and actively fights youth unemployment. 

How have SMEs in the hospitality sector been coping with COVID-19?

COVID-19 hit our sector hard and still poses an unprecedented challenge to all companies in the industry: thousands of businesses are struggling to survive and thousands of jobs are at risk.  Take for example the nightclubs, these businesses have been closed since the very start of the crisis and they have been looking ahead without much reassurance or idea of when they might start again.

Over the past months, support measures and recovery plans helped many SMEs to overcome liquidity shortages, but most of these companies are still facing solvency issues and are calling for massive targeted support.

Let’s not forget the suppliers that are an intrinsic part of the hospitality sector, many of which are SMEs as well. They are suffering alongside operators and will be critical to a successful restart.

The crisis exacerbated online shopping via e-commerce platforms: because of this trend, small companies are growing more dependent on large ‘gatekeeper’ platforms to distribute their products and services online. The upcoming Digital Services Act (DSA) might revert this trend and safeguard SMEs by giving them further bargaining power (read HOTREC’s position on the DSA for more).

Last but not least, coronavirus made SME’s need for a well-trained workforce more urgent– to lead the way out of the crisis and into a digital and sustainable Europe.

What’s the prognosis for SME’s sustainable development in hospitality in the future?

At the beginning of 2020, hospitality establishments were ready to meet the EU’s objectives in sustainability, if the appropriate funding would be allocated. At the present stage and due to COVID-19, businesses – especially smaller companies – are fighting for their survival.

Nonetheless, despite the current hardships, the industry did not forget its goal of a greener hospitality: sustainability remains a top priority to reduce EU greenhouse gas emissions by at least 55% by 2030 and at the same time remain competitive.

For all companies to comply, the Commission’s goals will have to be at the heart of national Recovery plans. In addition, proportionate measures and new EU instruments to finance the changes will be essential to help SME’s comply with these objectives.

Recovering from COVID-19: what does a good recovery look like for the hospitality sector?

Looking forward, the continued support of the EU and Member States will be vital for SMEs to recover from the crisis.  Many companies have been entering the new phase of lockdown in a critically vulnerable position. 

Businesses need now immediate liquidity to survive, provided via State Aid or other funding mechanisms – such as the SURE instrument, Cohesion funds or other short-term mechanisms.  

We also believe that applying reduced VAT rates would be an extremely effective measure to support the recovery of hotels, restaurants, bars, cafes around Europe. It should continue through the whole 2021. 

In the longer run, and provided that the national recovery plans include these measures, digital and environmental infrastructural improvements should be developed. This long-term financial support will help companies to remain competitive and ready to face the digital and environmental challenges of our decade.

At the same time, coordinating travel restrictions and replacing quarantines with a harmonised testing protocol will be essential to restore travel confidence and bring customers back to hospitality establishments.

A good recovery is one where guests feel safe having a coffee at a café, booking a hotel room or dining at their favourite restaurant.

Beyond their economic importance and contribution, the COVID-19 crisis has shown how much hospitality establishments matter for social cohesion. A ‘return to normal’ would not feel the same without diverse and thriving hospitality establishments.

A great recovery – and the industry’s goal – is to once again reach the growth rate of 2019. This will take time and will only come gradually, but hospitality has already proven its resilience in the past and I am confident that, standing together, we will get through this.