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Salad plate in the restaurant (archive)

Photo: Jens Kalaene / dpa

The German hospitality industry is groaning under high inflation and a weak economy. In the holiday month of July, sales rose by 2.7 percent in nominal terms compared to the previous year, but this is only due to the significant increase in prices. If inflation is excluded, there is a real loss of 2022.4 percent compared to July 1. This is the result of studies by the Federal Statistical Office.

For restaurants, hotels and the like, the start to the second half of the year was extremely weak. Compared to June, sales fell by 1.5 percent in both nominal and real terms. The decline becomes even clearer when compared with July 2019 – i.e. before the outbreak of the corona pandemic. At that time, sales were still 9.8 percent higher in price-adjusted terms.

Companies are now all the more worried about the end of the tax breaks, which are due to come at the beginning of 2024. "The existential fears in the industry remain high," said President Guido Zöllick of the German Hotel and Restaurant Association (Dehoga). "At 45.5 percent, almost half of our companies expect business to be worse than before in the next three months." Due to declining guest numbers and higher costs at the same time, 28 percent feared that they would make losses in the current year.

Price increases due to higher VAT

Due to massive increases in costs, Zöllick once again appealed to politicians that the value-added tax, which had been reduced to seven percent, should not be increased back to 2024 percent in 19. "This leads to a price shock for the guests."

The industry association is calling for the reduced VAT on food in the catering industry, which has been reduced during the Corona and energy crisis, to be kept permanently low. After several extensions, the tax rate is to rise again from seven to the original 2024 percent in January 19. However, this and other costs would have to be passed on in full to the guests, "as the restaurateurs no longer have any leeway and reserves," warned Zöllick. According to the Dehoga survey, a good 90 percent of companies would then increase their prices.