Научная статья на тему 'EFFECTS OF CORONAVIRUS ON THE HOSPITALITY MARKET IN THE GERMAN ECONOMY'

EFFECTS OF CORONAVIRUS ON THE HOSPITALITY MARKET IN THE GERMAN ECONOMY Текст научной статьи по специальности «Экономика и бизнес»

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Ключевые слова
SARS-CoV-2 / COVID-19 pandemic / hotel industry / tourism / business travel / hospitality market / SARS-CoV-2 / пандемия COVID-19 / гостиничный бизнес / туризм / деловые поездки / рынок гостеприимства

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Франк Стефан, Кононова Мария Юрьевна, Вильдероттер Клаус

The tourism industry is facing its greatest challenge because of the COVID19 pandemic. The pandemic has almost brought tourism to a standstill caused by strong travel restrictions and travel warnings, implying that the hotel industry had been suffering from large financial losses from here on. Many employees lost their jobs and had to reorient on the market. However, any crisis creates new opportunities. Our Short Note sheds some light on the impact of the COVID-19 pandemic on the hotel industry and sketches some short-term options for action. The report will present research results based on data from Germany. The authors thank the Mendel-University of Brno and the Technical University of applied Science of Rosenheim for supporting this study.

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ВЛИЯНИЕ КОРОНАВИРУСА НА РЫНОК ГОСТЕПРИИМСТВА В ЭКОНОМИКЕ ГЕРМАНИИ

Индустрия туризма столкнулась с серьёзнейшей проблемой из-за пандемии COVID-19. Пандемия практически остановила туризм из-за строгих ограничений на поездки и предупреждений о поездках. Это означает, что с этого момента гостиничный сектор понёс большие финансовые потери. Многие сотрудники потеряли работу и были вынуждены переориентироваться на рынке. Однако любой кризис создаёт новые возможности. Наш краткий отчёт отражает частное влияние пандемии COVID-19 на гостиничную индустрию и намечает некоторые краткосрочные варианты действий. В отчёте представлены результаты исследования, основанного на данных из Германии. Авторы благодарят Брно Мендель-Университет и Технический университет прикладных наук Розенхайма за поддержку этого исследования.

Текст научной работы на тему «EFFECTS OF CORONAVIRUS ON THE HOSPITALITY MARKET IN THE GERMAN ECONOMY»

УДК330.34:330.15:332:504:502.6:550.028:338.1:430 doi:10.18720/SPBPU/2/id21-411

Франк Стефан1,

магистр креативных сред, аспирант;

Кононова Мария Юрьевна2, приглашённый профессор, доктор технических наук, доцент;

Вильдероттер Клаус 3, профессор, доктор естественных наук, доцент

ВЛИЯНИЕ КОРОНАВИРУСА НА РЫНОК ГОСТЕПРИИМСТВА

В ЭКОНОМИКЕ ГЕРМАНИИ

1 Чешская Республика, Брно Мендель-Университет, Stefan.Frank2000@web.de;

1 2 3 Германия, Розенхайм, Технический университет прикладных наук

Розенхайма, Mariia.Kononova@th-rosenheim.de, 3 Klaus.Wilderotter@th-rosenheim.de

Аннотация. Индустрия туризма столкнулась с серьёзнейшей проблемой из-за пандемии COVID-19. Пандемия практически остановила туризм из-за строгих ограничений на поездки и предупреждений о поездках. Это означает, что с этого момента гостиничный сектор понёс большие финансовые потери. Многие сотрудники потеряли работу и были вынуждены переориентироваться на рынке. Однако любой кризис создаёт новые возможности. Наш краткий отчёт отражает частное влияние пандемии COVID-19 на гостиничную индустрию и намечает некоторые краткосрочные варианты действий. В отчёте представлены результаты исследования, основанного на данных из Германии. Авторы благодарят Брно Мендель-Университет и Технический университет прикладных наук Розенхайма за поддержку этого исследования.

Ключевые слова: SARS-CoV-2, пандемия COVID-19, гостиничный бизнес, туризм, деловые поездки, рынок гостеприимства.

Stefan Frank1, Master of Arts, Doctoral Student;

Maria J. Kononova2, Visiting Professor, Dr.-Eng. habil, Ass. Prof.;

Klaus Wilderotter3, Professor, Doctor of Natural Sciences, Ass. Prof.

EFFECTS OF CORONAVIRUS ON THE HOSPITALITY MARKET

IN THE GERMAN ECONOMY

1 Czech Republic, Brno Mendel-University, Stefan.Frank2000@web.de;

1 Л

' ' Germany, Rosenheim, Technical University of applied Science,

2 3

Mariia.Kononova@th-rosenheim.de, Klaus.Wilderotter@th-rosenheim.de

Abstract. The tourism industry is facing its greatest challenge because of the COVID-19 pandemic. The pandemic has almost brought tourism to a standstill caused by strong travel restrictions and travel warnings, implying that the hotel industry had been suffering from large financial losses from here on. Many employees lost their jobs and had to reorient on the market. However, any crisis creates new opportunities. Our Short Note sheds some light on the impact of the COVID-19 pandemic on the hotel industry and sketches some short-term options for action. The report will present research results based on data from Germany. The authors thank the Mendel-University of Brno and the Technical University of applied Science of Rosenheim for supporting this study.

Keywords. SARS-CoV-2, COVID-19 pandemic, hotel industry, tourism, business travel, hospitality market.

This publication is a direct continuation of the research carried out as part of the preparation of a doctoral thesis on this topic at the University of Brno (Czech Republic). This study started with the aim of making digitization usable and measurable for the hotel industry. The authors also take into account the requirements of the World Tourism Organization. In connection with the unique situation caused by the Covid-19 pandemic, and in conjunction with the WHO requirements for the suspension of travel activities, short-term forecasts and developments in the business travel industry in Germany were made.

Research question and methodology

The main aim of our work is a systematic research on the aftermath of the COVID-19 pandemic within the German hospitality market for business customers until summer 2021 to answer the following research question: which operational measures could improve the situation of this market segment in the short term?

The literature research focuses on online documents and available statistical data. The aim of our review is the identification of central aspects and the integration of practice-related concepts based on them. The literature search was carried out to provide representative coverage.

Introduction

In December 2019, the SARS-CoV-2 pathogen was detected for the first time in China. [1] At that point in time, nobody could have imagined how strongly the spreading of that virus would change the world - very likely, even steadily. Resulting from a rapidly increasing spreading of the virus worldwide, particularly induced by seemingly unsuspicious travelling across borders, the SARS-CoV-2 pathogen case of China turned to a huge pandemic whose definite end still is not in sight [2].

Therefore, the impact of the COVID-19 pandemic in particular has a lasting grip on tourism and will shape the travel and booking behavior of entire generations. Especially, the hospitality industry and tourism are significantly affected by these restrictions. This also includes the aviation industry, since border closings and travel restrictions almost brought passenger air traffic to a

standstill in many countries, which had a direct impact on the hotel industry [3].

Survey

The measures of German government to absorb the most threatening impacts of the COVID-19 pandemic hit the catering and hotel industries in Germany particularly hard from mid-March in 2020. From 18th March 2020, hotels, hostels and accommodations nationwide had to keep their doors locked for both, private and business travellers. Even restaurant operators were not allowed to serve guests in their premises (including their outside sitting area) since 22nd March, caused by a lockdown directive by German government. Only pick-up and delivery services could maintain their business [4]. "A particular problem for this loss of demand is that catch-up effects are not necessarily to be expected. If the supply chain is interrupted, it can be expected in many cases that the corresponding purchases and sales will take place later. This is different from social consumption. Restaurant visits or business trips that do not take place today are not necessarily made up for later. Private consumption has so far proven to be a pillar of the economy. Due to the cancellation of trade fairs, trips and events, a consumer recession occurred in 2020. Whether a complete compensation of these effects appears realistic in the following quarters is at least questionable because certain demand components are not necessarily made up for" [5].

Companies have reduced business trips to a minimum during the pandemic [6]. It can be assumed that this trend will continue [7]. This is because, on the one hand, costs are reduced due to the lower travel activities and, on the other hand, the infrastructure in the online area is also being greatly expanded. Video conferencing providers such as Skype, Zoom, Teams, TeamViewer, etc. were able to triple their sales and profits during the crisis [8].

"In the period from April to December 2019, the average occupancy of sleeping accommodations in Germany was approx. 41.65 %. In the following year, this fell to an average of 27.15 % due to the corona pandemic. In the year 2021, the occupancy was only 12.4 % from January to April. "This is even clearer through direct guest overnight stays in comparison from 2019 to 2020. The guest overnight stays in 2019 was 495.6 million, in the previous year (2018) at 478 million. In 2020 this fell to 302.3 million, which corresponds to a decrease of 39.00 %" [9].

5HÏ

Fig. 1 Average occupancy of the sleeping accommodations offered in German hotels [20]

The average room occupancy has increased by around 0.7 percentage points every month since January 2021. If this trend persists, it can be assumed that the level before the COVID-19 pandemic would be reached again in around 40 years only. In reality, however, this should improve more quickly, as the second lockdown was included in these figures and the hotels were only able to use their beds to a limited extent. According to current Ifo statistics, 57 % of all German companies are planning to massively restrict their business travel even after the "finishing" of the COVID-19 pandemic. As an example, the telecommunications company O2 [10] is planning to reduce its business trips by 70 % [11].

"The total cost of business travel in Germany in 2019 was 55.3 billion euros. In the previous year, expenditure was 53.5 billion euros (+ 1.8 billion euros). By 2020 it can be assumed that the volume for business travel will decrease to 31.52 billion euros, which corresponds to a decrease of 43 %. The online retailer Amazon alone was able to save 843 million euros in travel costs" [12].

"Another trend that can be seen on the market is that the number of hotels open in Germany fell by 533 from 2019 to 2020. That is a decrease of 4.14 % compared to the previous year. In previous years, the trend was around 0.40 %" [13].

12.S7& 12.920 12.W2 12.M5 I 13.193

Fig. 2. Number of open hotels in Germany [21]

This can also be seen in the reduction of beds in Germany. In 2019 there were a total of 1,889,000 beds. In 2020 these fell to 1,808,000, which in turn reflects a decrease of 4.29%. This is also due to an increase in bankruptcies in the hotel industry, according to DEHOGA. However, concrete figures are not yet available [14].

Fig. 3 Number of beds in hotel in Germany from 2014 to 2020 — graphic

(number in 1,000) [22]

In 2019, a total of around 195.4 million business trips were made by employees of German companies. In the year before, there were 189.5 million business trips [15]. The slump for 2020 is estimated at around 52.75 million, which will be a reduction of 142.65 million business trips, a decrease of 73%

[16]. Large hotel brands such as the ailing tour operator TUI are being forced to sell some of their properties to real estate investors and rent them in turn

[17]. Maritim Hotels has also started to sell its own houses. The hotel chain Centro, which in 2019 still owned 60 hotels with 1200 employees, had to sell 13 properties last year [18]. The sale of the houses provides the hotels with a short-term inflow of liquidity, as the large hotel chains, in particular, have

been hit hard by the cap on the subsidy limits of 12 million euros [19]. In the event of a sale-and-lease-back, however, the companies would only be supported in the short term, as leases would then have to be paid and this, in turn, would lead to a financial burden including the non-negligible risk of bankruptcy.

Measures

The medium and long-term consequences of the COVID-19 pandemic cannot be foreseen, and the hotel industry has to reposition itself. However, there are some measures that hotels can implement in the next few periods to stay in the market.

Hotels have to reduce their room capacity. This is because fewer rooms are required due to the lower willingness to travel. It follows that the hotels can reduce staff members and thus save costs. Even empty rooms that are not used cause running costs.

Living space is becoming increasingly scarce and therefore also more expensive. So, there is the possibility to use residual room for other purposes. The demand for long-term rentals has increased significantly in recent years. The hotels could convert some of their rooms into boarding houses and rent them out to companies or private individuals for longer periods. Since the rooms have not to be cleaned every day, this, in turn, saves staff and costs again. Another approach could be for hotels to convert some of their rooms into apartments and then rent them out. In Munich, there is an average of 1,500 applicants for an apartment. The rental market is relieved accordingly by creating additional living space. Some hotels have already rented their rooms to companies or private individuals in 2020 and 2021 to use them as workrooms on an hourly or daily basis because not everyone could work from home (lack of space, etc.).

It is not only important to comply with the legal hygiene and distance rules, but also to move forward with this core issue of the COVID-19 pandemic. Those who train their staff accordingly and can give their guests a good feeling will be able to survive in the market. In the business sector, in particular, it is crucial to set up conference and meeting rooms in such a way that they are non-contagious.

Conclusion

Several governmental lockdown directives led to serious economic slumps in the hospitality market in Germany and worldwide. Business trips could not be carried out due to strict travel restrictions. The hotel industry could not sufficiently occupy its beds and was forced to lay off employees or, in the best case, to send them on short-time work. With restrictions still in place, it will be years before the economic slump is caught up again. Actually, it is unpredictable whether these severe losses can be generally caught up, as it

cannot be excluded that companies' willingness for business travels continues to decrease significantly and that they are increasingly relying on online meetings instead.

In summary, it can be assumed that it will take several years, if not decades, for the hotel market to fully recover. Due to many of hotel bankruptcies, a market adjustment is taking place, as some hotels have to close for the short or long term due to the lower demand.

Final remark

The current situation and implied actions of German government regarding the COVID-19 crisis is changing rapidly. The present text could therefore contain "obsolete" parts at the time of its publication. The analysis is based on the short study "Effects of Corona on the hotel market in the business sector" published by the authors on July 31, 2021.

References

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