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The financial / economic crisis and the hospitality industry

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Title: The financial / economic crisis and the hospitality industry


1
The financial / economic crisis and the
hospitality industry
by Ákos Niklai Member of the HOTREC Executive
Committee
2
Contents
  1. Brief introduction to HOTREC
  2. The crisis and the hospitality industry
  3. Some data
  4. Recovery at EU level
  5. Recovery at national level
  6. Conclusions

Prague, 10 June 2009
2
3
I. Brief introduction to HOTREC
  • Represents hospitality industry at European level
  • 40 National Associations
  • in 25 European countries

Prague, 10 June 2009
3
4
I. Brief introduction to HOTREC (contd)
  • European hospitality sector
  • 1.6 million enterprises
  • 9 million persons employed
  • automotive production sales servicing 6.3
    million agriculture 10 million
  • 163 billion EUR value added
  • chemical sector 170 billion EUR

Prague, 10 June 2009
4
5
I. Brief introduction to HOTREC (contd)
  • European hospitality sector
  • 99 of enterprises employ lt 50 people
  • these 99 make up 62 of value added
  • 92 of enterprises employ lt 10 people

Prague, 10 June 2009
5
6
II. The crisis and the hospitality
industry
In a nutshell
Crisis combined with confidence
  • Direct impact on industry
  • business travels
  • business events (congress, seminars...)
  • private trips/outings
  • search for cheaper prices
  • cost of credit

6
7
III. Some data
European economy (EUROSTAT)
GDP 1st quarter 09 compared to 4th quarter 08
to 1st quarter 09 in EU 27 by 2,5 by 4,4
in Euro area by 2,5 by 4,6 Unemployment
(March 08 March 09) in EU27 from 6,7 to
8,3 in Euro area from 7,2 to 8,9
Prague, 10 June 2009
7
8
III. Some data (contd)
Confidence in the European economy (European
Commission)
Economic Sentiment Indicator (ESI) (Feb 09 -
April 09) ESI by 0,6 points in EU27 (at
60,3 pts in March) by 3,5 points in EU27 (at
63,9 pts in April) (long term average 100
points) Indicator increasing for the first time
over 2 years
Prague, 10 June 2009
8
9
III. Some data (contd)
UNWTO World Tourism Barometer
International tourist arrivals World Europe On
average between 2004 and 2007 7 lt
5,0 January to June 2008 5,7 3,4 June to
December 2008 -1,7 -2,8 In 2008 (thanks to
6 first months!) 1,7 0,0 Europe with
worst performance in 2008!
Prague, 10 June 2009
9
10
III. Some data (contd)
UNWTO World Tourism Barometer
International tourist arrivals World Europe On
average between 2004 and 2007 7 lt
5,0 January 2008 January 2009
-6,6 -5,4 February 2008 February 2009
-8,8 -11,2
Prague, 10 June 2009
10
11
III. Some data (contd)
UNWTO World Tourism Barometer
  • Prospects for 2009 (as of January 2009 still
    maintained)
  • for the world for Europe
  • stagnation stagnation
  • or slight decline (-1 to -2) or -3

Prague, 10 June 2009
11
12
III. Some data (contd)
Hotel performance in EU (2008)
  • Occupancy 69,3 (2007) down to 66,9 (2008)
  • - most affected Prague, Rome, Dublin ( -9,5)
  • - no European capital in
  • Average room rate stagnation
  • RevPAR -4,2

Prague, 10 June 2009
12
13
III. Some data (contd)
European Travel Commission
Hotel performance in EU January February 2009
(vs. same period 2008) Occupancy 10 Average
daily rate 10 RevPAR 20
Prague, 10 June 2009
13
14
III. Some data (contd)
Hotel performance in EU
April 2008 April 2009 Occupancy rate
68,9 59,4 Average daily rate 15 RevPAR
27
Prague, 10 June 2009
14
15
III. Some data (contd)
Reports by some associations
Budapest first 3 months in 2009 (vs. same period
2008) Room nights 20 Revenue 30 RevPAR (5
) 40 Restaurant revenue 40
Prague, 10 June 2009
15
16
III. Some data (contd)
Reports by some associations
Prague first 3 months in 2009 (vs. same period
2008) Room occupancy 18 (? at 39) RevPAR
20-30 Situation of restaurants 30 to close
down in 09-10
Prague, 10 June 2009
16
17
III. Some data (contd)
Reports by some associations
France - hotels (Jan 08 Jan 09)
Occupancy 3,3 Restaurants Turnover
20-50 (depending on region)
Prague, 10 June 2009
17
18
III. Some data (contd)
Reports by some associations
Spain hotels Occupancy 15 RevPAR 20
Prague, 10 June 2009
18
19
III. Some data (contd)
Reports by some associations
Spain restaurants Employment 60.000 jobs lost
over12 months Rev. (Jan08 Jan09) 5,2 Rev.
(Feb08 Feb09) 9,7
Prague, 10 June 2009
19
20
III. Some data (contd)
Reports by some associations
Portugal Rev. (Jan, Feb 08 Jan, Feb
09) 5,2 Nights (Jan, Feb08 Jan, Feb09)
9,7 Prediction for 2009 10-20
Prague, 10 June 2009
20
21
III. Some data (contd)
Reports by some associations
Ireland Occupancy 2007 2009 (forecast) 64
54
Prague, 10 June 2009
21
22
III. Some data (contd)
EUROBAROMETER survey (20 March 2009) On holiday
plans of consumers
  • 27 000 consumers interviewed
  • in February 2009
  • in the 27 EU countries

Prague, 10 June 2009
22
23
III. Some data (contd)
EUROBAROMETER survey On holiday plans of
consumers
  • Main results
  • Impact of changes in cost of living on holiday
    plans
  • 1/3 some impact on holiday plans (out of which
    for 38 this meaning not to take holidays at all)
  • 1/3 no impact
  • 1/4 no change in cost of living (the rest no
    answer)
  • Where to save?
  • 15 would save on accommodation
  • - 23 would go rather in low season
  • 23 would save on restaurant spending (30 on
    shopping)

23
Prague, 10 June 2009
24
IV. Getting out of the crisis How soon ? 3
possible scenarios
VorUorL
Prague, 10 June 2009
24
25
IV. Recovery at EU level
Yes, Europe has the unity, the confidence
and determination to win this
battle Commission President José Manuel Barroso
Prague, 10 June 2009
25
26
IV. Recovery at EU level (contd)
  • Succession of meetings of EU heads of State or
    government since October
  • 3 main lines of actions
  • promoting financial stability in order to
    re-build confidence
  • getting the real economy back on track
  • staying united against the crisis and working
    together at global level
  • 2 levels
  • EU
  • national

26
27
IV. Recovery at EU level (contd)
  • Example of general measure
  • European Investment Bank
  • 30 bn available for loans to SMEs
  • via commercial banks
  • at favourable interest rates

Prague, 10 June 2009
27
28
IV. Recovery at EU level (contd)
  • Example of measure specific for the hospitality
    industry
  • Change in VAT rate system came into effect on
    1 June 2009!
  • All Member States are allowed to apply a
    reduced VAT rate to restaurant services
  • (before only 11 of them were allowed to do
    so)

Prague, 10 June 2009
28
29
V. Recovery at national level
Responses to crisis vary greatly!
Prague, 10 June 2009
29
30
V. Recovery at national level
VAT good examples
  • from 17,5 to 15 in general (UK)
  • from 19 to 9 on restaurant services (CZ)?
  • from 19,6 to 5,5 on restaurant services (FR)?
  • from 21 to 6 on restaurant services (BE)?

Prague, 10 June 2009
30
31
V. Recovery at national level
VAT bad examples
  • from 5 to 9 on hotels (Estonia)
  • from 5 to 19 on hotels (Lithuania)
  • from 5 to 21 on hotels (Latvia)
  • from 20 to 25 on hotels and restaurants
    (Hungary)

Prague, 10 June 2009
31
32
V. Recovery at national level
VAT rates for hotels on 1 January 2008
Prague, 10 June 2009
32
33
V. Recovery at national level
VAT rates for hotels on 1 July 2009?
Prague, 10 June 2009
33
34
V. Recovery at national level
VAT rates for restaurants on 1 January 2008
Prague, 10 June 2009
34
35
V. Recovery at national level
VAT rates for restaurants on 1 July 2009?
Prague, 10 June 2009
35
36
V. Recovery at national level
Other measures
  • Increase in budget for marketing (e.g. Prague,
    Austria, Greece)
  • Subsidised credit for the industry (e.g. Austria,
    Portugal, Spain)
  • Abolishment of the bed-tax, special support for
    seasonal hotel enterprises, reduction of the
    landing fees (Greece)

Prague, 10 June 2009
36
37
VI. Conclusions
Overall objective of the industry
  • EU and 27 Member States are to create the
    conditions for
  • economy to recover
  • growth to florish
  • employment to redeploy
  • Survival of the 1.6 million enterprises as well
    as
  • the future of 9 million employees are at stake

Prague, 10 June 2009
37
38
VI. Conclusions (contd)
  • New European Parliament
  • New European Commission
  • Strengthened recovery plan? Need of
  • further facilitation of credit for businesses
  • reduction of charges to businesses
  • creative solutions for keeping/increasing skills

Prague, 10 June 2009
38
39
Thank you for your kind attention!
www.hotrec.eu
39
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