Prague, 10 June 20091
The financial / economic crisis and the hospitality industry
by Ákos Niklai
Member of the HOTREC Executive Committee
22
Contents
I. Brief introduction to HOTREC
II. The crisis and the hospitality industry
III. Some data
IV. Recovery at EU level
V. Recovery at national level
VI. Conclusions
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33
Represents
hospitality industry at European level
40 National Associations
in 25 European countries
I. Brief introduction to HOTREC
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44
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
I. Brief introduction to HOTREC (cont’d)
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European hospitality sector
99% of enterprises employ < 50 people
these 99% make up 62% of value added
92% of enterprises employ < 10 people
I. Brief introduction to HOTREC (cont’d)
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II. The crisis and the hospitality industryIn 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
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European economy (EUROSTAT)III. Some data
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%
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Confidence in the European economy(European Commission)
III. Some data (cont’d)
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
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UNWTO World Tourism Barometer
International tourist arrivals WorldEurope
On average between 2004 and 2007 +7% < 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!
III. Some data (cont’d)
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UNWTO World Tourism Barometer
International tourist arrivals WorldEurope
On average between 2004 and 2007 +7% < 5,0%
January 2008 – January 2009 -6,6% -5,4%February 2008 – February 2009 -8,8% -11,2%
III. Some data (cont’d)
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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%
III. Some data (cont’d)
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III. Some data (cont’d)
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%
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Hotel performance in EU (2008)
1313
European Travel Commission
Hotel performance in EU
January – February 2009 (vs. same period 2008)
Occupancy 10%
Average daily rate 10%
RevPAR 20%
III. Some data (cont’d)
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Hotel performance in EU
April 2008 – April 2009
Occupancy rate 68,9% 59,4%
Average daily rate 15%
RevPAR 27%
III. Some data (cont’d)
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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%
III. Some data (cont’d)
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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
III. Some data (cont’d)
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Reports by some associations
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France - hotels: (Jan ’08 – Jan ’09)
Occupancy 3,3%
Restaurants:
Turnover 20-50% (depending on region)
III. Some data (cont’d)
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Reports by some associations
1818
Spain hotels
Occupancy 15%
RevPAR 20%
III. Some data (cont’d)
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Reports by some associations
1919
Spain restaurants
Employment 60.000 jobs lost over12 months
Rev. (Jan’08 – Jan’09) 5,2%
Rev. (Feb’08 – Feb’09) 9,7%
III. Some data (cont’d)
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Reports by some associations
2020
Portugal
Rev. (Jan, Feb ’08 – Jan, Feb ’09) 5,2%
Nights (Jan, Feb’08 – Jan, Feb’09) 9,7%
Prediction for 2009: 10-20%
III. Some data (cont’d)
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Reports by some associations
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Ireland
Occupancy 2007 2009 (forecast)
64% 54%
III. Some data (cont’d)
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Reports by some associations
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III. Some data (cont’d)
EUROBAROMETER survey (20 March 2009)
On holiday plans of consumers
• 27 000 consumers interviewed
• in February 2009
• in the 27 EU countries
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III. Some data (cont’d)
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)
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IV. Getting out of the crisis
How soon ?
3 possible scenarios
VorUorLPrague, 10 June 2009
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IV. Recovery at EU level
“Yes, Europe has the unity, the confidence and determination to win this battle”
Commission President José Manuel Barroso
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IV. Recovery at EU level (cont’d)
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
2727
IV. Recovery at EU level (cont’d)
Example of general measure
European Investment Bank
€ 30 bn available for loans to SMEs
via commercial banks
at favourable interest rates
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IV. Recovery at EU level (cont’d)
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 applya reduced VAT rate to restaurant services
(before only 11 of them were allowed to do so)
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Responses to crisis vary greatly!
V. Recovery at national level
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V. Recovery at national levelVAT – 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)?
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V. Recovery at national levelVAT – 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)
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V. Recovery at national levelVAT rates for hotels on 1 January 2008
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VAT rates for hotels in EU-27 as of 1 January 200822 Member States applied a reduced VAT rate
3
5 5 5 5 5 5.5 6 6 7 7 7
8 8 8.5 9 9 9 10 10
12 13.5
17.5 19 19
20
25
0
15
LU EE
LT
LV
MT PT FR BE
NL
BG ES
PL CY FI SI CZ EL
RO
AT IT SE IE UK DE
SK HU
DK
3333
V. Recovery at national levelVAT rates for hotels on 1 July 2009?
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VAT rates for hotels in EU-27 as of 1 July 2009??? (vs. 1 January 2008)20 Member States to apply a reduced VAT rate?
3
9
19
21
5 5 5.5 6 6 7 7 7
8 8 8.5 9 9 9 10 10
12 13.5 15
19 19
25 25
0
15
LU EE
LT
LV
MT PT FR BE
NL
BG ES
PL CY FI SI CZ EL
RO
AT IT SE IE UK DE
SK HU
DK
3434
V. Recovery at national levelVAT rates for restaurants on 1 January 2008
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VAT rates for restaurants in EU-27 as of 1 January 200811 Member States applied a reduced VAT rate
3
6 7 7
8 8.5 9 10 10
12 13.5
17.5 18 18 18 18 19 19 19 19 19
.6 20 20
21
22
25 25
0
15
LU
NL ES
PL CY SI EL
AT IT PT IE UK EE
LT
LV
MT
CZ
DE
RO
SK FR BG
HU BE FI DK SE
3535
V. Recovery at national levelVAT rates for restaurants on 1 July 2009?
Prague, 10 June 2009
VAT rates for restaurants in EU 27 as of 1 J uly 2009??? (vs. 1 J anuary 2008)14 Member States to apply a reduced VAT rate?
3
6
7 7
8 8.5 9 10 10
12 13.5
15
18
19
21
18
9
19 19 19
5.5
20
25
6
22
25 25
0
15
LU
NL ES
PL CY SI EL
AT IT PT IE UK EE
LT
LV
MT
CZ
DE
RO
SK FR BG
HU BE FI DK SE
3636
V. Recovery at national levelOther 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)
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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
Overall objective of the industry
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VI. Conclusions
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• 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
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VI. Conclusions (cont’d)