Lower Saxony Hospitality Sector Stuck in a Slump: IHK Survey
Tourism Sector's Mood Remains Somber According to IHK Survey - Tourism industry remains in a dismal state according to IHK survey
In a recent survey by the IHK Lower Saxony, around 450 businesses across the tourism and hospitality sectors reported a gloomy outlook for the industry. As the spring season kicks off, businesses are cautiously optimistic due to the respite provided by the favorable weather during the Easter holidays but remain weary of the challenges lurking on the horizon.
"The mood among companies feels flat," Monika Scherf, CEO of IHK Lower Saxony, candidly shared with Deutsche Presse-Agentur. This pessimism mirrors the broader economic landscape, with other industries hesitant to invest.
In the hospitality industry, the so-called climate index has shown a slight increase after a continuous downtrend. This index, which ranges between 0 and 200, reflects the average responses from businesses. It rose from 87.5 points in the fall survey to 90.6 points. Interestingly, the value was almost identical in the spring of the previous year, around 90.2 points.
Business Conditions Now and the Future
A quarter of the surveyed hospitality businesses assessed their current situation as good, while about half found it satisfactory. Around 28 percent described their situation as poor. Similar results were observed in the restaurant sector.
Although business perspectives have improved slightly compared to the fall survey, they remain guarded, according to IHK Lower Saxony. 18 percent of hospitality businesses expect a more favorable business situation, up from just 8 percent in the fall. About a third anticipate a deterioration, while nearly half expect their situation to remain the same.
Key Business Risks
"The risks we're seeing are primarily cost risks," Scherf summarized the survey findings. Labor costs remain the biggest concern for 85 percent of businesses – a record high – particularly due to the potential increase of the minimum wage to €15, which disproportionately affects labor-intensive sectors like hospitality.
Other prominent business risks cited in the survey include energy, raw material, and food costs (76%), regulatory conditions (60%), and labor shortages (51%).
These concerns could potentially lead to increased prices in the hospitality industry. While more than half of businesses predict prices will remain stable, 44 percent of entrepreneurs anticipate needing to boost their prices.
IHK's Requests to the Federal Government
Certain moves by the federal government have brought some optimism to the tourism industry but are far from addressing the industry's requirements, Scherf stated. These initiatives include the planned reduction of VAT on restaurant meals starting in 2026 and the flexibility of working hours.
The IHK appeals to the federal government for more trust rather than more bureaucracy, and for reductions in reporting and documentation requirements. They expressed hope that the new federal government would offer significant relief to businesses through increased digital offerings, reductions in bureaucracy, and tax incentives for investments.
The survey, conducted between April and May, involved businesses from the hotel, restaurant, and camping sectors, as well as travel agencies and tour operators.
- IHK
- Lower Saxony
- Hospitality Industry
- Tourism
- Labor Costs
- Spring
- Tour Operators
- Restaurant Industry
- Economic Policy
- Minimum Wage
- Energy Costs
- Food Prices
- Regulations
- Labor Shortages
- Federal Government
- Challenges in Hospitality and Tourism
- Workforce Availability and Skills
- Regulatory Pressures
- Commodity Prices
- Economic Policy Framework Conditions
- Survey Methodology
- Participating Sectors
- Timeline
- The pessimistic outlook among hospitality businesses in Lower Saxony, as shown in the IHK survey, is heavily influenced by escalating labor costs, particularly the potential increase of the minimum wage to €15, which poses a significant burden for labor-intensive sectors like the hospitality industry.
- The survey conducted by IHK Lower Saxony also highlighted other challenges facing the hospitality and tourism sectors, such as energy, raw material, and food costs, regulatory conditions, and labor shortages, which could potentially lead to increased prices and affect lifestyle choices like travel.
