Saxony’s Hospitality Industry: Pessimism Despite Higher Prices

by | Jan 17, 2024 | Explore Local | 0 comments

The Future of Saxony’s Hospitality Industry Looks Pessimistic

In a recent survey conducted by the German Hotel and Restaurant Association (Dehoga) in Saxony, it was found that half of the businesses in the state’s hospitality sector have a pessimistic outlook for the year 2024. The increasing costs of energy, food, and personnel are seen as the biggest challenges for these establishments.

Axel Klein, the CEO of Dehoga Saxony, highlighted that rising costs, combined with growing bureaucracy and the expiration of the reduced value-added tax (VAT) rate for meals, are contributing to the concerns of hospitality businesses. During the Covid-19 crisis, the VAT rate for meals in restaurants was temporarily reduced to seven percent for over two years. However, as of January 1st, 2024, it has returned to its original rate of 19 percent.

Saxony Hospitality
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Impact on Prices and Operations

According to the survey, around 80 percent of gastronomy businesses have increased their prices in response to the rising costs. Additionally, more than half of the establishments have reduced their offerings and postponed planned investments. Furthermore, over 40 percent of the businesses have introduced additional days of closure or shortened their opening hours.

It is still too early to determine whether these price hikes will lead to a decrease in guest numbers. Axel Klein stresses the importance of effectively communicating the reasons behind the price increases to the public. He emphasizes that the state benefits from these increases in the form of tax revenue, highlighting the need for a fair evaluation of the impact on the industry.

“It is crucial to explain the reasons behind the price hikes to people. Who really benefits from them? The state does,” stated Axel Klein. He points out that Germany has had excessively high taxes on restaurant meals for the past 30 years. “Food is more than just sustenance; it is a part of our culture. We need regional cuisine, not only for the people but also for the economic cycle,” he added.

Show of Support for Farmers

In solidarity with the farming community, Dehoga and its members will be supporting a large demonstration scheduled to take place in Berlin on Monday. The demonstration is expected to draw tens of thousands of participants. Saxony alone has over 7,000 businesses in the hospitality industry, with around 2,200 of them being represented by the Dehoga association.

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