KHN: 2023 marks recovery, but 2024 offers renewed economic challenges for hospitality industry

Investing in people, innovation and sustainability key to success 

Koninklijke Horeca Nederland (KHN) today presented its economic review of the 2023 hospitality year and a look ahead to 2024. Although turnover in the hospitality industry was good in 2023, the industry faces major financial challenges. Indeed, due to increased costs of energy and procurement, among others, margins are under enormous pressure. A stronger business climate is therefore key. Fortunately, the industry is resilient; investing in employees, innovation and sustainability is crucial for a future-proof hospitality industry. 

The year 2023 was marked by an economic rebound in the hospitality industry. At 31 billion, sales were again well above pre-pandemic levels and grew by 14% on average compared to 2022. Volume grew by 6.7%. This growth is mainly explained by the fact that in the first two months of 2022, strict corona measures were still in place for the hospitality industry. As a result, we see a sizeable recovery in the first quarter of 2023 compared to the same quarter in 2022. The second and third quarters of 2023 showed a different picture, with even a contraction in volume at pubs and fast food outlets. Moreover, margins fell by an average of 2 percentage points in 2023 compared to 2022. This is no surprise, given the hugely increased costs of energy, staff, procurement and accommodation. These are costs that hospitality operators can hardly pass on to the guest, if at all. For the first time since 2015, we also see a decline in the number of hospitality locations.

For the hospitality industry, 2024 promises little improvement. Expectations from De Nederlandsche Bank (DNB) and the International Monetary Fund (IMF) are unanimous: the Dutch economy will barely grow, with inflation expectations ranging from 2.9 to 4.2%. Banks forecast little or no volume growth for the hospitality sector. 

According to the latest labour market report by KHN and SVH, prepared by ABF Research, the labour market in the hospitality industry is showing clear recovery after the pandemic. The number of people employed in the hospitality industry rose to above the pre-pandemic level by 2022, with more than 508,000 employees. Despite this, there remains a persistent tightness in the sector. A record 41,000 vacancies were filled in the third quarter of 2022. From the first half of 2023, the number of employed people seems to stabilise. Despite the economic uncertainties in 2024, which will also have an impact on labour demand, staff shortages in the hospitality industry are expected to persist in the coming years. This is mainly due to an ageing population and a decline in the number of young people available for the sector.

Labour market mobility in the hospitality industry remains high, with gross inflows of 45% in 2022. Of this, 9% is through-flow within the sector and 36% is new inflow from outside. Most of this is flexible work, within which on-call workers form the largest group. This flexibility is essential for the sector. Not only because of seasonal fluctuations, but also from the flexibility needs of (young) workers. 

An ageing population also affects the recruitment of young professionals in our industry. The number of students in hospitality vocational education has been falling for several years in a row. In school year 2017-2018, 35,400 students followed a hospitality education in mbo or hbo. In school year 2021-2022, this was still 29,400 students (-17%). 

To be future-proof as an industry, it is necessary to keep investing in good employees. They make the difference. KHN supports its members in this through its own personnel plan and the KHN Academy for Lifelong Learning, but also by working together with other parties in the hospitality sector through the Hospitality Pact. KHN also ensures a future-proof pension scheme and good collective terms of employment that fit these times. In this way, we offer employees growth perspectives within the sector, while entrepreneurs retain the space to do business. 

Investing in sustainability and innovation is not only a desire from The Hague or Brussels, but also hugely important for future generations. In addition, such investments can lead to cost savings. To achieve this, however, it is very important that the government works together with the industry to create a strong business climate in which doing business pays off again. With the right balance between work and security, realistic sustainability and health ambitions and less regulatory pressure. This will actually give SME entrepreneurs the opportunity to take another leap forward.