The outlook for the hospitality industry for 2024 is meagre, ING predicts. Due to low economic growth, slightly rising unemployment, low consumer confidence and rising prices in the hospitality industry, sales will increase by 1 per cent at most, the bank expects.
Prices in the hospitality industry rose by an average of 9 per cent in 2023. Prices are expected to rise further in 2024, mainly due to higher staff costs. One in eight hospitality businesses is now struggling with debt, ING says in the Prospects for the hospitality industry published Wednesday.
The hospitality industry took heavy hits during the pandemic, but recovered in 2022 and this year. Pin payments for restaurants and pubs were up 13 per cent until November this year compared to the same period in 2022. However, this high growth is largely due to price increases introduced by the hospitality industry this year.
The price increases were necessary to offset higher energy, procurement and personnel costs. These costs will continue to rise in 2024. Personnel costs in particular are increasing rapidly. According to the new hospitality industry collective agreement, all employees in the sector will improve by 8 to 12 per cent early next year.
Restaurants and pubs in particular are struggling to put the higher costs entirely on consumers. It is feared that customers will stay away if the price of a beer or a meal becomes too high. This will put further pressure on the profits of restaurants and pubs.
Also, since October 2022, hospitality companies have been obliged to start repaying tax debt of EUR 1.5 billion accumulated during the corona period. Given the low growth forecasts, ING expects, partly for this reason, that the number of hospitality businesses quitting or going bankrupt in 2024 will be higher than this year.
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