German hospitality revenue tumbles to lowest level since spring 2022
German hospitality revenue fell to its lowest level since spring 2022 in March, with price‑adjusted turnover down 5.2% year‑on‑year, driven by weak hotel demand and squeezed consumer spending.
The German hospitality sector recorded a sharp decline in real turnover in March, reaching levels not seen since the early months of the COVID‑19 pandemic. Price‑adjusted revenue in the sector fell by 5.2% compared with March 2025, reflecting weaker receipts especially in accommodation services. (zeit.de)
March turnover falls to pandemic‑era low
The March drop brought the sector’s seasonally and calendar‑adjusted real turnover down to its lowest point since March 2022. Analysts and industry observers said the reading signals renewed pressure on hotels and related lodging businesses as demand cooled following a strong reopening period. The contraction also contrasted with modest nominal gains in some months, underscoring the role of inflation in eroding purchasing power. (zeit.de)
Hotels and lodging bore the brunt of the decline
Hotels and other accommodation providers experienced the steepest losses in March, with real turnover for the accommodation subsector declining by around 5.6% relative to the previous month in adjusted terms. By contrast, foodservice and restaurant receipts were broadly flat, showing only a marginal decline; gastronomy turnover fell about 0.1% in the same comparison. The divergence points to weaker overnight and business travel rather than a broad collapse in eating‑out activity. (zeit.de)
Reduced VAT on meals came into effect this year
In an effort to support the hospitality industry and reduce consumer prices for meals, the government reinstated a reduced VAT rate of 7% on prepared foods in restaurants and similar outlets from January 1, 2026. The cut applies to on‑site meals while beverages generally remain taxed at the standard 19% rate, a change that industry groups said would help margins but would not instantly reverse the revenue trend. Economists note that tax relief can blunt price inflation but does not fully offset demand weakness when households cut discretionary spending. (zdh.de)
Inflation and energy costs weighing on consumer spending
Rising inflation and higher energy prices have reduced consumers’ real purchasing power, contributing to lower spending at hotels and other travel‑related services. Official data showed consumer prices accelerating to roughly 2.9% year‑on‑year in April, with energy costs — notably crude oil and fuel prices amid geopolitical tensions in the Middle East — accounting for a substantial portion of the increase. The energy shock pushed many households to pare back non‑essential outlays, curbing leisure travel and overnight stays. (tradingeconomics.com)
Consumer sentiment and the outlook for demand
Survey data from the Nürnberger Institut für Marktentscheidungen indicated that consumer confidence fell sharply for May, registering its lowest level since February 2023. The institute attributed the slide in sentiment largely to concerns about living costs and the economic impact of the war in Iran, which has lifted energy prices and amplified uncertainty. Lower confidence typically translates into postponed travel plans and reduced spending on hospitality services, suggesting continued pressure on sector turnover in the near term. (nim.org)
Industry representatives and analysts cautioned that the VAT cut will take time to feed through to higher bookings or sustained margin improvements, especially while inflation and geopolitical risks persist. They urged targeted measures to support liquidity for smaller operators and to stimulate domestic short‑haul travel as international demand softens.
The near‑term outlook hinges on two main variables: the trajectory of energy prices and whether consumer price inflation eases, and the pace of recovery in business and leisure travel. A sustained cooling of inflation would help restore some discretionary spending, while prolonged energy price pressure could deepen the contraction in accommodation receipts. (tradingeconomics.com)
Policy makers and trade associations are monitoring the situation closely as revenues slide to levels unseen since the spring of 2022, and as operators recalibrate staffing, pricing and promotional strategies to attract domestic guests and short‑term stays. The sector’s recovery will depend on a combination of stable energy markets, improved consumer sentiment and the effective pass‑through of tax relief to final prices.
