Tourism industry remains in a gloomy state according to IHK survey

Economic Woes in the Hospitality Biz: Another Sour Spring for Lower Saxony's Tourism Sector

Tourism industry sentiment remains subdued, according to IHK survey results - Tourism industry remains in a gloomy state according to IHK survey

Damn economy, always a drag.

Rising labor costs and skyrocketing energy and material prices continue to weigh heavy on the shoulders of the hospitality and tourism industries in Lower Saxony. This much is clear from the latest spring survey by the Industry and Commerce Chamber of Lower Saxony (IHKN) - a poll of approximately 450 firms - which illustrates a dour outlook across the sector as a whole.

Despite a solid Easter holiday boost, restauranteurs, lodging providers, and travel agents remain cautious about the future, with little optimism in sight. According to IHKN CEO Monika Scherf, "The mood among companies is grim. We're not seeing any broad enthusiasm." This sentiment mirrors the larger economic climate in the state, where businesses in other sectors are also hesitant to invest.

The hospitality sector's climate index barely budged after a downward trend this spring, with a value of 90.6 points - a mere 3.1-point increase from autumn. For perspective, spring values in 2024 hovered around the same perch.

Current State and Future Outlook

A fourth of hospitality businesses describe their current situation as good, with half settling for averagely satisfactory. Nearly a third characterize their present standing as poor, mirroring results in the restaurant industry as well. Although business prospects have shown signs of improvement compared to the autumn survey, they're still tinged with caution, Scherf reported. Eighteen percent of firms anticipate a more optimistic outlook, a substantial increase from the 8 percent reported in autumn. However, a third fear a deterioration, and almost half expect little to no change.

What Companies Are Most Worried About

"Costs are the main threats we're seeing," Scherf summarized the survey findings, with labor costs topping the list of concerns for 85 percent of businesses - a record high. The potential for a future minimum wage increase to 15 euros has stoked anxiety in the labor-intensive hospitality industry, Scherf explained.

Energy, material, and food costs, plus economic policy conditions, and labor shortages round out the other significant concerns. Nearly half of the respondents expect to see price increases in the hospitality industry, with 44 percent anticipating higher prices during the upcoming season.

What the IHK Wants for the Sector

Recent actions by the federal government have brought a glimmer of hope to the tourism industry, Scherf stated, citing agreements like the proposed reduction of VAT on restaurant food from 2026 and flexible work hour policies. "But it's still a long way from what this industry and others need," Scherf added.

The IHK pleads for a greater level of trust and less red tape from the federal government, with a reduction in reporting and documentation requirements high on their list of demands. The organization also expects the new federal government to provide key relief for businesses in the form of increased digital offerings, lowered bureaucracy, and tax incentives for investments.

The survey, which covered businesses in the hotel, catering, camping, travel agency, and tour operator sectors from early April to early May, did not yield specific details about the economic climate in Lower Saxony. Nevertheless, it's a grim reminder of the constant challenges facing the region's hospitality and tourism industries.

• IHK
• Economic pessimism
• Lower Saxony
• Hospitality sector
• Labor costs
• Overhead expenses
• Travel agencies
• Tourism industry
• Mood swings
• Government policies
• Consumer prices
• Restaurant industry
• Coronavirus impacts
• Raw material prices
• Energy costs

1. The economic pessimism in the hospitality sector of Lower Saxony, as reflected in the survey by the Industry and Commerce Chamber (IHKN), is largely due to the rising labor costs and overhead expenses, such as energy and material prices.
2. Despite the federal government's proposed actions, like the reduction of VAT on restaurant food and flexible work hour policies, the IHK emphasizes the need for a greater level of trust, less red tape, increased digital offerings, lowered bureaucracy, and tax incentives for investments, to provide key relief for businesses in the tourism industry.

Read also: