Although the Government has already set out a plan for easing restrictions so we can return to pre-pandemic life with the necessary measures, the outlook for the hospitality sector is not very positive.
The hospitality sector, mainly restaurants and accommodation, accounts for almost 6.3% of national GDP, in other words: more than 300,000 establishments employing more than 1.7 million people across Spain. This year, however, the figures will not be so favourable.
Many businesses and premises have had to close, not knowing whether they will be able to reopen or under what conditions. It's no longer just about opening hours and the safety measures to be taken; it's about whether they can financially weather this crisis.
The worst figures for Spanish hospitality
According to data collected by the Hostelería de España association , hospitality turnover is expected to fall by up to 40%. The first quarter of 2020 recorded lower sales than last year, and more than 90% of hospitality businesses expect the second quarter to be worse.
Suspension of hospitality activity.
According to this data, since the state of emergency was declared, 93.02% of hospitality businesses have had to cease trading entirely and 4.66% have closed permanently. Only 2.33% have been able to adapt to home delivery.
Businesses that closed temporarily and did not apply for a furlough scheme (ERTE) will have to restructure their workforce to adapt and cope with this difficult situation.
Problems reopening establishments
Another conclusion of the survey is that 40% of hospitality businesses say they have or will have problems adapting to the government's proposals to mitigate the economic impact of this crisis.
They also point out that many of the proposals, although innovative, require investment that in many cases is unaffordable given the critical situation we are in.
Job losses
All these figures will have negative consequences for employment. Consultancies Bain & Company and EY have also produced a report on the consequences of this pandemic for hospitality.
They estimate that hospitality will lose around €55,000 million in turnover, 40% less than the previous year. It will also affect almost 700,000 jobs, of which more than 200,000 will be lost permanently. VAT revenue could fall by €5,000 million, and social spending on unemployment support would rise to around €3,500 million.
Why is the sector so vulnerable?
The report also details the main reasons for the fragility of the hotel industry in the current circumstances in the country
- A highly fragmented sector with many small businesses. Of more than 300,000 premises, most have barely more than three employees
- It has very low profit margins compared with other national sectors
- Given the correlation between restaurants and accommodation and disposable income, they are more exposed to the economic cycle.
- It's a sector with little liquidity. More than 50% of companies could only stay afloat for around a month with their operating costs without seeking financing or dipping into savings.
Recovery of the hospitality sector
Randstad, a human resources company, has analysed the hospitality situation in this crisis. Its study states that when all activities resume and hospitality can operate again, it will not return to "normal" immediately. According to this data, hospitality and tourism will not fully recover until late 2021 or early 2022.
That's why the Hostelería de España association is urging the Government to involve it in the measures and proposals for easing restrictions as soon as possible. The aim is to give the sector a boost as soon as possible, as the consequences of the pandemic are undoubtedly very serious.
Fortunately, solidarity initiatives are emerging on social media urging people to help these businesses while leisure activity restarts. Proposals include Adopta un bar (Adopt a Bar), where you can buy and tip in advance; Save the bar, offering free advice to bars during the state of emergency; #Osvamosallenar (We'll fill you up), encouraging people to book hotel rooms to enjoy as soon as possible; and many calls to order takeaway from the establishments that need it most. Together, we'll make the return to "normal" easier while supporting one of the sectors hardest hit by COVID-19.
