Tourism businesses and hotels in particular are finding that the long-awaited recovery in tourism is not allowing them to return to pre-pandemic levels of profitability. The general increase in costs resulting from the ukrainian war weighs on their accounts despite the increase in travellers, who will also spend less due to the uncertainty.
“The electricity bill of a hotel has been multiplied by three or four. We talk about other sectors, but we also suffer from them. The inflationary problem affects the entire value chain and hotel services and makes us lose competitiveness,” said the president of the Spanish Confederation of Hotels and Tourist Accommodation (Cehat), Jorge Marichal.
reservations for Holy Week, according to the organization, are at levels similar to those before the pandemic and in some destinations such as the Canary Islands they are even higher. In fact, on a revenue level, portfolio bookings are exceeding pre-Covid levels, despite an increase in the number of cancellations due to instability.
“The translation of this recovery in sales to results will be limited by inflation and the consequent sharp rise in costs that companies are experiencing in all their operational areas and which, it seems, will last at least until June” , they explain from the Alliance for Tourism Excellence (Exceltur).
“It cannot be extrapolated that the encouraging recovery and the greater volume of tourist activity expected in 2022 are synonymous with greater corporate profitability: inflation and cost overruns make it difficult for companies to recover in various sub-sectors”, adds the organization which brings together large companies. in the area.
Next to the light, the part of food is strongly impacted by the war situation. And businessmen view with particular concern a greater difficulty when it comes to financein the face of a foreseeable rise in interest rates.
“Everything will go straight to the margins”
Hoteliers assure that, for the moment, they cannot pass on the increase in costs to the prices of their rooms. “Everything will go directly to the margins”, assures the general secretary of Cehat, Ramon Estalella. “The price is not set by the hotel, but by the market,” he adds. According to his analysis, the latter would not be able to assume a rate increase at this time, in a context where expenses for families are increasing.
According to a study presented this Thursday by his organization in collaboration with the consulting firm PwC2019 prices per room have already recovered, “but revenue per available room has not yet been reached” before the pandemic “due to the slow recovery in occupancy”.
For its part, according to a survey carried out by Exceltur among 2,500 business units, all companies in the sector claim to be able to pass on only 26% of cost increases to customers and expect to absorb the remaining 74% results.
“We are moving from a tourist demand crisis overcome with more vigor than expected, to notable and growing competitive challenges with strong pressures on business margins, due to the difficulty of transferring operating cost overruns to prices: this will affect the treasury in many cases depleted due to the pandemic, in the face of indebtedness, the ability to invest and create jobs, ”they point out from Exceltur.
The sector as a whole has been impacted by the pandemic for 24 months, with an average drop of 55% in turnover compared to 2019. Likewise, its executive vice-president, Jose Luis Zoredaalso warns against the rise wage costs 7.8% under the effect of second-round inflation. In this sense, calls for the conclusion of agreements within the framework of collective bargaining to limit the growth of wages.
At present, the industry-wide trade expectations for Easter 2022 are close to 90% of the sales levels recorded in 2019, despite the current complex scenario.