Accommodation and food service activities and the pandemic

Accommodation and food service activities paralyzed by the pandemic

Recent years have been favourable for accommodation and food service activities, recent months not due to the COVID-19 epidemic. Favourable economic outlook was followed by a fall in demand, employment and confidence.

  • 6/11/2020
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In 2018, enterprises engaged in accommodation and food service activities (according to NACE Rev. 2) for the first time exceeded EUR 2 billion of turnover. Their number was the highest ever, they had the highest number of persons working in them, and the highest value added per employee* compared to previous years. Favourable economic outlook continued in 2019 and in the beginning of 2020, until the COVID-19 epidemic was declared in mid-March.

Recent years favourable for accommodation and food service activities, recent months not

Restrictions imposed due to efforts to stem the epidemic led to closing down of almost all of accommodation and service activities from mid-March onward. Prior to that, turnover in 2019 grew by almost 8% compared to 2018. Growth continued in the first two months of 2020. In March 2020, accommodation and food service activities recorded the single biggest drop ever in turnover; it was 53.1% lower than in March 2019.

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As in most of the other services, most enterprises in this economic activity in terms of the number of enterprises are micro enterprises with up to nine employees; they represent approximately 96% of all enterprises, depending on the year concerned, of which, enterprises with up to one employee represent almost 62%. Their share has been growing continuously year-on-year from 2005 on, except in 2014 and 2016.

In accommodation and food service activities value added per employee has been growing from 2009 on, albeit it is still relatively low compared to other economic activities. In 2018 it amounted to EUR 27,267, which was the highest recorded value ever and almost 7% higher than the year before.

The number of persons working in accommodation and food service activities has also been increasing. In 2018 it was 40,569, 2,148 higher than the year before.

Data suggest a record fall in demand as well as in the confidence indicator

Demand across accommodation and food service activities, measured as a balance (increase, no change, decrease) in percentage points, has changed significantly after the restrictions were imposed in mid-March.

After several months of gradual decline, in accommodation services the balance in January 2020 was -12 percentage points. During the epidemic, the drop accelerated. In March it fell by 6 percentage points, in April by staggering 44 percentage points and in May by additional 36 percentage points, standing at -98 percentage points, the lowest value since we started to measure the indicator in April 2002.

In food and beverage service activities a similar situation can be observed, with a difference that in January the balance was positive, the demand increased by 22 percentage points to a positive value of 19 percentage points. In the following months severe downfalls were recorded: in February by 17 percentage points, in March by 16 percentage points, in April by staggering 65 percentage points and in May by 18 percentage points, leaving the indicator at the lowest ever value of -97 percentage points.

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The situation is no different concerning the confidence indicator, which measures the business position and expected demand in accommodation and food service activities. In the past few months, the indicator has significantly decreased.

In accommodation services it worsened by 50 percentage points in March and by another 47 percentage points in April, and then in May it improved by 1 percentage point reaching the value of -64 percentage points.

In food and beverage service activities it worsened by 16 percentage points in March, by 69 percentage points in April and by another 1 percentage point in May reaching the value of -72 percentage points.

A similar dynamic observed with employment

The employment indicator, measured as a balance (increase, no change, decrease) in terms of percentage points, also declined in 2020.

In accommodation services the employment indicator was moving as follows: in January it worsened by 11 percentage points and in February by 4 percentage points, in March it improved by 3 percentage points, and again dropped in April by staggering 41 percentage points and in May by additional 14 percentage points reaching the lowest ever value of -72 percentage points. Compared to the previous year, the situation this year is almost inverse. In May 2019 the indictor was at 48 percentage points pointing to employment increase.

Negative values were also recorded in food and beverage services. In January the indicator went down by 2 percentage points, in February it went up by 14 percentage points, in March it again declined by 9 percentage points, in April by 31 percentage points and in May by another 15 percentage points. In May the value stood at -50 percentage points, which was a much lower value than in May 2019 (9 percentage points).

In accommodation and food service activities there are quite a few self-employed

An important category in accommodation and food service activities is the self-employed, since the share of the self-employed in the total number of persons working is more than 22%.

In accommodation services the share of the self-employed is more than 24%, while in food and beverage service activities it is almost 21%.

The service with the greatest impact on employment (due to a large share of the self-employed) is holiday and other short stay accommodation with an 88% share of the self-employed.

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*Value added at factor cost per employee.
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