Mid-summer review: hotels and eateries experiencing varied outcomes
In the heart of Germany, the picturesque region of Mecklenburg-Vorpommern is known for its stunning landscapes and popular holiday destinations. However, the catering industry in this region is currently facing a challenging period.
The lunch business has plummeted for many restaurants, leading some to close on certain days or reduce opening hours. This downturn can be traced back to 2019, as turnover in the gastronomy sector was down 18 percent compared to pre-corona times.
One of the key factors contributing to this situation is the limited influx of tourists. The region, despite being a popular holiday destination, has seen a very low share of foreign tourists (around 3% of total overnight stays in 2024). This has restricted the growth of the restaurant business compared to 2019.
Uncertainty and reduced capacity at key transport hubs, such as Rostock-Laage Airport, have also played a role. The airport, crucial for inbound holidaymakers, especially from Scandinavia and southern Europe, has undergone ownership changes, threatening stable tourist arrivals.
Despite efforts like improved regional connectivity through 5G rail projects, the overall tourism sector has not yet fully rebounded to pre-pandemic levels, indirectly affecting restaurant turnover.
The current VAT rate on food in the catering industry is 19 percent, but this may change. The current black-red coalition wants to make the reduced VAT rate of 7 percent permanent from January 1, 2026. If this comes to pass, it remains to be seen whether prices on menus will automatically be reduced.
Restaurants have had to adapt to these challenges. They have raised their prices due to the return to the 19 percent VAT rate and increased costs due to the statutory minimum wage, which will increase to 13.90 euros per hour from January 1, 2023, and further to 14.60 euros per hour by January 1, 2027.
However, despite potential relief from a reduced VAT rate on food in the catering industry, the industry in Mecklenburg-Vorpommern is still facing challenges. Vacationers are opting for cheap wine from the supermarket instead, and many are now skipping starters, a second drink, or dessert at restaurants.
Mecklenburg-Vorpommern seems to be an "odd one out" in all of Europe with these challenges in the hotel and catering industry. It's a situation that the industry and the region's leaders will continue to navigate in the coming years.
[1] Source: Regional Tourism Report, 2024 [2] Source: German Hospitality Association, 2022
The current decline in the catering industry in Mecklenburg-Vorpommern, rooted in the reduced influx of tourists and the rise of food and drink costs, raises concerns about the region's lifestyle and business sectors. Faced with challenges such as the return to the higher VAT rate for food and drink in the catering industry and the increasing minimum wage, restaurants are struggling to maintain profitability, leading some vacationers to opt for supermarket alternatives for wine and alter their dining habits by skipping certain courses. [1] [2]
