1. Prague, 10 June 2009 1 The financial / economic crisis and the hospitality industry by Ákos Niklai Member of the HOTREC Executive Committee

2. 22 Contents I.Brief introduction to HOTREC II.The crisis and the hospitality industry III. Some data IV. Recovery at EU level V.Recovery at national level VI.Conclusions Prague, 10 June 2009

3. 33  Represents hospitality industry at European level  40 National Associations  in 25 European countries I. Brief introduction to HOTREC Prague, 10 June 2009

4. 44 European hospitality sector  1.6 million enterprises  9 million persons employed automotive production + sales + servicing: 6.3 million agriculture: 10 million  163 billion EUR value added chemical sector 170 billion EUR I. Brief introduction to HOTREC (cont’d) Prague, 10 June 2009

5. 55 European hospitality sector  99% of enterprises employ < 50 people  these 99% make up 62% of value added  92% of enterprises employ < 10 people I. Brief introduction to HOTREC (cont’d) Prague, 10 June 2009

6. 66 II. The crisis and the hospitality industry In a nutshell: Crisis combined with confidence Direct impact on industry  business travels  business events (congress, seminars...)  private trips/outings  search for cheaper prices  cost of credit

7. 77 European economy (EUROSTAT) III. Some data GDP: 1 st quarter ‘09 comparedto 4 th quarter ‘08 to 1 st quarter ‘09 in EU 27 by 2,5%by 4,4% in Euro area by 2,5%by 4,6% Unemployment (March ’08 – March ’09) in EU27 from 6,7% to 8,3% in Euro area from 7,2% to 8,9% Prague, 10 June 2009

8. 88 Confidence in the European economy (European Commission) III. Some data (cont’d) Economic Sentiment Indicator (ESI) (Feb ’09 - April ’09) ESI by 0,6 points in EU27 (at 60,3 pts in March) by 3,5 points in EU27 (at 63,9 pts in April) (long term average =100 points) Indicator increasing for the first time over 2 years Prague, 10 June 2009

9. 99 UNWTO World Tourism Barometer International tourist arrivals WorldEurope On average between 2004 and 2007 +7% < 5,0% January to June 2008 +5,7%+3,4% June to December 2008 -1,7% -2,8% In 2008 (thanks to 6 first months!) +1,7%+0,0% Europe with worst performance in 2008! III. Some data (cont’d) Prague, 10 June 2009

10. 10 UNWTO World Tourism Barometer International tourist arrivals WorldEurope On average between 2004 and 2007 +7% < 5,0% January 2008 – January 2009 -6,6%-5,4% February 2008 – February 2009 -8,8% -11,2% III. Some data (cont’d) Prague, 10 June 2009

11. 11 UNWTO World Tourism Barometer Prospects for 2009 (as of January 2009 – still maintained) for the worldfor Europe  stagnationstagnation  or slight decline (-1% to -2%)or -3% III. Some data (cont’d) Prague, 10 June 2009

12. 12 III. Some data (cont’d)  Occupancy: 69,3% (2007) down to 66,9% (2008) - most affected: Prague, Rome, Dublin (~ -9,5%) - no European capital in +  Average room rate: stagnation  RevPAR: -4,2% Prague, 10 June 2009 Hotel performance in EU (2008)

13. 13 European Travel Commission Hotel performance in EU January – February 2009 (vs. same period 2008) Occupancy 10% Average daily rate10% RevPAR20% III. Some data (cont’d) Prague, 10 June 2009

14. 14 Hotel performance in EU April 2008 – April 2009 Occupancy rate 68,9%59,4% Average daily rate15% RevPAR27% III. Some data (cont’d) Prague, 10 June 2009

15. 15 Reports by some associations Budapest first 3 months in 2009 (vs. same period 2008) Room nights 20% Revenue30% RevPAR (5* )40% Restaurant revenue40% III. Some data (cont’d) Prague, 10 June 2009

16. 16 Prague first 3 months in 2009 (vs. same period 2008) Room occupancy 18%(  at 39%) RevPAR 20-30% Situation of restaurants:30% to close down in ’09-’10 III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

17. 17 France - hotels: (Jan ’08 – Jan ’09) Occupancy3,3% Restaurants: Turnover 20-50%(depending on region) III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

18. 18 Spain hotels Occupancy 15% RevPAR20% III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

19. 19 Spain restaurants Employment60.000 jobs lost over12 months Rev. (Jan’08 – Jan’09) 5,2% Rev. (Feb’08 – Feb’09) 9,7% III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

20. 20 Portugal Rev. (Jan, Feb ’08 – Jan, Feb ’09) 5,2% Nights (Jan, Feb’08 – Jan, Feb’09) 9,7% Prediction for 2009: 10-20% III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

21. 21 Ireland Occupancy 20072009 (forecast) 64% 54% III. Some data (cont’d) Prague, 10 June 2009 Reports by some associations

22. 22 III. Some data (cont’d) EUROBAROMETER survey (20 March 2009) On holiday plans of consumers 27 000 consumers interviewed in February 2009 in the 27 EU countries Prague, 10 June 2009

23. 23 III. Some data (cont’d) EUROBAROMETER survey On holiday plans of consumers Main results: Impact of changes in cost of living on holiday plans - 1/3 some impact on holiday plans (out of which for 38% this meaning not to take holidays at all) - 1/3 no impact - 1/4 no change in cost of living (the rest: no answer) Where to save? - 15% would save on accommodation - 23% would go rather in low season - 23% would save on restaurant spending (30% on shopping) Prague, 10 June 2009

24. 24 IV. Getting out of the crisis How soon ? 3 possible scenarios V or U or L Prague, 10 June 2009

25. 25 IV. Recovery at EU level “Yes, Europe has the unity, the confidence and determination to win this battle” Commission President José Manuel Barroso Prague, 10 June 2009

26. 26 IV. Recovery at EU level (cont’d)  Succession of meetings of EU heads of State or government since October  3 main lines of actions:  promoting financial stability in order to re-build confidence  getting the real economy back on track  staying united against the crisis and working together at global level  2 levels:  EU  national

27. 27 IV. Recovery at EU level (cont’d) Example of general measure  European Investment Bank € 30 bn available for loans to SMEs via commercial banks at favourable interest rates Prague, 10 June 2009

28. 28 IV. Recovery at EU level (cont’d) Example of measure specific for the hospitality industry  Change in VAT rate system – came into effect on 1 June 2009! All Member States are allowed to apply a reduced VAT rate to restaurant services (before only 11 of them were allowed to do so) Prague, 10 June 2009

29. 29 Responses to crisis vary greatly! V. Recovery at national level Prague, 10 June 2009

30. 30 V. Recovery at national level VAT – good examples from 17,5 to 15% in general (UK) from 19% to 9% on restaurant services (CZ)? from 19,6 to 5,5% on restaurant services (FR)? from 21% to 6% on restaurant services (BE)? Prague, 10 June 2009

31. 31 V. Recovery at national level VAT – bad examples from 5% to 9% on hotels (Estonia) from 5% to 19% on hotels (Lithuania) from 5% to 21% on hotels (Latvia) from 20% to 25% on hotels and restaurants (Hungary) Prague, 10 June 2009

32. 32 V. Recovery at national level VAT rates for hotels on 1 January 2008 Prague, 10 June 2009

33. 33 V. Recovery at national level VAT rates for hotels on 1 July 2009? Prague, 10 June 2009

34. 34 V. Recovery at national level VAT rates for restaurants on 1 January 2008 Prague, 10 June 2009

35. 35 V. Recovery at national level VAT rates for restaurants on 1 July 2009? Prague, 10 June 2009

36. 36 V. Recovery at national level Other measures Increase in budget for marketing (e.g. Prague, Austria, Greece) Subsidised credit for the industry (e.g. Austria, Portugal, Spain) Abolishment of the bed-tax, special support for seasonal hotel enterprises, reduction of the landing fees (Greece) Prague, 10 June 2009

37. 37 EU and 27 Member States are to create the conditions for  economy to recover  growth to florish  employment to redeploy Survival of the 1.6 million enterprises as well as the future of 9 million employees are at stake Overall objective of the industry Prague, 10 June 2009 VI. Conclusions

38. 38 New European Parliament New European Commission  Strengthened recovery plan? Need of: further facilitation of credit for businesses reduction of charges to businesses creative solutions for keeping/increasing skills Prague, 10 June 2009 VI. Conclusions (cont’d)

39. 39 Thank you for your kind attention! www.hotrec.eu