Home ➾ Blog ➾ The Hospitality and Leisure market in the Netherlands after corona (2020 – 2023)

The Hospitality and Leisure market in the Netherlands after corona (2020 – 2023)

Marco Louters Auteur

Marco Louters

July 22, 2023 | 8 minute read

De horeca- en recreatiemarkt na corona
Marco Louters Auteur

Marco Louters

July 22, 2023 | 8 minute read

In this comprehensive blog, we look back at what has happened in the hospitality and leisure industry since corona 2020. We spoke to 70 businesses (40 owners). We used 50 online sources. The market was – and still is – a rollercoaster.

When corona hit our unprepared world in the early 2020s, everything changed. In particular, the hospitality and leisure industries were dealt a relentless blow with mandatory closures.

According to the Dutch Central Bureau of Statistics, of all the industries in the Netherlands in 2020, hospitality shrank the most; by 40.6%. Culture and leisure were in second place, shrinking 24.7%. (CBS)

While the hospitality industry most often used government support measures to sit out the corona months – and later years – many experts assumed the industry would forever change.

There were theories that we would never again sit so close together; that a minimum distance between tables would be standardized. Another theory was that consumers were now used to not dining out anymore as a routine, to just drink the cup of coffee at home, or using delivery services.

As part of this research, we also looked at the digitization trend. However, to minimize the length of the blog – and because it is a strong stand-alone topic – we have given it its own spot: Accelerated technological development in hospitality after corona!

Below we dive into the global market situation. What are the hospitality and leisure industries facing in the Netherlands?

1. Growing number of bankruptcies?

Not entirely… 📈

In 2020 and 2021, expectations were that many bankruptcies in hospitality and leisure were not prevented, but rather delayed by ongoing government support.

Many companies were so-called zombie businesses, with too little equity to pay the bills. The newspaper Trouw called it “Silence before the storm” and the ING bank expected two to three times more bankruptcies in 2021 compared to 2019. (ING) (Trouw)

Back in 2021, we were struck by the fact that Breda – the first city that Questlog operates in – actually experienced growth in hospitality businesses. In December 2020, there were 10 more than a year ago, despite a number of companies that had ceased operations. (In De Buurt)

Now this appears to have been the case everywhere.

An analysis by Datlinq on July 15, 2022 found that 2,500 locations had been added in the past 2.5 years! That was the period in the midst of the corona crisis!

Most of the new businesses started in Amsterdam; a whopping 381. The Hague and Rotterdam followed with 140 and 121 locations, respectively.

The full figures are visualized in the infographic below. What is striking is the huge number of new businesses focusing on ‘fast-casual’.

Ontwikkeling aantal horecalocaties

Source: Datlinq 2022. Datlinq was acquired by Roamler in 2022, so the source is not accessible today.

2. High revenue in 2022

Spend! Spend! Spend! 💸

Sales was also doing well. In the second quarter of 2022 – the first quarter without corona measures – revenue was higher than before corona. (CBS)

On the graph below, it looks like corona had no impact on what would otherwise have been logical growth, shown with the dotted line.

Yet many were skeptical about this too, thinking it would be short-lived. Of course more people would want to enjoy the hospitality industry, especially now. It is logical to see a brief spike. At least, that was the thought, but in quarter 3, however, the figures rose again, by almost 3 percent.

The same picture was seen in leisure. Holiday parks were full and tourists (especially Belgians and Germans) knew how to find the Netherlands again. Everything was better in 2022 than in 2019! (Rabobank)

Turnover hospitality corona years

Source: CBS 2022. Figures revenue hospitality industry, seasonally adjusted. Dotted line, arrow, and question added by Questlog.

Despite continued growth in sales through 2022, it became clear at the beginning of quarter 3 that entrepreneurs and business owners in the hospitality industry were looking less and less positively at the near future. The economic climate was changing again.

This ‘business confidence’ declined even further at the beginning of the fourth quarter. (CBS)

Although other sectors also felt less confident about the survival of their businesses, such as culture, sports and recreation, and automotive and retail, it was noticeable that the hospitality industry had the lowest level of confidence, by a lot.

Underlying the declining confidence were three main issues:

1) Staff shortages
2) Accured debt
3) Inflation / energy costs

3. Growing labor shortage in 2022

We want YOU! 👤

Because companies in hospitality, recreation, and culture could not offer any hours for a very long time, many staff and self-employed workers began to look for other jobs.

Whereas in early 2020, 424,000 people were still working in the hospitality industry, by February 2021, only 305,000 remained. (UWV)

Getting the departed staff to come back proofs very difficult. Many have gone to work in other industries, resulting in businesses that had to stay closed on beautiful summer days due to staff shortages. Others opted for shorter opening hours or just keeping the kitched closed. (RTV Utrecht) (Omroep Brabant)

The labour market is tighter than ever before in 2022, with the hospitality industry having the most vacancies. (CBS) At the start of the second quarter, staff shortages are the main obstacle to deal with for almost 43% of companies.

However, the Netherlands is not alone in this crisis. In its peak season, Italy was missing 300,000 workers; an industry loss of € 6.5 billion. Greece had a shortage of 50,000 kitchen and cleaning staff in island hotels. And France, as summer began, still had 361,000 open vacancies at hotels, cafes, and restaurants. (NOS)

Of  course, it was not much different in the leisure industry. As many as 66% were understaffed, with some 33% saying that this is jeopardising the future of their business.

On top of this, the intake of new recreation students has been lagging behind for years and even 18% of current employees are considering leaving the industry. Corona has seriously tarnished the image and reputation of the leisure work field. (FNV Recreatie)

If we take a glance at the cultural sector, we once again see the same thing. An extremely high 80% (!) of pop venues and festivals expect to be in financial trouble in the near future.

Reasons for this are persistent staff shortages, but also skyrocketing costs for energy, and lagging indexation of subsidies.

The labour market has become completely disrupted as a result of the corona crisis. The self-employed were hit hard and many professionals, such as technicians, marketers, and production managers, left. Concerts and performances were cancelled due to lack of staff or because a tour budget could not be met. All reserves have been used up and resistance is low.” responded co-chairman of umbrella association Kunsten ’92 Jeroen Bartelse (translated to English). (AD)

4. Accured debts

Most payment delay at Tax Office 💰

Due to government support, the number of bankruptcies has been historically low since the second quarter of 2020. (CBS)

Logicially, then, we can indeed assume that government arrangements, such as the TVL and ATE, have kept many companies alive; including those that would have gone bankrupt under normal circumstances. (Rijksoverheid)

About 1/5th of all corona support went to the hospitality industry, most of which went to restaurants, followed by hotel-restaurants and pubs. (CBS)

Aantal faillissementen van bedrijven tijdens coronajaren

Source: CBS 2022. Number of corporate bankruptcies (incl. sole proprietorships), adjust for sessions days.

Still, the aid has not prevented many hospitality and leisure businesses from running into financial difficulties. This number of cases is quite a bit lower in most other sectors.

Overall, less than 1% of all businesses in the Netherlands have a higher debt burden that is problematic for them. (CM)

This is a completely different story in service industries, such as hospitality, culture, sports and recreation. Here, more than 40% expect to need one to five years to pay off accumulated debts and 5.4% expect this could even take more than five years. (KvK)

Grafiek van schuldenlast per onderneming per sector in vergelijking met de situatie voor de coronacrisis

Bron: Kamer van Koophandel 2022. Grafiek van de schuldenlast per onderneming per sector in vergelijking met de situatie voor de coronacrisis.

Most debts and payment arreas were with the tax authorities at the beginning of Q2 2022. This was true for 66% of hospitality (H) and 54% of culture, sports and recreation (CSR). This is followed by debts with banks (H: 37%, CSR: 19%), suppliers (H: 15%, CSR: 19%) and energy companies (H: 1%, CSR: 9%). (Pretwerk)

According to a calculation by the bank ABN Amro, the August 2022 average tax liablity came to € 309,000 for hotels and € 76,000 for restaurants.

In fact, the bank’s research on the issue of debt – in contrast to the Chamber of Commerce research – found that it is problematic for 20% of hospitality businesses (about 5% higher than what the Chamber of Commerce found). (FD)

A lot of entrepreneurs ahve also had to draw from their pensions and savings.

On top of that – especially in the hospitality industry – many businesses are sole proprietorships, so the entrepreneur is personally liable for debts. (RTL Nieuws)

The fear is that many entrepreneurs are unable to meet repayments. “Besides repayment, the industry must also invest in sustainability, and pay more for energy, drinks, and packaging materials. This will create pressure on cash flows.” says Gerarda Westerhuis, sector economist at ABN Amro (translated to English).

5. Inflation / energy costs at the end of 2022

Energy prices times four+ ⚡

We saw in chapter 2 that revenue in the hospitality industry is on the rise again in 2022. Yet this same year, they are struggling to make up for the losses incurred.

Part of this has to do with the staff shortages discussed above. The other part has to do with the huge inflation of energy, products, and transportation costs.

Companies see energy bills rising, but have run out of money to invest in energy-saving solutions. (FD)

The Central Bureau of Statistics measures inflation as an increase in the consumer price index (CPI) compared to the same month in the previous year. The CPI reflects a basket of goods and services purchased as average by Dutch households.

On the graphs below we obviously see that inflation has increased dramatically compared to previous years. (CBS)

I personally spoke to a cafetaria owner in Breda who had his business open only a few hours a day in early 2023, purely because off-peak opening hours could no longer be afforded due to energy costs. The fryer is too expensive.

Cijfers op inflatie CPI

Source: CBS 2022. Figures on inflation (CPI), the percentage change from a year before. The dark blue line shows inflation excluding energy and fuel costs.

Ontwikkeling stroomtarieven en gasprijzen I

Source: Overstappen 2023. Left: Development of electricity tariffs 2014-2023, including VAT and government fees. Right: Development of gas price per m3 2014-2023.

Ontwikkeling stroomtarieven en gasprijzen II

Source: Overstappen 2023. Top: Development of electricity tariffs 2014-2023, including VAT and government fees. Bottom: Development of gas price per m3 2014-2023.

Procurement costs have also risen dramatically.

Although many companies do not dare or want to do so, all these costs will eventually have to be passed on to the ened consumer.

At the end of 2022, beer brewer Heineken announced a sharp 10.7% increase in prices in early 2023. This increase follows an earlier increase of 5.8% in August and 3.4% in January. (FD)

All of the above finally brings us to a poll by Qredits and Utrecht University of Applied Sciences, which shows that only 42% of smaller entrepreneurs currently earn more than the minimum wage; 36% even below the welfare level. (FD)

Hospitality, leisure and cultrual entrepreneurs have been struggling since the start of the corona crisis.

Crises are the order of the day.

6. Recovery in 2023?

Still a rollercoaster 🎢

Halfway through 2023, it still looks like – despite crisis upon crisis – the hospitality and leisure industry will continue to do well. “Everyone thought last year would be quieter, but the dip did not materialise. Restaurants are full, full, full.” says hospitality trend watcher Wouter Verkerk (translated to English).

Ruud Bakker, owner of a steakhouse and chairman of the Eindhoven branch of Koninklijke Horeca Nederland, sees the same thing: “Guests eat several courses, order expensive beers, expensive wines.” (NOS)

If we update the reveneu graph from earlier with the latest figures, we see that revenue in the third and fourth quarters of 2022 have remained fairly similar to the second quarter. (CBS)

What would this graph look like if we added the first two quarters of 2023 as well?

Turnover hospitality corona years with last two quarters 2022

Source: CBS 2023. Figures revenue hospitality industry, seasonally adjusted. (Volume figures for 2020-II and 2021-I are unknown or insufficently reliable.) Dotted line, arrow, and question added by Questlog.

For ‘culture’ and ‘leisure’ specifically, no concrete figures are available at the time of writing, but if short messages near the booking button of leisure companies early in the season are any indication, this is also a good sign.

It is incredibly busy with reservations. Book quickly if you want to be assured a spot!” (Kurenpolder)

The idea that owners now immediately make more profit thatn before is not true.

Many entrepreneurs still have corona-related debts to repay, while also facing rising purchase prices and staff costs.

Revenue is not profit.

In my interviews with hospitality entrepreneurs in June and July 2023, I hear from many that compared to the previous year, revenue is reasonably the same and sometimes even higher, but profits are lower.

Half of small to medium sized business owners do not dare to pass on the higher costs in a beer or admission price. There is fear that customers will then leave to the competition or simply drink a beer at home. This fear is particularly prevalent in the hospitality, recreation, culture and sports sectors. (NOS)

Sometimes, it is playing around with prices so that guests still order a second beer.

Also remember that on 1 January 2023, the minimum wage increased by 10.15% and again by 3.12% on 1 July 2023 (although July’s is the more standard six-monthly increase). (Rijksoverheid)

Oh, and since 1 July 2023, entrepeneurs are no longer allowed to offer single-use plastic cups and meal containers to be used on site, including festivals and company restaurants. (Misset Horeca)

All in all… Working in culture, leisure and hospitality is a rollercoaster.

It is sometimes said that entrepreneurship has the highest highs and lowest lows. The period from February 2020 to August 2023 is a prime example of this for the entire sector.

What does the end of 2023 have in store for us?

We are still in an economic contraction. (NOS)

ℹ️ This research was 50% co-funded by the province of North Brabant.

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