Gloomy outlook for the hotel industry because of Corona

The industry survey, conducted between September 30 and October 4, 2020, reveals a tightening situation across Switzerland. The coming months will be significantly more challenging for the lodging industry than the summer.

Tourist recovery only sluggish

The summer season was significantly worse than the previous year for the vast majority of businesses across Switzerland (66 percent). Although more Swiss nationals vacationed in rural alpine areas, massive losses were recorded in some cases. In particular, establishments in the Bernese Oberland and Valais were short of international guests.

In the coming months, hotel businesses are expecting clearly lower occupancy rates as well as a large drop in sales. Across Switzerland, 70 percent of establishments expect a worse winter season than in the previous year. The assessments from urban areas are particularly alarming. 90 percent of respondents in urban areas see a significant deterioration in the situation. In the vacation regions, 57 percent expect the winter season to be more negative.

Unclear, inconsistent travel regulations slow down tourism

Respondents see the inconsistent travel regulations in Europe as a particular challenge. Currently, the recovery of travel is being massively slowed down. 63 percent of respondents are in favor of harmonization. Furthermore, 61 percent would like to see rapid approval of rapid tests and the adjustment of quarantine regulations. Association President Andreas Züllig therefore calls on the Federal Council to "advocate harmonization of travel regulations and adapt quarantine regulations as quickly as possible".

The current rules would jeopardize the economic viability of operations, increasing the risk for unnecessary plant closures. Often, entire teams of employees are quarantined. In addition, travelers are deterred from coming to Switzerland.

Investments are suspended, skilled workers reduced

Due to the Corona-related liquidity problems, two thirds of the hotel companies (67 percent) will postpone their planned investments in the next six months. This means that significantly more establishments are taking this measure than in the June survey, where the figure was 55 percent.

More than a third of respondents (37 percent) will have to give notice in the coming months. The rate is particularly high in the cities (59 percent). Thus, the situation on the labor market remains worrying. The option of short-time work will therefore remain an important pillar in the fight against mass unemployment in the hospitality industry in the coming months.

Probability of bankruptcy increases

Due to the significantly gloomier outlook, the hotel industry again estimates the probability of bankruptcy to be higher. Whereas in June around 3 percent of hotel establishments had indicated a bankruptcy probability of 60% or more, 6 percent now anticipate such a high risk of bankruptcy. Urban establishments are particularly affected: A bankruptcy probability of 60 percent or more threatens 12 percent of establishments in the city hotel industry, especially in Zurich and Geneva. Extrapolated to the entire city hotel industry, around 142 establishments are currently at risk of bankruptcy.

The association is therefore calling for prompt repayment of simple Covid loans in hardship cases and a zero interest rate for the entire term. These measures are necessary to combat liquidity problems and investment backlogs and to preserve jobs and competitiveness in the long term.