Bankruptcies in hospitality sector doubled; 40% doubt that they'll survive the year

Last year, 245 companies in the hospitality sector were declared bankrupt up to and including November. That is almost double compared to the 134 hospitality companies going under in all of 2022, Statistics Netherlands (CBS) reported. Around 40 percent of the remaining catering and accommodation businesses have doubts about whether they’ll still be standing in a year and 12 percent struggle with problematic debts.

According to CBS, the number of bankruptcies in the hospitality sector last year was about the same as in pre-pandemic 2019. The sector expects this year to be another tough one. Just over 12 percent of hospitality businesses find their debt burden problematic. That is twice as much as the average in the business community as a whole (6 percent).

About 3 percent of catering businesses expect an increase in turnover in 2024. The average for all industries is just over 21 percent. Catering entrepreneurs expect their investments to decline in 2024, while, on average, Dutch entrepreneurs expect more investments this year.

"The events and developments of recent years — the pandemic, surging inflation, bad players on the tooling market — have created a perfect storm for the hospitality space. If your business is still around you can already count yourself lucky, and if you’re increasing your turnover year over year you’re among the select few," said Thijs van Himbergen, the Chief Marketing Officer at Tebi. The Amsterdam-based business provides point-of-sales and reservations systems for the hospitality industry.

He advised entrepreneurs to pay attention and keep a firm grip on their company's financials, even if they do not have the same passion for business administration as they have for the service industry. "Businesses depend on lots of different digital tools these days, which come with hefty monthly subscription fees, per-device surcharges, and integration costs. Many providers of these tools don’t have the best interests of merchants at heart; they’re just trying to fill their pockets as much as possible," he told NL Times. "Often they’ll waive their fees or give away free hardware in the beginning only to lock them into expensive, long-term contracts later down the line."

In its industry report, the CBS also noted that just 60 percent of hospitality businesses expect to exist for at least another year, compared to 73 percent across all industries. Accommodation providers are more likely to have higher debt burdens, and catering businesses are more worried about their survival.

The sentiment in the sector is more bleak than in other industries. Catering and accommodation entrepreneurs are less positive about their turnover, workforce, and investments for 2024 than the average for all industries.

This means hospitality business owners "should be looking for ways to save money, create new revenue streams, and improve existing ones," Van Himbergen said in response to the report. "If you know your Tuesday nights are consistently slow, for example, you could organize a musical evening or quiz in your establishment to attract more guests."