Wave of bankruptcies to hit Dutch hospitality sector amid rising wages, supply costs

The predicted increase in the number of bankruptcies in the hospitality and catering industry will affect the whole sector, said Marijke Vuik, who is the chair for Dutch hospitality association Koninklijke Horeca Nederland (KHN). Owners of cafés, restaurants and hotels are faced with numerous problems, such as increased staff costs.

ABN Amro announced last week that the number of bankruptcies of restaurants and other eating establishments will probably rise to record levels this year. They are expecting around 450 bankruptcies in 2025. Vuik agrees with this view. “It does not sound strange to us.”

She added that cafés, hotels, and restaurants will all have challenges like rising labor costs. "It remains a labor-intensive industry." Entrepreneurs also face higher purchasing costs.

Statistics Netherlands (CBS)recently published data regarding the total number of bankruptcies in the Netherlands, which increased by around 30 percent last year. The number of bankruptcies also increased significantly in the hospitality sector, according to the CBS data.

Another issue for the hospitality industry is the ongoing staff shortages, and difficulties filling vacancies. The aging population is leading to fewer available workers, Vuik said. The situation will continue to perpetuate for at least the time being.

The staff shortages in the catering industry will be back to the levels it from before the coronavirus pandemic, if they are not yet there, and the issue is not going away, Vuik said during Horecava, the annual catering industry trade fair at the Rai Amsterdam.

All sectors have to deal with this, but the hospitality and catering industry struggles with it the most. “Around half of our staff are between 15 and 24 years of age. So we notice this more because we more quickly observe that there are fewer young people.”

Around 8,000 people finish a catering-related course every year, while the high staff turnover means there is a need for more than 100,000 additional workers. There is a shortage of chefs in the catering industry, as well.

“The peak in the tightness of the labor market was two years ago, and that is significantly less now, but there is still a tightness that will always remain. So it is up to us to see how we handle that in the future,” said Vuik.

Turnover in the catering industry grew by five percent compared to the previous year, KHN reported based on numbers provided by Rabobank. However, the volume dropped by 0.5 percent. The KHN thinks that this is because owners are unable to completely pass their costs onto their customers.

Confidence among entrepreneurs in the catering industry remains negative: 60 percent of hospitality businesses expect to continue to exist for at least another year. One in seven entrepreneurs has a problematic debt burden, in many cases left over from the coronavirus crisis. Confidence among consumers is increasing slightly, partly because willingness to buy is increasing, but sentiment also remains negative.

However, there are also positive aspects to mention, said Vuik. The volume has "stabilized", she thinks. For example, there was a small increase in volume at cafés and restaurants last year, of 0.6 percent, compared to a decrease of 2.3 percent at hotels. "But the hotels had a huge catch-up year last year. So that too can easily be explained."