Rising Costs in Hospitality Industry: The Need for Higher Prices to Prevent Business Bankruptcy

By our economics editors

Jan 8, 2024 at 4:27 PM Update: 12 minutes ago

Hotels, pubs and restaurants must charge more money for food, drinks and accommodation to prevent them from going bankrupt. Companies are making less and less profit because they are faced with rising costs. Higher prices are therefore necessary.

This was said by chairman Marijke Vuik of Koninklijke Horeca Nederland (KHN) on Monday during the Horecava trade fair. “We hear that entrepreneurs are worried, but when they ask for help, they are actually already too late.”

To compensate for the increased costs, catering businesses should maintain profit margins of an average of 10 to 13 percent, according to Vuik. Now entrepreneurs have to make do with about 7 to 9 percent. That’s too little, Vuik thinks.

According to her, the catering industry is already trying to reduce costs as much as possible by, for example, purchasing for less money. But some developments, such as increased inflation, are something entrepreneurs can do little to change. That is why they have to increase their prices, says Vuik. She cannot say exactly how much more expensive everything should become. This varies greatly from company to company.

Earlier in the day it became clear that the number of catering establishments has fallen for the first time since 2015. KHN attributes this to the increased costs, which operators can only pass on to a limited extent in their sales prices.

Companies in particular that were unable to use corona support during the pandemic are now having a hard time, says Vuik.

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2024-01-08 15:27:17
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