Hospitality industry 2020 numbers: 35 pct plunge in turnover, 19 pct fall in headcount

The turnover of the hospitality industry plunged 35 percent in 2020 from 27.5 billion lei in 2019 to 17.9 billion lei as a result of the pandemic, shows a survey by the Termene.ro platform based on the financial statements reported by Romanian companies. The headcount in the hotel and restaurant industry dropped 19 percent in 2020 from 186,000 to 150,000 and the cumulative net losses in the industry surged by 220 percent in 2020 to 2.3 billion lei, compared to 710 million lei in 2019. According to the survey, the net profit registered by hospitality companies that are above the break-even point decreased by 46.5 percent to 2.49 billion lei in 2020, compared to 4.65 billion lei in 2019. The hospitality industry is the sector that saw the largest increase in net losses in 2020, of 220 percent, followed by the events industry (169 percent increase in net losses compared to 2019) and the information and communications sector, with an advance of 81 percent in net losses, shows the Termene survey. In terms of turnover, only the events industry registered a steeper plunge than the HoReCa operators, with a total decline of 38 percent in 2020 compared to 2019. "We processed the data available in the Termene.ro platform based on the balance sheets submitted by the companies, and we already have the first statistically relevant conclusions about the impact of the pandemic on the Romanian business milieu. (...) For instance, after a year during which decline estimates for the hospitality industry ranged between 20 and 70 percent, we now see firsthand that hotels and restaurants earned 35 percent less in 2020 than in 2019," said Termene.ro co-founder Adrian Dragomir. Against this background, Romanian entrepreneurs and managers are increasingly concerned about the ability to pay and the insolvency risk for all current customers and suppliers, but also for those they prospect. The number of checks among Romanian companies has doubled in the context of the pandemic. Termene offers the "Company Verification" product that provides the users instant access to raw information or advanced reports on the financial, fiscal and legal data of all companies in Romania, from reliable sources and updated in real time. Regarding the capacity of the hospitality industry to adjust to the context of the pandemic, the survey shows that 47 percent of the restaurant market was generated by delivery services, and that the delivery sector kept many HoReCa businesses afloat. The findings of the Termene.ro survey are confirmed by the National Foodservice Research survey conducted by the Hospitality Culture Institute. The total annual value of the market of out of home cooked food and drinks (standard restaurants, fast food, canteens, pubs and supermarkets) in five of the largest Romanian cities (Bucharest, Timisoara, Iasi, Cluj and Brasov) amounted to 10.2 billion lei in 2020 - down 29 percent compared to 2019. According to the survey, these five cities represent 60 percent of the total market, which takes the hospitality industry to a value of 17 billion lei in 2020, in line with the results released on Thursday by Termene.ro. Also, the hospitality industry has a significant contribution to the evolution of companies that develop businesses in related fields, such as agriculture, local ingredient suppliers, producers and distributors of kitchen raw materials, food product importers and distributors, providers of industry dedicated services, as well as management systems, cleaning, transport, logistics, packaging. According to the employers' organization HORA and the members of the Tourism Alliance, the hospitality industry contributes approximately 5.07 percent to the GDP as follows: direct financial impact (added value) - 3.42 pct; social impact (employee salaries and consumption contribution) - 0.91 pct; indirect financial impact (suppliers and investments) - 0.74 pct. "In order to start and continue investments, companies need predictability. Romanian managers and entrepreneurs want to run predictable businesses. The call for HoReCa projects funded from state aid grants, as a recovery solution, has only recently been put up for public debate. Under the state aid scheme, operators whose activity was affected by the Covid pandemic can get 20 percent of the 2020 loss compensated, but not more than 800,000 euros per single enterprise. This state aid scheme is absolutely necessary, even if it comes 16 months after the outbreak of the pandemic that caused the hospitality industry the steepest surge in net losses in 2020," the document shows. AGERPRES (RO - author: Mariana Nica, editor: Andreea Marinescu; EN - editor: Simona Klodnischi)