How did Covid-19 affect the hospitality industry in Germany?

In this article, I showcase a dashboard that my group developed during the course “Information Visualization” at LMU. The project was an exciting technical challenge as we merged multiple data sets of the German Federal Statistics Office into one coherent data model and made the data explorable by creating highly interactive visualizations from scratch using D3.js in React.

Nevertheless, this article is not about the tech. What truly stood out in this project is the story that emerged from the data. After all, the end goal of every good data analytics project should be to tell a compelling story using data. That being said, here is the story about how the COVID pandemic affected hospitality business owners during the COVID pandemic in Germany.

CovInsights Dashboard

Open Dashboard

Phases of the pandemic

You can click the button above to open the dashboard and explore the data. I highly recommend the playback feature, as it showcases how key indicators of the hospitality industry changed over time, which highlights the volatile developments that business owners were confronted with during the pandemic.

🔬 January 2020: First awareness of COVID-19 in Germany.

Infections: The pandemic starts slowly with the first case of COVID-19 being recorded in January of 2020. During the first months of 2020, the overall 7-day incidence is still zero as only a few isolated cases are registered. These mostly include travelers returning from high-risk regions, who are promptly quarantined to prevent the spread of the virus within the country.

Revenue: The first COVID reports make it to the German news and citizens become careful when it comes to socializing. Consequently, the revenues of hospitality businesses take a first small hit. Camping sites are the one exception that massively increased in revenue.

Employment: Employment in the hospitality industry is not affected yet.

❌🔒 March – April 2020: Precautions mandate the closure of businesses which leads to a massive first hit on the hospitality industry.

Infections: The first death from COVID-19 is reported in Germany. Even though the 7-day incidence is minimal overall, the government introduces strong restrictions to prevent a fast-paced spread of the virus as it was observed in parts of Asia and neighboring countries. These measures, which are being referred to as “Lockdown”, require the temporary closure of hospitality establishments such as cafés, pubs, and restaurants.

Revenue: The strong restrictions force many hospitality businesses to close and the fear of getting infected keeps customers away from these businesses. Consequently, the revenues of all hospitality businesses except for camping sites massively decrease. The revenue of the affected businesses drops down to only 25 % of the revenue they made in January before the restrictions were put in place.

Employment: The drop in revenue propagates to employment. In March and April, employment drops to about 80 % of what it usually is during this time of the year. Even though the employment decreases, it is not as strongly affected as the revenue. This can be attributed to the “Kurzarbeit” model, in which the government offers to subsidize salary payments for employees who are not needed in businesses due to low demand or temporary halt of business operations. Hospitality businesses can use this model to keep their workers employed through the lockdown and quickly get up to speed again once the restrictions are lifted. Short-term labor is quickly adopted by the hospitality businesses and the number of short-term workers in this industry skyrockets from only about 200 workers to about 634.000 workers, which likely saved the employment from dropping as drastically as the revenue.

⛱️📈 May – September 2020: The restrictions are lifted gradually as the incidence stays low over the summer and hospitality businesses recover.

Infections: The 7-day incidence stays stable and low around the 10 cases per 100.000 inhabitants mark during the summer, mostly due to the warm weather and strict regulations for business and socializing. Over the summer, the government decides to gradually loosen the restrictions with a “Hotspot-Strategy”, meaning regions with low incidences can lift restrictions. Consequently, cafés, restaurants, and other service businesses are gradually allowed to reopen to the public if they comply with social distancing and hygiene requirements.

Revenue: Because of stable incidences and creative solutions for outdoor-based hospitality offerings, the revenues of hospitality businesses recover month by month over the summer.

Employment: The employment recovers in parallel to the revenue. As the demand picks up again over summer, employment returns to normal levels and the number of short-term workers drops from its peak of 634.000 workers to 221.00 workers.

❄️🔒 October 2020 – May 2021: A rising 7-day incidence and the effort to keep it below the 100 mark result in strict restrictions, making it a hard winter and spring for hospitality businesses.

Infections: The 7-day incidence rises drastically with the cold weather from 10 to 100 cases per 100.00 inhabitants in October. It stays between the 50 and 200 mark during the cold winter months. This rise in COVID cases and the limited success of already existing countermeasures leads to increasingly strict regulations. The government first responds with a so-called “Lockdown-Light” in November, followed by a full “Lockdown” in December which ultimately gets intensified by the “Bundesnotbremse” in April which added a curfew to the lockdown rules. Additionally, vaccinations begin in December 2020.

Revenue: The hospitality businesses are facing a long and hard winter as revenues stay extremely low due to the strict regulations, which either completely forbid the businesses to operate or massively impact the demand from customers.

Employment: The employment level follows the drop in revenue. It decreases to about 75 % of the usual number of workers. The “Kurzarbeit” model has its second spike in popularity and the number of short-term workers increases from 235.000 workers in October to 494.000 workers in November. The affected employees stay in “Kurzarbeit” during the whole winter.

🌞📈 June 2021 – August 2021:The restrictions are lifted gradually as incidences stay low over the summer and hospitality businesses experience a short break from the regulations.

Incidences: During the warm summer months, the 7-day incidence drops below the 100 mark and stays relatively low. Because of that, strict regulations like the curfew are lifted. Furthermore, the “3G-Regel” is introduced which allows citizens to visit restaurants, events, cinemas, hairdressers, and other service-based businesses again if they are vaccinated, tested, or have recovered from COVID.

Revenue: As restrictions are lifted and the fear of getting infected decreases due to low incidences, customers return to the hospitality offerings. As in 2020, the revenues of the hospitality businesses recover gradually over the summer.

Employment: Employment picks up again and nearly returns to normal levels. Because of the “Kurzarbeit” concept, short-time workers are quickly turned into full-time employees again to keep up with the increasing demand. This is illustrated by the fact the number of 503.000 short-term workers in May 2021 quickly decreased to about 110.000 workers in August 2021.

😷🥶 October 2021 – March 2022: The 7-day incidence skyrockets as the COVID-19 virus spreads through the population. However, hospitality businesses experience a milder downturn than in the previous winter as public life decouples from the incidence rates.

Incidences: The start of winter in 2021 is accompanied by a drastic rise in the 7-day incidence. The incidence peaks for the first time in September 2021 around the 80 mark, followed by another peak in December at the 450 mark, ultimately reaching a 7-day incidence of about 1750 cases per 100.000 inhabitants. Despite the record-high incidences, there is no new lockdown. The government instead focuses on individual responsibility and promotes vaccinations and regular testing to take part in public life under the “3G-Regel”.

Revenue: The governmental focus on individual responsibility gives citizens the ability to decide how they engage in public life themselves. Even though the revenues of hospitality businesses decrease, they do not drop as drastically as in the first COVID winter. Citizens do not shy away from hospitality offerings as they did in the first COVID winter, likely due to the fatigue of the pandemic. The beginning of 2022 is the first point in time where incidences and the demand for hospitality businesses decouple, illustrated by the fact that the demand of the customers increases steadily even though record-high incidence rates are being reached.

Employment: As the demand and revenues of hospitality businesses are not severely affected, employment declines only slightly. The number of workers placed in “Kurzarbeit” increases from 67,000 short-term workers in October 2021 to 236,000 in February 2022. While this still represents a significant number of short-term labor, it is significantly less than in the first COVID winter. Additionally, the number of short-term workers starts to decrease in February 2022 already.

🏕️☀️ Since April 2022: The majority of the population is vaccinated and previous governmental restrictions expire, leading to a steady return to “normal” public life.

Incidences: The incidences start to decline from their all-time high in March 2022. At the same time, most of the governmental restrictions expire – only the requirement to wear masks, for example in public transport, persists throughout 2022. During 2022, the 7-day incidence stays at a high level compared to the previous years as it fluctuates in a range from 200 to 700 cases per 100.000 inhabitants. With these numbers, the year 2022 has significantly more infections than the previous years, especially during the summer months. Nevertheless, no new restrictions are put into place by the government and instead, the focus lies on promoting vaccinations.

Revenues: As already mentioned, the revenues of the hospitality businesses decouple from the COVID infections. The demand for hospitality offerings is back to normal and follows its usual seasonal pattern. Because of missing restrictions and little fear of COVID-19 infection due to vaccines, most people return to their normal public life in 2022.

Employment: Employment returns to usual levels and most workers are no longer part of “Kurzarbeit”.

💸🛑 What about the insolvencies?

Besides incidences, revenues, and employment, we also included insolvency data in the dashboard. Surprisingly, there is no clear trend in this data, and the timeline at the very bottom shows a steady number of insolvencies that even go down slightly during the pandemic. The following summary includes a possible explanation for this finding.

A story about the COVID-19 pandemic, the hospitality industry, and government subsidies

The highlighted phases of the COVID pandemic in Germany and its effect on hospitality businesses tell an interesting story. Here are my key takeaways.

Regarding the COVID incidences, I was pretty impressed by the foresight of the government together with research institutes like the RKI. Even though the strict lockdown at the beginning of the pandemic might have been frustrating and confusing at the time, it turned out to be very effective in hindsight. With their actions, the German government and population managed to evade the devastating first wave of the pandemic that many other countries experienced and thereby bought time for the medical system to prepare throughout 2020. Furthermore, the additional lockdown-light, full lockdown, and curfew in the Winter of 2020 / 2021 dampened the spread of the COVID-19 virus, which protected many citizens from severe infections as vaccines were not widespread yet. Only one year later in the Winter of 2021 / 2022, when vaccines were widely available and citizens had the chance to protect themselves against severe cases of COVID-19, the government started to focus more on individual responsibility.

Thus, the strict restrictions of the government limited the spread of the virus as long as needed to ensure that citizens were able to vaccinate themselves to prevent a mass spread of severe COVID-19 infections. This both relieved the German medical system and minimized the number of deaths from COVID.

On the other hand, the hospitality industry experienced collateral damage from the government’s efforts to limit the spread of the virus. The quickly changing regulations together with a general fear of getting infected in the population made it impossible to continue business operations as usual. To mitigate this, the government supported the hospitality business during the pandemic both by making the model of short-term work easily accessible and also by providing subsidies like the “Soforthilfen”, “Überbrückungshilfen” and “Neustarthilfen”. On paper, this governmental support mitigated the economic damage and kept the hospitality businesses afloat throughout the pandemic. The unaffected level of insolvencies shows that business owners leveraged the subsidies to cover fixed costs while also keeping their employees through short-term work, even though the demand from customers was non-existent many times during the pandemic.

Nevertheless, the hospitality industry is not the same as pre-COVID. Hospitality businesses might have made it through 2020 – 2022, but they now face a whole new set of challenges. The funds of many hospitality businesses are drained which makes it challenging to make the repayments that the government demands. Furthermore, finding personnel is hard as the overall pool of workers in the hospitality industry decreased since many employees looked for alternative job opportunities in less volatile industries during the pandemic. Additionally, the overall downturn of the German economy, the shift towards less travel, and the impending inflation change the spending habits of customers which also results in less demand for hospitality offerings.

In summary, our collected data shows that Germany handled the humanitarian aspect of the pandemic well. However, there were significant repercussions for the German economy, particularly in the hospitality industry. Despite efforts to mitigate economic damage and maintain stable insolvency rates from 2020 to 2022, it is yet to be seen if the insolvencies have been prevented or only delayed. Taking into account the challenging market situation, it is likely that we will witness an increase in insolvencies through 2022 and 2023 as businesses might not be able to recover from the two years of the pandemic.