European hospitality - the long and winding road to full recovery

During the summer, Europe’s hospitality sector experienced a much-needed gradual economic recovery  following the dramatic income losses from the Covid-19 crisis . But, with rising infection numbers across the continent, Europe’s bars, restaurants and hotels could be facing another challenging winter of uncertainty, writes Ulrich Adam, director general of spiritsEUROPE.

During the first phases of the pandemic, the closure of hospitality venues had startling social consequences which we must now strive to avoid.

According to a YouGov survey, 2 out of every 3  adults polled in ten countries agreed that the social and mental wellbeing of the general population had suffered as a direct result of the closure of hospitality venues. And nearly half of the respondents said their own social and mental wellbeing had been negatively affected by the closure of cafés, bars, and restaurants.

Apart from the massive social losses, there’s the economic damage. National lockdowns saw thousands of hospitality businesses closing permanently and job losses ranging in the millions.

The long and winding road to full recovery

Positively, the International Monetary Fund (IMF) now predicts that economic activity in the Euro Area and the UK will come back and surpass 2019 levels by 2022. However, the impact of the Covid-19 crisis has been uneven and the same can be said for the recovery. Those sectors most severely affected by restrictions and bans on social mobility and gatherings were hit hardest and the road back to pre-crisis levels and thus full recovery will be long and arduous.

In this challenging context, the hospitality sector and its supply chain should be seen as a potential engine for jobs and growth. In the best case, the hospitality sector and its value chain partners can help drive the economic recovery and ultimately reduce the financial burden on governments. The spirits industry directly supports the sector by delivering high value to bars and restaurants, promoting a high-quality and premiumized hospitality landscape for consumers and a highly-skilled career path for specialist bartenders and distillery operators alike.

Governments must therefore play their part now to support the full recovery of the hospitality sector. Funding programmes, such as the EU’s Recovery and Resilience Facility, should be made available to the hardest-hit industries. Even a small part of the allocated €723.8 billion in the facility could provide a vital economic lifeline for the people it employs in the medium term.

Most importantly, in such a fragile and uncertain economic situation as we experience right now, governments must avoid the temptation to hike taxes. Stable excise tax rates and temporary reliefs will enable the whole supply chain to promote a sustainable recovery, and these should be focused on spirits, which across Europe are subject to far more punitive tax levels than wine and beer on a per-drink basis.

Of course, all of this can only be achieved by working in partnership with businesses, governments and the European institutions.

SpiritsEUROPE’s #WeStandReady campaign is one such effort. Viewing the long-term perspectives of both the spirits and the hospitality industries as being intertwined, we are determined to play our part in reinvigorating the sector to support its resilience and full recovery.On 17 November, we will come together at our annual Spirits Summit to discuss how we can walk the talk and support the sector.

In so many ways, the COVID-19 crisis has been a challenge and catalyst for structural changes to societal life. Today, with some crucial decisions ahead of us, we have to use the opportunity to restore the hospitality industry to pre-crisis levels with a strong focus on economic sustainability across the entire value chain, because we owe it to the bartenders, mixologists and waiters that make us feel so welcome.

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