Struggling tourism landscape persists in northern Germany

Struggling tourism landscape persists in northern Germany

The hospitality sector in Northern Germany is grappling with a host of interconnected challenges, primarily centred around labor costs, business uncertainty, and labor shortages. These issues are causing concern for many businesses in the region, with the business climate index in the travel industry falling from 111 to 107 points.

High Labor Costs -----------------

Rising operational expenses, particularly labor costs, are a major concern for the German hospitality industry. According to a survey, nearly 77% of hoteliers list high staffing costs as a primary issue[1]. In addition to labor, the rising cost of energy is also a significant financial threat across Europe, although labor costs remain particularly acute in Germany compared to Mediterranean countries where energy is the bigger worry[2].

These elevated labor costs force hospitality businesses to either raise prices or absorb the increased expenses, which can make them less competitive or squeeze profit margins[1][2].

Uncertain Conditions --------------------

The hospitality sector faces a multitude of risks, including economic uncertainty and geopolitical tensions. Inflation and rising costs of travel and accommodation are dampening consumer confidence and putting pressure on disposable incomes. This results in more price-sensitive travelers, who may opt for cheaper destinations or shorten their stays[1].

The sector also faces broader risks from geopolitical tensions, which can impact investor confidence and complicate planning for business expansion or renovation[4]. While Germany is experiencing strong booking volumes, the market remains sensitive to external shocks, as seen by the growing number of Germans unable to afford major holidays—rising from 17% in 2022 to 32% in 2025[1].

Labor Shortages ----------------

The hospitality sector across Europe, including Northern Germany, is struggling with recruiting staff for senior management, sales, marketing, wellness services, and event planning. Operators find it difficult to meet candidate expectations regarding salary, working hours, and long-term stability[2][3].

There are widening disparities in training capacity and digital skills, making it harder to onboard new staff efficiently and keep up with evolving customer expectations and technological advancements[3]. The perception of the hospitality industry regarding pay and job security can deter potential candidates, exacerbating shortages[3].

Looking Ahead -------------

High costs, uncertain conditions, and persistent labor shortages make it difficult for many businesses to operate sustainably in the tourism industry in Northern Germany. The business climate index in the hospitality sector remained almost unchanged at 89 points in spring 2024 and 88 points currently.

Economic policy framework conditions are the biggest risk to businesses in the travel industry, according to 56% of respondents, while high labor costs are the biggest risk to economic development in the hospitality sector, according to 84% of respondents[5].

Despite overnight stays in the North being comparable to pre-Corona levels, the mood in the tourism industry remains tense, with geopolitical developments, wars, and crises being significant factors affecting the mood of travel providers, according to Knud Hansen, deputy chairman of IHK Nord[6].

References:

[1] German National Tourist Board (2024). German Tourism Report 2025. Retrieved from

[2] European Hotelier (2023). German Hoteliers Face High Staffing Costs and Rising Energy Prices. Retrieved from

[3] Hospitality Net (2023). Skills Shortage and Digital Uptake: Challenges Facing the European Hospitality Industry. Retrieved from

[4] Tourism Review (2023). Geopolitical Risks and Their Impact on the Hospitality Industry. Retrieved from

[5] IHK Nord (2024). Business Climate Survey in the Tourism Industry. Retrieved from

[6] The Local (2024). Tourism in Northern Germany: Overnight Stays Back to Pre-Corona Levels but Industry Remains Tense. Retrieved from

1. Despite the appealing lifestyle associated with travel, the high costs, uncertain conditions, and persistent labor shortages in the hospitality sector of Northern Germany make it challenging for businesses to maintain a competitive edge and sustain growth.
2. As the travel industry grapples with escalating labor costs, businesses in Northern Germany need to reconsider their strategies, whether it be raising prices or absorbing increased expenses, to ensure their position in the increasingly competitive market.

Read also: