Austrian tourism struggles with rising costs despite strong guest numbers

Austrian tourism businesses are grappling with a profitability squeeze, even as guest numbers remain high. While the sector contributes significantly to the economy, companies are finding it increasingly difficult to maintain profit margins. "We have to row faster and faster to earn the same amount," says Klaus Hofmann, vice president of the Hotel Association and managing director of Vamed Vitality World.

The situation is exacerbated by a decrease in purchasing power in crucial markets such as Germany and Austria, which exhibit the lowest economic growth in Europe. Many tourists are saving money, leading to a "fear-saving" mentality. Despite these challenges, tourism operators are adapting by tapping into new markets, with record numbers of visitors expected from Poland, Romania, and the Czech Republic this year.

Ricardo-José Vybiral, CEO of the credit protection agency KSV1870, describes the industry as a "comeback kid" sector, highlighting its high degree of flexibility. However, only 35 percent of tourism businesses report a very good or good business situation, compared to 48 percent across all sectors. Furthermore, only 4 percent of tourism companies plan to increase investments, versus 10 percent overall.

Adding to the uncertainty are stalled collective bargaining negotiations in the hotel and gastronomy sectors. While the Chamber of Labour blames internal issues, the union insists on full compensation for inflation. Insolvency statistics indicate a rising trend in bankruptcies within the gastronomy sector.