Sufficiency of financial buffers in hospitality sector coronavirus Netherlands 2020

As of March 2020, 60 percent of companies in the Dutch hospitality sector predicted that they did not have sufficient financial resources to survive the coronavirus epidemic for more than two to three months. Of this group, more than half indicated that they could not even survive for one month without (governmental) financial support. A mere ten percent of businesses expected that they would be able to endure the epidemic for six months to a year. Government regulations as response to the coronavirus diminished the occupancy rate in the hospitality sector in March 2020.

COVID-19 and its impact on businesses

The COVID-19 outbreak in 2020 did not only affect the health of the Dutch population, but also that of its businesses. The hospitality sector was among those hit the hardest by the coronavirus epidemic in 2020. As of March 2020, it was estimated that food services in the Netherlands could face revenue losses of 630 million euros per month. The deterioration of small and large businesses prompted the government to provide financial aid worth tens of billions of euros. Nonetheless, the epidemic caused the bankruptcy of many stores, restaurants, cafes and businesses in the (travel) servicing industry.

Government regulation and changing consumer behavior

Two underlying factors contributed to the decline of the hospitality sector: government regulations and a rising level of concern about the virus. Firstly, the government of the Netherlands forced the closure of many non-essential business, including those in the hospitality sector. In addition, new social distancing regulation such as the 1.5 meter-rule made it near-impossible for many businesses to remain operational. Secondly, potential customers stayed away from inner cities and shopping centers due to a fear of infection. As the lion’s share of hospitality businesses is located in inner cities and near shopping areas, most businesses were affected.