Taxonomy of the hospitality sector in Spain
The hospitality sector was among those hardest hit by the consequences of the pandemic as it was at the epicentre of the social distancing measures used to contain the spread of COVID-19. Although official indicators point to the sector’s clear recovery in 2022, this has not been across the board. An analysis of CaixaBank’s internal data reveals the great differences that exist within the sector, with one part that has greatly improved its situation compared with 2019 and another, non-too negligible part that is still encountering difficulties.
The consequences of the pandemic have been palpable in the hospitality sector over the past two years, this being one of the sectors hardest hit by the social distancing measures imposed to control the spread of COVID-19. Nevertheless, the data from 2022 already suggest a paradigm shift is occurring for the sector, which seems to have embarked on a decidedly positive trend. The turnover indicator produced by Spain’s National Statistics Institute, for 2022 up to August, points to the food and beverage services sector (CNAE 56) being just 4.1% below its level in the same period in 2019, a considerable improvement on the 27% reduction posted in 2021. However, the hospitality sector is considerably diverse and we can therefore assume that its recovery has also been highly heterogeneous.
We have used CaixaBank’s internal data to analyse the sector and understand its heterogeneous nature, specifically the data provided by hospitality businesses that use CaixaBank POS terminals for payments, from which we can extract highly valuable information to evaluate the hospitality sector. A simple exploration of the data (see the table below) reveals appreciable differences between the three different types of establishment identified: bars, restaurants and gourmet restaurants.
From the data provided by the hospitality businesses that use CaixaBank POS terminals for payments, we can extract valuable information to evaluate the hospitality sector.
To assess how the recovery has been distributed across the hospitality sector between 2020 and 2022, we have looked at how the turnover of establishments using CaixaBank POS terminals between 2020 and 2022 has varied with respect to 2019.5 Specifically, we have calculated the median change and the 25th and 75th percentiles for all the changes in turnover observed in the sample.6
According to our findings, in 2022 the median change in turnover was positive in the three types of business analysed. However, some large increases in turnover stand out, namely in bars with a median change, so far in 2022, of 100% compared with the same period in 2019. Moreover, the 25th percentile stands with 25% growth, pointing to an unmitigated recovery.7
The rebound in restaurants and, above all, in gastronomic restaurants has been somewhat weaker. Despite this, as can be seen in the chart below, the 75th percentiles and medians of both branches of activity have posted increases in turnover compared with 2019. Nevertheless, it should be noted that, in the case of gastronomic restaurants, the 25th percentile still shows a drop in turnover compared with 2019 (–22%).
- 5. For each year, we have limited the sample to those businesses with active POS terminals in both periods. The sample therefore excludes businesses that were forced to close during the period analysed.
- 6. The 25th percentile (75th) reflects the change in turnover compared with 2019, which leaves 25% (75%) of the sample below this change.
- 7. It should be noted that card usage at hospitality establishments has grown considerably since the outbreak of the pandemic so that, on average, the change in POS turnover would be well above the actual change. In this respect, between January and August 2022 and according to the National Statistics Institute, hospitality turnover fell by 4% compared with the same period in 2019, while median POS turnover grew by 64%.
From the above findings we can conclude that the recovery has been mixed but generally positive. However, it can also be inferred that a number of businesses are still suffering from the consequences of the pandemic. To assess the extent to which there are still establishments showing signs of distress, we calculated the proportion of businesses reporting declines in turnover compared with 2019. The results, shown in the chart below, suggest that the number of establishments doing less business than in 2019 is still high, even among bars. Specifically, in 2022 18% of bars, 26% of restaurants and 37% of gastronomic restaurants were still experiencing drops in turnover compared with 2019. Although these figures are high, it is nevertheless clear that the situation in the hospitality sector has improved significantly if we compare the 2022 figures with those of previous years.
The recovery has been mixed but generally positive, although it can also be inferred from the data that a number of businesses are still suffering from the consequences of the pandemic.
Share of hospitality businesses with less turnover than in 2019
Faced with the question of what is causing these big differences between establishments, we divided up the sample of hospitality businesses according to the characteristics of their consumers in order to identify those establishments that depend on international tourism.
In addition to social distancing measures, the drop in tourism was one of the factors that most affected the hospitality sector during the toughest periods of the pandemic. The rebound in tourism demand in 2022 has therefore been great news. However, the fact that international tourist arrivals have not yet fully recovered could be one of the factors behind the uneven recovery in hospitality. Despite the strong recovery in tourism this year, international tourist arrivals to Spain so far in 2022 are still 17% below the level for the same period in 2019. Nevertheless, according to our analysis of businesses that use CaixaBank POS terminals, when we differentiate between establishments that depended on international tourism before the pandemic (i.e. in which foreign cards generated more than 35% of their turnover) and those that did not, no differences can be seen in 2022. In both cases turnover between January and August shows a median growth of around 65%, with the 25th and 75th percentiles also at similar levels for these two groups.
As might be expected, in 2020 we did observe big differences between establishments that depend on international tourism and those that don’t. In that year, establishments dependent on foreign consumption recorded median drops in turnover of 44% compared with 2019. On the other hand, businesses dependent on local consumption also felt the impact of the pandemic due to the tough social distancing measures imposed, but their reduction in turnover was appreciably smaller (a median drop of 12%). In 2021, the sector recovered at different speeds, with businesses not dependent on international tourism recovering faster, posting widespread increases in payments via their POS terminals. In contrast, a large number of tourism-dependent establishments still saw significant declines in their POS turnover in 2021 (the 25th percentile recorded a 29% drop).
In 2021 the sector recovered at different speeds, with businesses not dependent on international tourism recovering faster, posting widespread increases in payments via their POS terminals.
Based on our analysis, there is no doubt that the recovery in the hospitality sector has been far-reaching, although a part of the sector is still encountering some difficulties. On the other hand, it should be noted that dependence on tourism is no longer a concern within the sector, since in 2022 this hardly had any effect on the differing speeds of recovery across hospitality businesses. We can therefore state that dependence on tourism in the hospitality sector is once again a sign of strength and will contribute positively to the sector’s progress in 2023.
Dependence on tourism in the hospitality sector is once again a sign of strength and will contribute positively to the sector’s progress in 2023.