The hospitality sector is showing signs of a revival after years of stagnation and contraction, with overall revenue seeing a substantial increase since the beginning of the year. This positive trend is highlighted by the Datev SME Index, published by FAZ. Seasonally adjusted nominal revenue for small-to-medium-sized gastronomy businesses in April was nearly four percent higher than recorded in December and 7.1% higher than the previous year, marking the highest revenue level since autumn 2023. Datev economist Timm Bönke suggests that this recovery is linked to the VAT rate reduction for meal services, which dropped from 19% to 7% in January. He notes that this tax cut is beneficial for small hospitality businesses because it helps improve their challenging profit margins.
However, the recent improvement in the hospitality industry alone is not sufficient to signal a complete end to the overall stagnation within the broader SME sector. The Datev SME Index shows only a slight stabilization in overall revenue compared to the previous year, at 1.2% higher. Robert Mayr, CEO of the Datev Cooperative, cautioned that the nominal revenue growth is not strong enough to indicate a broad recovery, stating that “cross-industry dynamism is still lacking for a real trend reversal”. Furthermore, while employment slightly contracted in April according to the index (0.2% lower than a year ago), payroll costs increased by 4.9% in April, rising faster than general price trends.
The Datev SME Index draws its data from extensive sources, including VAT preliminary declarations from over one million companies and payroll records for more than eight million employees. This data is anonymized and aggregated to create the index, which provides insight into the current economic development of German small and medium-sized enterprises.
