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As one of Europe’s most profitable industries, the hospitality sector’s plays a crucial role in propping up the economy. And HOTREC, the trade association representing hotels, restaurants and cafes in Europe ensures its member’s interests are protected. Business Management meets HOTREC CEO Maguerite Sequaris to find out the issues it will be campaigning on this year.

Can you describe HOTREC's role in terms of representing the interests of the European hospitality industry?
Maguerite Sequaris. HOTREC is the voice of the hotel, restaurant and cafés sector at European level. As an umbrella organisation, HOTREC brings together 39 national hospitality associations in 24 countries across Europe. Our mission is to promote the interests of hospitality businesses vis-à-vis the European institutions. The objective is to ensure a regulatory framework which enables hotels, restaurants, and cafés to develop, to grow and provide more jobs. We maintain close relations with various interest groups representing other economic activities related to the hospitality sector (tour operators, travel agents, transport, retail, etc.). This dialogue enables all participants to coordinate their views and build coalitions to best defend their common interests. HOTREC paves the way, but the full support of its membership (i.e. the national associations) is crucial to defend effectively the interests of the industry at EU level. In summary, the role of HOTREC is threefold: keeping the industry informed on EU legislative developments, coordinating its views and communicating its vision to EU decision-makers and key stakeholders. In other words, HOTREC operates as sort of ambassador of the European hospitality industry to the European Union.

How important in your view is the hospitality industry as a backbone of the EU economy?
MS. As one of the major players in the European tourism industry, the hospitality sector certainly plays a significant role in the EU economy, both in terms of employment and GDP. According to data quoted in a recent study by the European Commission, in 2006 the sector consisted of over 1.6 million enterprises, accounting for approximately nine million employees in the EU. In the same year, the turnover of the industry reached €440 billion. To put these figures in perspective, in 2006 the automotive sector (production, sales and servicing) employed 6.3 million people. This simple comparison gives us an idea of the importance of the hospitality industry, a highly labour intensive service sector, in the EU economy and society. Nevertheless, the extent of the contribution by the hospitality industry to the EU economy is not as visible as in other sectors because our industry is highly fragmented compared to others (e.g. utilities, energy, etc.). As we always stress in our discussions with EU policy makers, 92 percent of hospitality enterprises are micro-businesses (employing less than 10 people) and over 99 percent are small businesses (employing fewer than 50 people).

Your organisation is involved in monitoring and assessing the impact of EU legislation on the EU hospitality industry. What legislation would you saying is having the biggest impact on the industry?
MS. There are undoubtedly many EU regulations that impact the industry. Too many, I would say. HOTREC has just issued a publication outlining some 60 key EU measures that are in place or under discussion which directly or indirectly affect the activities of hospitality enterprises. And these 60 measures are just the top of the iceberg. The current proposal for a regulation on food information to consumers is a clear example of how the competitiveness of the European hospitality industry can be severely affected by a legislation that simply ignores its specificities. If adopted as it stands, this regulation would require restaurants to indicate for each item on their menus: the list of ingredients, the quantity of the food, the allergens as well as a nutrition declaration. In other words, the legislation would require restaurants to provide the same information as displayed on the labels of pre-packed food sold in shops. Let's be realistic. Complying with this regulation would not only impose heavy burdens and costs on the industry: it would simply be unworkable for traditional restaurants and cafés. Staying in business would only be possible by reducing and standardising the menu-offer; using ready-made and pre-labelled foods instead of fresh products. At the moment this proposal is surely our greatest concern.

Is there a need for greater standardisation of regulations governing the hospitality industry across the EU?
MS. This is not a question to which I can give you a straightforward answer. Depending on the topics and issues at stake, our answer can be yes or no. The services provided by hospitality businesses are as varied as the issues and challenges they are facing. Inevitably, the answer to this question depends on the context. In certain policy areas, HOTREC opposes legislative harmonisation at EU level, while in others we consider that it could bring benefits to the industry. For example, as regards the issues related to lifestyles (e.g. smoking, alcohol policy, nutrition, etc.), our answer is that one-size-fits-all solutions at EU level do not work and national rules are more appropriate, because they can better take into account local conditions and specificities. On the other hand, in policy areas such as VAT, payment services or the collective management of copyright, harmonised solutions at EU level can play a positive role. Of course, the reply to this question as well as the views of the industry on these issues may vary depending on the countries and the players concerned.

What changes do you think could be made to EU legislation to support the growth of the industry?
MS. I am convinced that the key words are better regulation and simplification. The EU institutions have to do more to fulfil their promise of cutting red tape and simplifying the regulatory environment which our businesses have to comply with. EU legislation must be simple, understandable, effective and enforceable. It has to provide a real level playing field without adding unnecessary burdens, in order to enable our enterprises to grow and compete on the global market place. In particular, impact assessments accompanying any new piece of EU legislation should better take into account the impact on the hospitality sector in terms of administrative costs. As CEO of HOTREC, I have been insisting fiercely on this point with the European Commission on several occasions. For example, in relation to the proposed requirement of food labelling in restaurants, HOTREC was particularly shocked to read that the Commission impact assessment acknowledged that no systematic research answered the question of how much such a provision would cost. In the midst of the current economic turmoil, a favourable regulatory environment is more than ever needed to provide oxygen to the European tourism industry. The top priority for policy makers at all levels should be to ensure a sustainable framework for business. Better impact assessments, balanced legislation, reduction of red tape, improved access to finance and lower taxation are the main ingredients of a recipe for speedy recovery.

What are the biggest challenges currently facing the EU hospitality industry?
MS. Besides the economic crisis, the biggest challenge is probably the increasing competition from tourist destinations in non-EU countries with lower labour costs and less administrative burdens. The tough competition from emerging destinations is testified by the fact that Europe is constantly losing market share in the global tourism market. On average, over the period 2004 - 2007 international tourist arrivals increased only by five percent in Europe while they increased by seven percent in the world. Of course, another big challenge for the hospitality industry, as well as for all other businesses, is environmental sustainability. This issue is and will continue to be very high on the agenda of EU policy makers over the next years.

How have your members been affected by the economic crisis of the past two years?
MS. The current financial and economic crisis directly affected our industry. The economic slowdown implied less business travellers: companies cut down on business meetings and seminars. As unemployment was rising, the purchasing power of European households was reducing, with a direct impact on private outings as well as private trips. In parallel, the financial situation has made it much more difficult for both consumers and industry to obtain loans. As a result, many investment projects in the hospitality sector were cancelled or postponed. At the last HOTREC General Assembly (Barcelona, 5-6 November 2009), the majority of our members reported negative business trends in their countries and considered that the recovery is not yet in sight. Just to give you a few but striking examples, in Ireland the situation was catastrophic as restaurants witnessed a decrease of 30 percent in their revenues over the last months, while bankruptcies rose from 10 percent to 15 percent. In Latvia and Lithuania, occupancy rates in hotels fell by up to 40 percent, depending on the areas. In the UK, up to 52 pubs were closed per week in 2009. In Spain, over the last 12 months, employment rates in hotels dropped by 7.4 percent.

In what parts of the EU do you see the hospitality industry particularly developing in the coming year?
MS. My impression is that there is still an untapped potential for growth in many of the East and Central European countries which joined the EU since 2004 as well as in the new candidate-countries. I think that there are good opportunities for the hospitality industry in those countries, although the global economic crisis has hit hard and slowed down business development projects.

What skills gaps currently exist in the EU hospitality industry and what additional training facilities are needed to help to fill these gaps?
MS. Here again, it is not easy to give a valid reply for the whole European hospitality industry. In general, there seems to be growing demand for multi-skilled labour in most parts of the sector. Over the last few years, the trend towards healthy lifestyle as well as the demand for new experiences has pushed hospitality businesses to provide an ever increasing range of new services (e.g. wellness, spas, beauty treatments, nutrition, sport activities, etc.) which in turn require new skills. At the same time, in several countries, there is a major shortage of more traditional professionals, such as experienced chefs. To face these challenges, education and training institutions must be strengthened. New approaches integrating a flexible combination of courses and disciplines, e.g. traditional hospitality skills with new skills related to health, ICT, environmental sustainability, etc. could be created to meet the increasingly complex skills needs within the industry. In parallel, a close cooperation between national and regional educational authorities and the industry is essential to ensure that education and training systems are in line with the needs of the market.

You have many years of experience in the EU hospitality industry. How would you say the industry has changed to meet customers' changing needs in the past decade?
MS. Customers are of utmost importance to the industry and they are certainly the driving forces for all changes. However, these changes are decided by the entrepreneurs and HOTREC does not intervene in operational matters.

About HOTREC

HOTREC is the umbrella organisation representing 30 national hospitality associations in 24 countries across Europe. According to HOTREC the European hospitality industry  is made up of around 1.6 million different organisations which employ nine million people. HOTREC's main role is to monitor EU policies that have an impact on the EU hospitality industry. For more information log onto www.hotrec.org.