The findings are part of a survey carried out across the country by the Associação de Hotelaria, Restauração e Similares de Portugal (AHRESP) between 22 September and 10 October.

According to a report by CNN Portugal, In the case of the restaurant sector, in view of the increase in costs, 83% of companies admitted that they had “to increase the selling price to their customers”, and “in most companies (88%), the prices charged rose to a maximum of 20%”. In tourist accommodation companies, more than half (69%) acknowledged that they had to increase “the selling price to their customers, with the majority (85%)” increasing prices to a maximum of 20%.

And in the face of rising prices, companies already say they are noticing a drop in demand from their customers. In the case of catering companies, 74% of entrepreneurs admit a retraction in consumption, and of these, more than half (54%) say they “have already recorded drops of up to 20%, with another 29% of respondents saying they have faced drops between 21% and 30%”.

On the side of accommodation companies, the drop was also felt, with 40% of companies saying that they observed “a retraction in consumption by customers, in September 2022. Of these, 49% saw a drop in billing of up to 20% and 22% a drop of 21% to 30%, in the same period.

Help needed for the industry

Faced with this scenario, the interviewed entrepreneurs demand more measures from the Government. In catering, the priorities identified were the temporary application of the reduced VAT rate on food and beverage services (89%), the application of the reduced VAT rate on electricity and gas (64%), and financial compensation to counteract the inflationary trend in food raw materials (42%).

Hotel companies, on the other hand, point to the application of the reduced VAT rate on electricity and gas (81%) as a priority measure. They also claim the provision of financial support for the optimization of consumption and the energy transition (44%), the allocation of financial support to families to mitigate the loss of purchasing power (43%) and the temporary application of the reduced VAT rate on food and beverage services (42%).

Potential layoffs

Without new measures, companies admit to raising prices again or laying off workers. In the restaurant sector, entrepreneurs “admit that the increase in sales prices will be one of the main measures to be implemented (68%), followed by the dismissal of workers (37%) and the reduction of opening hours (25%)”.

In the hotel industry, the consequences of not having new measures will also include price hikes and layoffs. “If the Government does not provide any additional measures, in the short term, considering this inflationary context and rising energy costs, most tourist accommodation entrepreneurs will increase sales prices (63%) and lay off workers, as a second concrete measure (15%)”.