Large hotels prepare strong staff adjustments in Madrid

The large hotel chains still do not see the light at the end of the tunnel. And one of the most affected destinations has been Madrid, where the perfect storm has occurred. The lack of national tourism due to restrictions on movement has been joined by the absence of business travelers due to the prohibition of social interaction and the disappearance of foreign tourism due to travel restrictions. A cocktail that has caused Madrid to close last year with an occupancy of 31.9% compared to 76.4% in 2019 and a profit per available room of 28 euros compared to 88 euros registered twelve months earlier, according to the latest Cushman & Wakefield barometer. Not even the extension of force majeure ERTES until May 31 has convinced the chains, which are preparing strong staff adjustments in the face of what they advance as a prolonged absence of income, after a year of inactivity. The vast majority of hotels assume that the recovery of the urban segment will be slower and that it will not arrive at least until 2023 and therefore have chosen to advance the adjustments.

The first one that was signified was NH, which presented an ERTE at the beginning of March that could affect 400 people in its central services, the vast majority based in Madrid. although he finally chose to withdraw it at the Reservation Center, with 94 employees, while in the rest of the business units the number of layoffs was reduced to 200. This was followed by the Palace hotel (owned by the Archer Hotel Capital fund), which has announced to the representatives of the 420 employees that it is going to start the negotiation of a collective dismissal, and the Intercontinental, belonging to the British IHG, the fourth largest hotel company in the world, which has also started the processing of an ERE.

Miguel Ángel Ortiz, head of hosting of the Federation of CC OO Services, stresses that companies not only seek to reduce staff, but also reduce wages and conditions of workers. And it exposes as an example the last sentence of the Social Court number 31 of Madrid, which gives the reason to the union organization in the lawsuit that it had with the Meliá Castilla hotel for what it considered a substantial change in workers’ conditions, when wanting to finish with an adhesion contract that included labor improvements.

Ortiz assures that there is a suspiciously concerted action between the companies, coinciding with the negotiation of a new provincial agreement, denounced by the employers in the midst of a pandemic. The unions present at the negotiating table consider the possibilities of renewing an agreement to be almost null and void. They denounce that the objective of the employer’s association could be to wait for the year of ultra-activity of the agreement to expire and to apply to new workers the inferior conditions established by the General Workers’ Statute.

On the other side, the Madrid Hotel Business Association (AEHM) is waiting to receive a reply about the rescue plan that has been requested from the central government to compensate for the collapse of income registered since March 2020. The central administration is claiming a 100% discount in the Tax on Economic Activities (IAE) and a deferral of payment in Companies, a reduction of tourist VAT from 10% to 7%, the extension of the ERTE until December 31, 2021 or have three additional years for the return of ICO credits. The other substantial part of the rescue falls on the Madrid City Council, from which it requests a 100% discount in the Real Estate Tax (IBI), in the Economic Activities Tax (IAE) and in the Vehicle Pass Rate.

The return to pre-crisis levels will arrive between 2023 and 2024

Survey. A study carried out by Cushman & Wakefield in December showed that 46% of the hoteliers in sun and beach locations consulted expected to recover their pre-COVID income already in 2022. 35% delayed it to 2023 and 17% to 2024.

Urban. The pessimism was much more evident among the owners of urban hotels in Madrid. Only 23% expected to recover pre-crisis income in 2022, half that in the case of sun and beach destinations. The percentage of responses rose to 48% by 2023 (13 points more than in vacations) and to 27% by 2024 (10 points more than those of sun and beach). Both statistics agreed, however, that 2% predicted the return to pre-crisis income in 2025.

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