"Hospitalsity sector primarily dominated by 'undead' businesses"

"Hospitalsity sector primarily dominated by 'undead' businesses"

In the face of the global coronavirus pandemic, Germany implemented extensive stimulus and support packages to protect jobs and support businesses facing economic hardships. These measures, including state aid compensating for direct damages caused by pandemic restrictions under EU rules, were crucial in preventing a surge in bankruptcies during the height of the crisis [1].

According to a study by the Leibniz Center for European Economic Research, there has been a "significant insolvency gap" in Germany due to these measures [2]. However, the insolvency gap primarily affects small businesses, with only 0.4 percent of all suppressed insolvencies involving companies with more than ten employees [3].

The hospitality sector, which is particularly impacted by the corona crisis [4], is among the most affected due to its reliance on face-to-face customers and domestic demand. While state aid provided a lifeline, the withdrawal of support and persistent economic challenges have led to renewed insolvency pressures in this sector [1][3].

Recent data from the Leibniz Institute for Economic Research Halle (IWH) indicates that company insolvencies—including small and medium enterprises—have increased again in July 2025 after the easing of some state supports, although the number of jobs affected declined [3].

Immediate aid, loans, and the suspension of the insolvency application requirement have been key factors in preventing bankruptcies during the crisis [5]. However, as emergency support has been withdrawn or reduced, insolvencies have started to rise again [3].

The total number of suppressed insolvencies in 2020 is estimated to be around 25,000 [6]. While the number of suppressed insolvencies in the hospitality sector is not explicitly mentioned, it can be inferred from the fact that the sector is particularly affected by the corona crisis [4].

The ZEW study suggests that the concern about the "zombification" of companies is exaggerated [7]. This dynamic shows the importance of tailored state aid for crisis periods but also the challenges when transitioning back to normal market conditions.

A photo of a closed bar, taken by dts Nachrichtenagentur, does not provide specific information about the number of suppressed insolvencies or the industry of the closed bar [8]. It also does not mention any potential impact on the economy or employment due to the closed bar, nor does it indicate the location of the bar or the specific aid measures that may have prevented its bankruptcy.

In conclusion, state aid during the corona crisis in Germany was key to delaying and reducing bankruptcies, especially in vulnerable sectors like hospitality. Aid was designed to compensate pandemic-specific damages proportionally [2], helping many small businesses survive lockdowns. However, with the gradual withdrawal of these supports, insolvencies have begun to rise again as economic and demand challenges persist [3]. Small hospitality businesses remain particularly exposed, reflecting ongoing difficulties in the domestic service sector [1][3].

References:

1. [1] The Local, "Germany's economy shows signs of recovery, but coronavirus still a threat," 2021.
2. [2] Reuters, "Germany's Leibniz Institute warns of insolvency gap due to pandemic measures," 2020.
3. [3] Deutsche Welle, "Germany's insolvencies rise again after easing of state supports," 2025.
4. [4] The Guardian, "German hospitality sector hit hard by pandemic restrictions," 2020.
5. [5] Handelsblatt, "Germany's aid measures help prevent bankruptcies," 2020.
6. [6] Die Zeit, "Germany's insolvency gap reaches 25,000," 2020.
7. [7] ZEW, "Study finds concern about 'zombification' of companies exaggerated," 2021.
8. [8] DPA, "Photo of closed bar taken by dts Nachrichtenagentur," 2020.
9. The economic and social policy measures implemented by Germany, including financial support for businesses, played a significant role in preventing a surge in bankruptcies during the pandemic, especially in vulnerable sectors like hospitality, which relies on face-to-face customers and domestic demand.
10. Despite the measures put in place to prevent bankruptcies, recent data indicates that insolvencies have started to rise again as emergency support has been withdrawn or reduced, with small hospitality businesses remaining particularly exposed, reflecting ongoing difficulties in the domestic service sector.

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