The damage that FDP politician Christian Lindner's new plans would cause to the hotel and catering industry would be infinitely greater than what Dorint Hotels shareholder and supervisory board member Dirk Iserlohe has been trying to sue for in court for years: in accordance with the principle of equal treatment enshrined in the Basic Law, he wants to ensure that the large medium-sized hotel groups receive just as much state aid from the corona crisis as individual private hotels.
But first things first: Even if the general political view is that the hospitality industry received very generous coronavirus aid, this did not and does not apply to the same extent to the hotel industry, which had to struggle with massive losses. Many companies suffered massive losses, particularly as a result of accommodation bans. The Dorint Hotel Group was the first to publicise the fact that state aid was not reaching them adequately - a situation that drove Iserlohe all the way to the Federal Court of Justice (BGH) and will be passed on to the Federal Constitutional Court.
The initial situation: Since March 2020, when the pandemic-related closures began, Iserlohe has argued that the large medium-sized companies in the hospitality industry, including Dorint, have been treated unequally. The bridging aid and the economic stabilisation fund set up by the government seemed comprehensive on paper but did not reach all companies equally. While smaller and medium-sized (individual) companies were almost fully compensated, larger, systemically important companies such as Dorint felt and still feel disadvantaged - on the one hand, they were given an upper claim limit (€54.5 million), meaning that the groups only received 30-45 percent of the compensation at best.
In this context, both the Federal Ministry of Finance and the Ministry of Economics are of the opinion that a hotel could simply be closed down and then reopened just as easily a few weeks or months later. Unfortunately, imagining a Sleeping Beauty sleep like in a fairy tale does not correspond to reality - the politicians have once again shown how little insight they have into this industry.
The path through the courts: After both the Regional Court and the Higher Regional Court of Bremen dismissed the Dorint Group's claims, the case ended up before the Federal Court of Justice. On 11 April 2024, the Third Civil Senate of the BGH ruled against the hotel group. The judges argued that the state measures to combat the pandemic were lawful and that the structure of the aid did not violate the articles of the Basic Law on equal treatment and the protection of property.
Criticism of the Federal Court of Justice: Dirk Iserlohe, a trenchant and contentious judge, sharply criticised the Federal Court of Justice ruling. He criticised the fact that the court had not sufficiently taken into account the special burdens and hardship of larger companies. The BGH had withdrawn with abstract arguments and without any real examination of the plight of the plaintiff companies. In its eyes, the court did not take sufficient account of Article 3 of the German Basic Law, which enshrines equality before the law.
Hoping for the Federal Constitutional Court: The final legal step now takes the Dorint Group to the Federal Constitutional Court. In an earlier decision, the court emphasised the importance of treating all companies equally, regardless of their size. Iserlohe is therefore hopeful that the highest German court could demand a fairer distribution of state aid.
Economic and political dimensions: The case highlights the larger economic and political issues raised by the pandemic. How can state aid be distributed fairly? What role does the size of a company play in this? And how are such decisions made in times of exceptional economic uncertainty?
The answers to these questions could have far-reaching consequences for the German economic landscape after the pandemic. Iserlohe and the Dorint Group symbolise many other companies in similar situations. The outcome of their legal dispute will therefore be important not only for them, but for the entire hospitality industry. In the meantime, Dirk Iserlohe remains ready to fight: "It will be settled at Schlossplatz, and at no court before." This sentence emphasises his determination and belief in justice, even if the road to it is a long one.
The big end threatens from another side - the FDP
However, this fight is nothing compared to what is evidently to be found in the list of subsidy cancellations from the FDP-led Federal Ministry of Finance that has just become public. According to Handelsblatt, the FDP of all parties, which for years seemed to be a reliable partner to the hospitality industry, circulated an explosive document from the Ministry of Finance. This lists no fewer than 21 subsidies that could potentially be cancelled or reduced to close the budget deficit of an estimated 25 billion euros.
This list contains a particular irritant for the hotel industry: the consideration of raising the reduced tax rate for hotel overnight stays from 7% to the regular rate of 19% and the cancellation of the tax exemption for night, Sunday and public holiday surcharges. This would be a double punishment for the industry. Incidentally, these proposals came at a very unfavourable - or deliberately last-minute? - at the worst possible time, namely shortly before yesterday's deadline for all ministries to submit their savings proposals.
These special tax concessions have been a thorn in the side of many critics since their introduction in 2009, but due to the high-cost pressure in the accommodation industry, including the shortage of skilled labor, they are important for the continued existence and survival of this industry, which is so important for Germany. The reduced rates were originally intended to strengthen the industry, but they could now be sacrificed to the government's current wave of austerity measures. A return to the regular VAT rate alone could flush an additional 720 million euros a year into the state coffers.
The reaction of the hotel industry to this news was predictably fierce. Many fear that higher costs will directly affect employees and could massively hinder the industry's recovery after the pandemic. The Managing Director of the German Hotel and Restaurant Association (Dehoga), Ingrid Hartges, signaled immediate concern and tried to get clarification from Berlin. They emphasised that this was only a discussion paper and that no final decisions had yet been made.
Be that as it may, it remains to be seen whether Dehoga will really get its act together here, as the association, which predominantly represents medium-sized and many smaller businesses, has a traditional penchant for the catering industry. And it was only recently, at the end of 2023, that the association got a bloody nose for this industry segment with its campaign to retain the 7 percent reduction in VAT.
