Hotels and restaurants in Germany enter 'lockdown light'

German state and federal governments put the measures in place this week. Due to an increasing number of Covid-19 cases, the government wants to break the second wave with new contact restrictions and a reduction of leisure activities.

Closures will last until the end of November for hotels, restaurants, cinemas and theatres. Schools, day care facilities for children and shops remain open with hygiene rules in place.

"After the first lockdown and the ban on accommodation, the 'lockdown light' is now the second blow to the hospitality industry," said Jörn Fingerhuth, a hospitality and hotels expert at Pinsent Masons, the law firm behind Out-Law. "Especially hotels outside of the major cities, which steered quite well through the crisis so far, are hit hardest by the new lockdown. We hope that this will now give rise to more and above all more specific support for the hospitality sector."

Prior to the decision, the German Hotel and Restaurant Association (DEHOGA) said that in case of another lockdown the politicians in charge should be ready to compensate losses quickly and in full, as a second lockdown could mean the end for one third of the 245,000 hospitality businesses in Germany. Experts expected a wave of restructuring in the hotel sector even before the 'lockdown light' had been announced.

Guido Zöllick, president of DEHOGA, said that the hospitality sector was not a driver of the pandemic and referred to the information published by the Robert Koch-Instituts (RKI). He said hotels and restaurants "had no relevant occurrence of infection." According to tagesschau.de, a national news broadcast, leading virologists are also critical of the new measures. Studies and numbers provided by the RKI suggested that schools were driving the pandemic much more than the hospitality industry.

Before the lockdown had even been decided, Zöllick had already announced that it could lead to legal action: "The haphazard squabbling over accommodation bans, which later had been lifted by the courts, and the new rules for events in the federal states have already lead to massive losses in revenue for businesses." In general, hardly any other sector was hit as hard by the crisis as the hotel and gastronomy industry, Zöllick said. 

News magazine Focus Online said that 32 court cases had been filed by restaurants by 11am on the first day of lockdown.

The federal minister of economics, Peter Altmaier of the CDU party, announced that the affected businesses would receive 'extraordinary economic aid' of up to 75% of the total revenue of November 2019. Additionally, interim aid will be extended and the fast loan of the Kreditanstalt für Wiederaufbau opened for small businesses, he said.

The 'extraordinary economic aid' will be given as a lump sum, but the 75% will apply only to businesses with fewer than 50 employees, according to the federal government. This is due to EU regulations on state aid: percentages for bigger businesses have to be in line with requirements on the maximum limits of the relevant state aid rules, the government said.

The 'extraordinary economic aid' will also be adapted if the business receives other forms of state aid in November, for example short-time allowances or interim aid. Therefore operators of hotels and restaurants should be careful and keep their options for compensation claims open, Fingerhuth said. This could also include proceedings against the general ruling of a 'lockdown light' by the states. 

Dr. Thomas Wölfl, expert on real estate law at Pinsent Masons: "It can be useful to have a look at the general law on state liability, depending on the situation and development of the individual case."

While most legal professionals agree that the legal protection against epidemics in Germany is in line with the constitution and that - under the impression of immediate thread - most of the measures taken by the federal states in March were compliant with German law, this must not automatically hold true for the new lockdown, Dr. Wölfl said.

"As the case law of the administrative courts shows, a differentiated approach to judicial review is needed. Lawful intervention is not always accomplished at first attempt and not always consistently – as the recent lifting of the ban on accommodation has proven," Dr. Wölfl said. "It is important to readily identify possibilities for legal protection and to keep all options for compensation claims open."