Austrian hotel industry rebounds: 2024 brings new openings and legal changes; challenges for short-term rentals

After a prolonged battle with the COVID-19 pandemic, the Austrian hotel industry is celebrating a strong return to its pre-pandemic glory. Hotels across the country are experiencing a surge in bookings and occupancy rates.

 

Winter season success

The recently concluded 2023/24 winter season marked a significant milestone, surpassing 50.55 million overnight stays – a feat not achieved since the pandemic began. Vienna saw a remarkable 14.4% increase in overnight stays in February 2024 compared to the same month in 2023. Nationally, the overall increase was 5.7%.

The volume of overnight stays underscores Austria’s enduring appeal as a sought-after travel destination, particularly among winter sports enthusiasts and nature lovers. But the industry is grappling with several challenges.

 

Challenges ahead

Despite this positive trend, the industry faces several challenges. Escalating costs, driven by high energy prices and inflation, are putting financial strain on hotels. Many businesses are compelled to raise their prices, potentially affecting demand. Austria’s inflation rate, projected to be between 3.5% and 3.8%, places the country among the eurozone’s negative leaders. Labor, energy, and financing costs have a huge impact on tourism businesses, necessitating corresponding price adjustments.

 

Embracing digitalization

The Austrian hotel industry is embracing digitalization as a strategic imperative. In an era where technology shapes guest experiences, hotels are increasingly investing in innovative solutions to enhance service quality and streamline operations. Hotels recognize that seamless guest experiences are paramount. To achieve this, they’re turning to guest management systems and automated reservation processes. These digital tools optimize check-in/check-out procedures, personalize services, and facilitate communication between guests and staff.

The Austrian Chamber of Commerce is at the forefront of driving digital transformation. Their comprehensive 22-point program outlines key initiatives to propel the industry forward. Specific points in the program include expanding digital infrastructure, particularly in rural areas, and developing a peer-to-peer learning platform for hotel operators.

 

Sustainability takes center stage

Environmental consciousness is gaining prominence. Hotels are increasingly adopting eco-friendly practices, such as reducing plastic waste and embracing renewable energy sources. These initiatives resonate positively with both guests and the government. Recent travel analysis by the Forschungsgemeinschaft Urlaub und Reisen (FUR) revealed that 47% of Germany’s population – crucial for Austrian tourism – prioritize ecologically sustainable vacations, while 64% emphasize social responsibility. These figures have risen steadily since 2019.

 

Skills shortage: A looming crisis

Finding and retaining qualified staff remains a top priority for hotels. The scarcity of skilled workers poses significant hurdles. To address this, the industry is actively promoting training and further education. Additionally, taking measures to enhance the industry’s appeal as an employer are essential. Attracting talent and nurturing existing employees are crucial steps towards sustainable growth.

 

Outlook and opportunities

Despite the hurdles, the Austrian hotel industry maintains an optimistic outlook. The rising demand for high-quality, authentic travel experiences positions Austria favorably. Its rich culture and breathtaking natural landscapes are strong selling points. To secure long-term success, hotels must embrace innovative strategies, adapt to market shifts, and prioritize sustainability. In 2024, the industry faces both challenges and exciting opportunities. By combining creativity and responsible practices, hotels can solidify their position and remain an attractive destination for travelers.

 

Challenges for short-team rentals

Short-term rentals

As hotels celebrate their resurgence, alternative accommodation providers confront a different reality. Specifically, short-term rental hosts find themselves at odds with Vienna’s legal framework. While Vienna has taken a proactive step by implementing new regulations to curb such rentals, other Austrian cities, including Salzburg and Tyrol, have yet to follow suit.

The numbers speak for themselves

According to the Austrian Chamber of Commerce, Vienna alone boasts approximately 14,697 short-term rental offers as of March 2024. A significant 62.6% of these listings fall under the multi-listing category. The “Top Host” alone manages 320 accommodations in Vienna. The Chamber of Commerce has been increasingly vocal about regulating commercial short-term rentals, and their pleas have not gone unheard.

As a result, the Vienna Building Code has been updated with an amendment that came into force on July 1, 2024, and introduced significant restrictions on the short-term rental of apartments offered via online platforms.¹

90-Day Limit

Apartments may only be used for short-term tourist rentals for a maximum of 90 days per calendar year. But this restriction applies only if the landlord retains their primary residence in the apartment. The state legislature proposes that apartments can only be rented out for short periods when the actual occupant isn’t using them. For instance, this could apply to a student going abroad for three months. In any case, rental's shouldn't be operated commercially.

Special permits

Beyond the 90-day threshold, an exemption permit becomes necessary. This permit is valid for a maximum of five years. To qualify, certain conditions must be met:

• The apartment must not be in a residential zone or specific grassland areas.
• No housing subsidies can be used during the dwelling’s construction.
• At least 50% of the apartments in the building must serve residential purposes.
• Unanimous agreement among co-owners or apartment owners is required.

Enforcement and sanctions

Violating these regulations can result in fines of up to EUR50,000. Authorities are empowered to conduct inspections.

The impetus for change

The question remains: was Vienna’s regulation merely a catalyst? Will other Austrian cities adopt similar measures? While it’s too early to tell definitively, the impact of Vienna’s decision may reverberate across the country.

In contrast to Vienna, Tyrol has not yet taken steps to restrict short-term rentals. As winter approaches, travelers seeking accommodation for their ski trips can still rely on popular online platforms without hindrance.

EU-level validation

At EU level, the vote on the “EU short-term rental regulation” (Regulation on data collection and sharing relating to short-term accommodation rental services) was decisive: 493 votes in favor, 14 against, and 33 abstentions. The Austrian Chamber of Commerce views this as a victory, highlighting the industry’s efforts to address shortcomings and unfair competitive conditions. The regulation establishes a data exchange framework between platforms and public authorities. Additionally, long-demanded host registration requirements will be formalized.

Preserving living space

The recent amendment to the Vienna Building Act restricts commercial short-term rentals to hotels for tourist purposes. The legislation aims to preserve and secure living space. But it remains to be seen how effective it will be. As the industry adapts, it faces both challenges and opportunities, navigating a complex legal landscape.

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¹ LGBl. Nr. 70/2021