Haute-Garonne: “Some hoteliers are being suffocated by the repayment of loans guaranteed by the state”, assures Hubert Faure

the essential
Hubert Faure has opened and runs a luxury hotel near Toulouse. Once the support has ended, the former commercial court judge expects a wave of bankruptcies in his sector of activity. Some will not be able to repay their PGE (loans guaranteed by the government).

An economist by training, then a director at Airbus and Novartis before becoming a consular judge, Hubert Faure now runs Domaine de Montjoie, a four-star establishment at the gates of Toulouse. Dominique Faure’s husband, the Minister of Local Government, examines his sector of activity weakened by the health crisis and the war in Ukraine.

Should we worry about local restaurateurs and hoteliers?
Everyone has taken out a PGE (loan guaranteed by the state), it is now a matter of repaying it. It will do damage. This financial windfall was intended to cover operating expenses until the health crisis ends. The problem is that some have used EMPs to fund their investments. In economics, this is a fundamental mistake. They are suffocated by the size of the installments that must be repaid. In the hotel and restaurant business, a business that works generates 6 to 8% profitability, no more. With a PGE equal to 25% of the turnover (maximum amount allowed), this means that the profit generated only covers the repayment of the loan. For companies that are already in trouble, it will be complicated.

Will we reach a historic number of bankruptcies in the coming months?
There will inevitably be more than in 2022. We will undoubtedly return to the number of liquidations before the crisis, but not more. I would rather talk about some kind of catch-up. Last year, the companies that disappeared had not even been able to pay the first installment of their EMP. In 2023 there should be more damage, but it will not be a tidal wave. The state, through Urssaf, has not yet prosecuted those who do not pay their taxes or those who are unable to pay their VAT. Urssaf has accepted postings that it would never have given before. This will still give some oxygen to companies that are in the red.

Is this likely to permanently weaken the sector?
Companies that survived only thanks to state aid will disappear, but in reality they are small structures that provide few jobs. The most resistant will reduce their investments. This will have little impact on the restoration, where you will only need to replace some furniture from time to time. On the other hand, it is much more problematic for the hotel industry. Major works must be carried out every 8 to 10 years. Delays will inevitably occur for those who have little leeway, this is very detrimental to maintaining the quality of services and attractiveness.

Are skyrocketing prices, partly attributed to the war in Ukraine, likely to be the death knell for the hotel and restaurant industry?
At my level I was lucky. I renegotiated my contract with EDF last August before gas and electricity prices peaked. My energy bill has still tripled. I had to implement an aggressive sobriety plan to reduce costs by about 15%. Some of my colleagues found themselves paying 700 to 800 euros for the price per megawatt hour, so a factor x 8! The state has introduced support measures that are not yet well known. Over 300 euros per megawatt hour, it supports the profit. Good news, the price of energy will drop significantly in the coming months. The reopening of nuclear power plants will contribute to this, and I hope that at European level we will finally succeed in “mismatching” the price of gas and electricity, because we are trapped because of it.
In Haute-Garonne, is there still development potential for your branch of activity?
In terms of tourism, we started from a long way off, but we have made spectacular progress in recent years. Our cuisine is known for its dishes, but our region is not yet recognized as a gastronomic country like, for example, Lyon, although we have very good chefs. We must also consider opening Toulouse. That we are 4:30 from the capital by train is heresy.

Leave a Comment