• Germany's Christmas markets are a huge draw for international tourists, with millions of visitors usually flocking to them for a festive experience each year.
• For the second year in a row, however, the pandemic has scuppered many plans for festive markets.
• Germany has seen Covid cases rise rapidly in recent months.

Germany's Christmas markets are a huge draw for international tourists, with the country's major cities hosting some form of "Christkindlmarkt" — a festive market selling Christmas gifts as well as food and drink — from late November to early January.

For the second year in a row, however, the Covid-19 pandemic has posed a challenge to city officials in Germany. Several states have again called off their large Christmas markets against a backdrop of surging Covid cases across the country.

Those that have decided to remain open are operating under more restrictions and have implemented strict entry rules for visitors, who must show their vaccination status or that they have recently recovered from Covid-19. These restrictions are known as "2G rules" as they refer to people who are vaccinated — "geimpft" in German — or recovered, "genesen."

While Christmas markets opened in North Rhine-Westphalia, several German states with particularly high infection rates, such as Bavaria and Saxony, have banned their Christmas markets altogether this year.

This is the case in Munich, the capital city of Bavaria, which hosts one of Germany's most famous Christmas markets in its main square, Marienplatz. On Nov. 16, Munich's Mayor Dieter Reiter announced that the Munich Christkindlmarkt — which would have taken place from Nov. 22 to Dec. 24 — had been canceled owing to "the tense coronavirus situation."

Reiter said the cancellation would be "bitter news" for Munich residents and stall owners, but "the extreme situation in our hospitals and exponentially rising infection rates leave me no other choice."

In explaining the reason for the cancellation, he said "anything else would cause an unjustifiable increase in the risk of infection and would send the wrong signal — especially to all the employees in our hospitals, who are working at their limits. It is now a matter of avoiding large gatherings of people as far as possible."

Some critics of the closure had argued that, since the market takes place outdoors, the risk of infection for visitors and shoppers there would be lower than in indoor shops. Reiter responded to the criticism, noting: "As some might point out, that the Christkindlmarkt is out in the fresh air. However, the Munich Christkindlmarkt on Marienplatz and the surrounding squares in particular cannot be fenced off, meaning the number of guests and compliance with the 2G rule would be impossible to control. And this in the pedestrian zone, which is already heavily frequented in the pre-Christmas period. The same applies to Winterzauber at the Viktualienmarkt." The Viktualienmarkt is an open-air food market that becomes a Christmas market at this time of year.

The closure of the Christmas market is a blow to stall-holders, but officials have been caught between a rock and a hard place. Bavaria has been a Covid hotspot in Germany and has recorded the second-highest number of Covid cases (after the more populous North-Rhine Westphalia) since the start of the pandemic, with around 1.25 million infections reported.

Lucrative markets

The closure of Christmas markets was not a decision made lightly, given how lucrative they are for small businesses and for the states they take place in.

The Department of Labor and Economic Development in Munich, which organizes the city's main Christkindlmarkt at Marienplatz, told CNBC that according to 2015 calculations and a survey of 1,000 visitors, the market is worth around 286 million euros ($323.4 million) every year to the city.

That calculation is based on the number of visitors each year — the state says 3.3 million people visit the market annually. And about 61 million euros is spent — on food and drink, among other things — each year. Visitors spend about 88 million euros each year on taxis and public transport in the city, while overnight visitors to the market spend 137 million euros on accommodation.

Munich's labor department said the figures relate only to the official Christmas market and not to the private ones in the city, of which there are more than 30. All Christmas markets in Bavaria have been canceled this year, including the private ones.

The department added that the state doesn't make any direct profit from the Christmas markets. Rather, it makes profits or losses indirectly, such as from the municipal share of the sales tax. Consequently, any fall in tourism, and the money visitors spend in hotels, restaurants, retailers and tours, hits the city's coffers.