Swiss Ski Resorts See Good Times After Franc Sent Them Downhill
Switzerland’s tourism industry has found its feet again, having once been a prime example of the strong franc’s impact on the economy.
A better exchange rate, along with good snowfall and resilient global demand for foreign travel means hotels and bars could be looking at their best period since the financial crisis. The heavy traffic out of Zurich on the first day of school break tells a story of domestic demand, while the operators of the famous Alpine cable cars also say business has been vibrant.
For evidence of better times and stronger demand, there’s also improved pricing power, with statistics office data showing that hotel rates have risen. According to Klaus Abberger at the KOF Swiss Economic Institute: “The hospitality sector has left the worst behind it.”
It’s a far cry from 2015, when vacationing in famously pricey Switzerland got even more expensive when the franc surged to parity against the euro. The haven currency has since weakened and is holding relatively stable, despite plenty of reasons for investor risk aversion, from trade disputes to Brexit and a U.S. shutdown.
“Bookings indicate that it’ll be a very good winter,” said Andreas Zuellig, head of the Hotel Schweizerhof in Lenzerheide, a destination popular with skiers in the east of the country. He’s thankful for the thick snowfall, the exchange rate and a “positive economic environment.”
Stronger numbers are clear across the tourism sector: revenue for cable car operators is more than 8 percent above its five-year average. One such example is Titlis Bergbahnen in central Switzerland, where business so far this winter has been a nudge above what was already a record 2018.
The past year was also a record for the Rigi Bahnen, featuring a cogwheel mountain railway by Lake Lucerne dating back to 1871, while Zermatt hotel bookings were at an all-time high.
At less than 3 percent of Swiss annual output, the tourism sector is smaller than banking, insurance, manufacturing and pharmaceuticals, but it punches above its weight in terms of public attention.
The turnaround is welcome given that the economy as a whole is expected to cool this year. Overnight hotel stays are forecast to increase 2.3 percent this winter, with summer 2019 demand seen rising 3 percent, according to the KOF Swiss Economic Institute.
©2019 Bloomberg L.P.