Swiss Alps In Shock Over Franc's Rise
The Swiss Alps already looked pricey before the Swiss National Bank dropped its currency bombshell on Thursday. Now Swiss tourism fears being frozen out altogether.
Reuters | Last Updated: January 16, 2015 09:31 (IST)
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Geneva/Zurich: The Swiss Alps already looked pricey before the Swiss National Bank dropped its currency bombshell on Thursday. Now Swiss tourism fears being frozen out altogether.
As the central bank's shock decision to scrap a cap on the Swiss franc pushed the currency up nearly 30 per cent, some businesses were already reporting cancellations as visitors rushed to rearrange their plans for the busy winter season.
Swiss hoteliers vented their fury on social media and politicians urged the Swiss to support the country's tourism industry, while resorts across the French border cheered a "Godsend" as they looked forward to new Swiss clients.
"Swiss people! Take your holidays in Switzerland!," said Swiss tourist office chief Juerg Schmid on a twitter account.
In Gstaad, hotelier Thomas Frei tweeted: "Great, first rejections, wanting to know the euro rate and whether we can do a better rate. While I'm at it, does anyone want to buy my hotel?"
Tourism contributes 3 per cent of Swiss GDP and hotels and restaurants employ 5 per cent of the labour force.
The franc's abrupt surge, which sent the Swiss stock market down 9 per cent on Thursday, comes weeks before European school half-term breaks which mark the height of the ski season, and a week ahead of the World Economic Forum, the annual meeting of rich and powerful in the Swiss ski resort of Davos.
It is unlikely to dampen the spending of the many well-heeled attendees at Davos, although it will be noticeable.
Anyone wanting to pick up a copy of the Economist magazine during their stay in Davos, for example, will find they have to part with 10 Swiss francs, 70 per cent more than in Germany where it sells for 5.80 euros.
The main worry of Swiss tourism officials is that a country already struggling with a reputation for being expensive will find it harder to attract visitors further down the scale, delaying a recovery in the sector.
"The original forecasts predicting growth once again in the Swiss tourism industry over the next two years probably won't stand up any more," Christoph Juen, CEO of the Swiss hotel association hotelleriesuisse, told Reuters.
That is an "existential threat" to some hoteliers, he said.
Tourists from Europe accounted for 37 per cent of overnight stays in 2013, according to latest data from the Swiss statistics office, but the country will be out of reach for many after 'SNB Day'.
The price of a six-day ski pass in Verbier, a resort popular with Europeans, rose to 347 euros on Thursday, from 296 before the franc's surge. A cordon bleu schnitzel in Zurich's Zeughauskeller, a popular tourist hangout, costs an extra 4 euros at 27.9 euros and a beer is now 6.3 euros.
"I'm glad I'm just here for one day," said Amit Raj, 29 from Seville in Spain, admiring the watches in the shop Beyer on Bahnhofstrasse, Zurich's luxury shopping street.
"I'm definitely going to be a lot more cautious tonight and won't withdraw any more money," he said.
Even before the decision to allow the franc to surge, Europe's economic woes had seen the number of German travellers to Switzerland drop 19 per cent over five years to 1.9 million by 2013, according to the latest available German tourism association data.
In Alpine ski resorts, the economic chill has worsened in the past year as the number of Russian visitors fell sharply due to Moscow's standoff with the West over Ukraine and because of a weaker Russian rouble. Tourism from Japan has also been hit as the yen weakened.
An even bigger test for the mainly small businesses in the hotel and restaurant industry could come during the summer.
In the busiest summer months 2.5 million nights per month are booked by foreigners at Swiss hotels, 70 per cent more than during the peak ski season, says Eurostat.
Not everyone, though, is feeling sore about the SNB's decision.
In Geneva, long queues formed outside foreign exchange bureaux as foreign workers and others sought to cash in their francs.
"For me, it's good news: it is giving me the opportunity to have more euros for the same amount in Swiss francs," said Alexandre, a Frenchman who works in the watchmaking industry, adding he was nonetheless worried about what the future held.
Over in France, Clement Marie, co-manager of the Savoyarde Hotel in Val d'Isere, a ski resort less than three hours by car from Geneva, saw the franc's appreciation as a chance to attract Swiss customers.
"This could be great for business," he said. "Considering how little snow and how few customers we have had this January, this could be a Godsend."
Copyright: Thomson Reuters 2015
Story first published on: January 16, 2015 09:15 (IST)