Swiss Tourism Amid Dueling Crises: A Look Behind The Numbers
During the Covid crisis, many hospitality players have suffered, some have weathered the storm and a few have even thrived. As the pandemic finally recedes and another threat comes to the fore, we look back at how hospitality has been reshaped by recent events in Switzerland. Two specialists from EHL Hospitality Business School look at the statistics before and during the Covid, and draw surprising conclusions. Dr. Stefano Borzillo, associate professor of organizational behavior, specializes in topics relating to individual and collective performance and for a more financial perspective, Dr. Augusto Hasman, also associate professor at EHL, who teaches finance and management risks.
Q. In which Swiss cantons has tourism suffered the most and the least?
As business travel falls off a cliff, total visitor numbers to Zurich have fallen by 68%, while Appenzell Innerrhoden, a rural canton in central Switzerland, has suffered only a loss of 4.9% and was therefore the winner in terms of number of visitors. In terms of Swiss visitors, the loser was again Zurich with a loss of 55% of its Swiss tourists in 2020. On the other hand, four cantons actually increased the number of Swiss visitors in 2020 compared to 2019, including Appenzell Rhodes- Interior (+5.28%), Graubünden (+2.96%), Neuchâtel (+7.87%) and Uri (+12.84%). All the others suffered a drop in the number of Swiss visitors.
The winners are less urban, sparsely populated and have great tours. Travelers have generally avoided cities during the pandemic. This also explains why the losers are more oriented towards an international business clientele. In 2019, 11 cantons welcomed more than 20% of their foreign visitors from the USA, China or India, while in six cases it was more than 30% (Lucerne with 47%, Obwalden with 63%, Zug 34%, Schwyz 39%, Nidwalden 39%, Bern 36%). These figures explain why these six cantons suffered in 2020 a drop in their foreign visitors of almost 80%. Nevertheless, the negative impact on the total number of overnight stays for these cantons is close to 50% (except in Bern with 39% and in Schwyz with only 29%). This can be partly explained by the fact that tourists who actually visited Switzerland ended up staying there longer (in the particular case of Bern, the total number of nights spent by Swiss visitors even increased while the number of Swiss visitors has decreased).
Q. During the Covid lockdown, the Swiss Tourist Board encouraged regional travel. Did this actually happen?
It is indeed a mirage effect, a misconception that many citizens have had, to think that the Swiss were traveling more within the 26 cantons during the Covid. Apart from the four winning cantons mentioned above, all the other cantons received fewer Swiss tourists during this period. The Swiss may have taken more “day trips” to Switzerland during Covid, but this does not show up in the data.
It is particularly important to note that many hotels in Switzerland (regardless of canton) have decided to remain open during this period to cover their fixed costs. In other words, they lost – by staying open – less money despite low occupancy. But it’s not just about staying open. In an attempt to rebalance tourism, many hotels have had to offer attractive prices and show creativity to make their offer more interesting. For example, some hotels (whether in rural or urban areas) have offered an “alternative use” for some of their rooms by adding, for example, furniture, a refrigerator, a desk or a microwave to their rooms more large and selling them as “apart-hotels”. This allowed rooms to be occupied for longer periods of time, preventing them from sitting empty.
Q. Has Swiss hospitality suffered as much as expected during Covid?
To analyze the impact on the sector, it is best to look at the sector’s gross value added. We can see that it has fallen to 2006 levels. Value added is the economic contribution of an industry.
In terms of employment, the contribution of the hotel industry has fallen to 2014 levels. In 2020, the hotel industry employed fewer people in Switzerland than almost ten years ago.
Finally, if we dig deeper into the reasons for such an impact, we find that the food and beverage subsector has had the most layoffs, while in terms of value added, the worst off are travel agencies. , tour operators and tourist guide services.
It can be seen that 2020 was the worst year, in terms of performance, of the last five years for all sub-sectors.
It can be seen that in the case of employment, the figures are the lowest of the last five years for all the sub-categories (with the exception of passenger transport, cultural and leisure services, which managed to maintain levels comparable to those of 2019).
Nevertheless, the most plausible explanation – in addition to Covid – for such a drop was the fact that Swiss hotels are so much more expensive than in neighboring countries, as seen below.
Q. Will these jobs come back?
It is difficult to anticipate when the sector will fully recover and some signals show that it will be slower than for other sectors of the economy (some economists predict that it will be difficult to fully recover before 2026). Another open question is how to bring back not only tourists but also employees who found jobs in other sectors during the crisis.
Q. High turnover, undesirable hours, unhappy customers: how has Covid reshaped hospitality employment?
The total confinement and temporary layoff of hotel workers has allowed them to experience – for a few months – a much less strenuous pace of life and to spend more quality time with family. Once the confinement ended, some of these workers made the decision to either apply to hotels offering more pleasant working conditions or to work in other less strenuous hotel sub-sectors such as coworking centres, private clinics or residences for the elderly. This is why many hotels in Switzerland find it difficult to recruit workers such as catering professionals, chefs, waiters and receptionists. It is also becoming difficult for hotels in Switzerland to recruit seasonal workers. Interestingly, some hospitality workers have completely rearranged their work schedule, working part-time in a hotel and the rest of the time in other businesses (not necessarily in the hospitality industry), or even starting their own business.
Q. Are hotels and tourism an important part of the Swiss economy? What has been the impact of Covid?
The contribution of tourism to the Swiss economy in 2020 was the weakest of the last twenty years. Employment has fallen to 2006 levels. In short, tourism has lost a decade or two.
Compared to its EU neighbours, the Swiss has continued to travel during the pandemic. Overnight stays fell by only 8.6% among Swiss citizens, compared to an EU average of around 41%. Hotel bookings in the EU fell by 73% in 2020 compared to 2019, as shown in the table below. That’s almost 3 out of 4 reservations cancelled!
Table 7: Evolution of overnight stays in hotels and similar establishments by country, 2019-2020
Q. Will Russian sanctions affect Swiss tourism?
It is still early to speculate on the medium-term consequences for Swiss tourism of the sanctions imposed on Russia. In addition, Russians represent a very small share (1.3% in 2019) of foreign tourism in Switzerland. Nevertheless, if we focus on the city level, they accounted for 4% of tourists and 6% in terms of overnight stays among foreigners in Zug (with similar figures for Bad Zurzach and Loèche-les-Bains in 2019), while 10% of foreigners visiting the baths in Bad Ragaz were Russian (17% in terms of overnight stays) before the pandemic.
Moreover, Russian tourists represent a “niche” market, since they are generally wealthy people (often business leaders) who stay in 4 or 5 star hotels, located in urban centers and the most exclusive ski resorts in Switzerland. These are generally people whose commercial activities are carried out partly (or wholly) with European countries. During their leisure holidays (or business trips) in Switzerland, these tourists with high purchasing power generally have so-called “luxury” consumption habits. Russian travelers consume expensive goods and services and generate substantial revenue for the luxury establishments that host them.
Now that trade between Russia and European countries has dried up, it can be assumed that Russian business owners will see a drastic drop in their cash flow and business income, which in turn will affect their purchasing power. . Moreover, the ruble has lost much of its value. Do these Russian entrepreneurs hold bank accounts in Switzerland? Can they withdraw their money? If they can, financing a vacation in Switzerland may not be their top priority. Finally, flights between Russia and many countries have been suspended. For all these reasons, it is easy to assume that Switzerland will lose a large part of its Russian tourists and that some tourist destinations could be really affected by the current crisis.
Sources: All data taken from the Federal Statistical Office of Switzerland.
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