Suffering under the surge of the strong franc, Swiss holiday resorts have been doing much soul-searching. Even the chic winter destination Verbier – one of the world’s most expensive - is competing on price to hold onto visitors.
Outside the Medran bubble lift in the centre of Verbier dozens of children and parents wait patiently for their ski instructors on a cold February morning. Beneath the grey cloud and falling snow, the air is thick with different languages and laughter.
This is typically one of the busiest periods of the winter season for the sprawling upmarket resort in western Switzerland, half of whose visitors generally come from Britain, France and the Benelux countries. Yet the hustle and bustle in the square and nearby cafés belies major economic concerns held by Verbier officials and entrepreneurs.
“The snow came late this season but we were lucky to have a good week in December. Since January every weekend has been pretty bad weather-wise and then we had the Swiss franc disaster,” said François Roux, owner of Evasion Sports shop.
After three years with the safety of a minimum exchange rate of 1.20 francs to the euro, the peg was suddenly taken away by the Swiss National Bank on January 15. Overnight already expensive Swiss holiday destinations became 15% dearer for guests from European countries.
The crisis is so acute that last month the tourist industry requested an additional CHF270 million ($278 million) for new marketing campaigns, and urged the government to invest more in innovation and to reduce the high costs of imported goods.
After the initial shock and much soul-searching Verbier – which has a 50-50 mix of foreign and Swiss visitors – is following a handful of other Swiss ski resorts and has lowered prices. For the first time it’s offering a coordinated series of discounts across different businesses.
Splashed in big red letters across the front page of the tourist office website a banner reads: “15% off your next stay in Verbier”.
Téléverbier, the ski-lift company, is also offering a 15% discount on six-day lift passes for tour operators in the eurozone selling special holiday packages and 5% on lift passes booked in advance online. Après-ski should also be easier on the pocket in some places.
In 2008 when the euro and pound were at their strongest against the Swiss franc Verbier recorded one million overnight stays. After a rocky few years this figure finally stabilised at 830,000 last year. Officials hoping for an increase in 2015 may be disappointed.
Vincent Riba, head of communication at Verbier tourist office, said the new discount strategy was an important exercise so as not to lose foreign and domestic customers.
“We have to send out some positive messages as so far they've only been negative ones from Switzerland,” he declared. “We wanted to show that even if it's an upmarket resort we have adapted our prices and offer added value.”
Nationwide, the Swiss Tourism Federation has reported lower bookings and cancellations since January. Christophe Sempéré, president of the Association of Verbier Rental Managers (AGIV), said it was too early to assess the impact for the resort, as almost 80% of winter holiday reservations had been made at the time of the BNS decision.
“Our concern is more about March and April. We have had very few cancellations but demand is very weak – we’ve had few new contracts since January,” he declared.
Verbier has a reputation for being expensive and attracts the rich and famous, including celebrities like singer James Blunt, but there are also many middle-class visitors from Switzerland and Europe.
“Verbier has always been a mix of wealthy people and those looking for fun. That’s its strength. It’s not Courchevel or Gstaad,” said Sempéré.
Locals say the impact of the strong franc on Verbier’s restaurants, cafés and bars varies widely. At first glance it doesn’t appear too serious. Philippe Bernard, owner of the Le Carrefour restaurant next to the slopes, said he hadn’t seen much of a difference and people didn’t really talk about money ‘but the general trend is a slowdown’.
While 80% of Verbier’s turnover, like in most Swiss resorts, comes in winter, Bernard said he was more worried about this summer when clients are ‘more spendthrift’.
Throughout the village “sales” signs are visible in many shop windows. Outside Evasion Sports a rack of skis proposes heavy discounts on the latest top-of-the range skis. As the ‘last link in the service chain’, restaurants and in particular sports shops are suffering more than others, said Roux, who is also president of the Society of Merchants and Artisans of Verbier (SCAV).
“There is a big difference with the eurozone market,” he said. “We had certain articles which were cheaper in Chamonix [in France] than with our dealers in Switzerland. We were over 50% more expensive than the eurozone. We have big stocks so remaining competitive is difficult. We don’t have any choice but to adapt.”
Verbier’s new discount strategy has not passed without criticism, however. Roux said some people felt it reflected a sense of panic, selling off the resort cut-price. Valais Tourism is encouraging local resorts to maintain their focus on quality and keep targeting Swiss tourists, who represent 52% of visitors to the region.
Riba admitted that offering discounts in a place like Verbier, which wanted to maintain its exclusive image, was a tricky communication exercise. “We have this upmarket label - maybe not like St Moritz but a bit like Zermatt - so people instantly think 'Verbier - it's too expensive',” he added.
Since January 15 the exchange rates may have stabilized slightly against the euro and pound but they have still hit many visitors in the pockets.
“We have eaten a lot more pasta than during previous holidays,” said one middle-aged French woman.
“Verbier compares with French resorts like Val d’Isère and Les Trois Vallées but before it was about 20% more expensive; now it’s 40%,” said another French woman waiting outside the Le Carrefour restaurant.
Several holidaymakers said the price differences may certainly influence their future choices.
“We booked before the price change so we didn’t lose out when we booked our hotel and flights. But it’s dinner and drinks which hit us most. If I hadn’t already booked I would’ve gone somewhere else in the eurozone,” said a young British skier.
Thijs Elias, a middle-aged Dutchman living in London, echoed this: “When you consider whether to go on holiday in Switzerland you think twice, but I met my wife here so it’s special. But if in the future I go skiing with the whole family I’ll consider Austria if we are staying a whole week in a hotel.”
That being said, not everyone is feeling the pinch.
“Money is the last thing for my guests. They don’t care. They are the kind of people who spend CHF9,000 a day on caviar. It doesn’t bother them,” said Max Mepham, who works as a chef in a luxury chalet catering for wealthy Russian, Arab, French, Italian and Swiss visitors.