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Franc blamed for demise of ski resort

Ernergalen's four ski lifts will be permanently idle Keystone

The strong Swiss franc has been blamed for the shelving of plans to develop the Ernergalen ski resort in canton Valais.

The decision sounds the death knell for the small resort located near the Italian border. Its four lifts, already at a standstill last winter, are set to be closed for good in the summer.

It is a disappointing end for an ambitious development plan which began when a British investor responded to a newspaper article which offered the sale of Ernergalen – lifts, pistes and snow machines – for the bargain price of one franc to any developer game enough to take on the challenge.

British company director Bruno Prior told plans for upgrading ski lift infrastructure and building a new hotel were well advanced, and the necessary permits obtained, when his company decided not to continue with the project.

He said his company, Summerleaze, had invested more than SFr500,000 ($590,000) on preliminary planning, but financial circumstances had forced it to put the development on hold indefinitely.

“It’s not absolutely certain that it won’t go ahead but for now it’s hard to imagine circumstances in the next few years (in which it would),” said Prior.

“One thing is the exchange rate, when we started it was about 2.5 francs to the pound, now it’s about 1.4 which means the funds we’d made available to do it were worth less.”

Money matters

News of Ernergalen’s fate comes as Swiss tourism authorities attempt to offset the effects of the strong franc on the tourism sector, having earlier this year announced extra spending on promotional efforts for 2011-12.

According to the Federal Statistics Office, the number of hotel stays registered over the winter season – November 2010 to April 2011 – declined by 114,000 visitors, or about one per cent.

Numbers of European winter visitors to Switzerland declined by 5.1 per cent, some 373,000 people, over the winter of 2010-11 compared with the previous winter season.

“The relatively low exchange rate of the single European currency against the Swiss franc may be a factor in explaining the decline in overnight stays of some countries of the continent,” the Statistics Office said in a statement earlier this month.

Big dreams

Ernergalen comprises some 20 kilometres of piste and partly belongs to the small commune of Ernen. For years it had been struggling to compete with attractions offered by its larger neighbours, with existing hotel beds often empty during the week in winter.

Christine Clausen, mayor of Ernen, told although the decision not to go ahead with the development of Ernergalen added to difficulties faced by the community of around 500, Prior had tried his best to make it work.

“It was a good project,” said Clausen. “He had invested a lot in the planning of the project so it’s a shame he was unable to continue.”

Prior’s plans for Ernergalen included a new 800-bed hotel, and linking Ernergalen to other resorts in the area such as Bellwald, Aletsch and Belalp with options for visitors to purchase ski passes valid across all resorts. 

“Put them together and you’ve got one of the largest ski resorts in Switzerland,” said Prior. “We spent quite a bit of extra money looking at options to try and connect them. It wasn’t obvious that you could make it function like one integrated resort.”

Prior said although locals were not resistant to the idea of linking resorts, there was no “impetus” for the idea to go ahead. He said the biggest problem was finding a way to physically link the resorts, and he had investigated “slinging a cable car across the lake at the end of the Aletsch glacier” to link Aletsch and Belalp resorts.

“To survive now, you need more than before,” said Prior, adding that the economic climate was pushing tourists towards the larger resorts.

“You need to get people in for a week and you can’t get people in for a week, fill the beds, buy lift passes, if you’ve got 20 or 30 kilometres piste.”

Moving on

Prior and Clausen insist that the failure of the project does not necessarily spell the end for Ernergalen, and both are open to new expressions of interest.

Clausen said the resort is particularly popular with tourists in the summer months.

“There was the project for a large hotel. In summer we have a lot of people coming and there are not enough beds, so we still want to continue with that project to find someone to take it on in some way,” Clausen said.

Prior suggested the project might be more attractive to a Swiss investor as a standalone family-orientated resort.  

“Everything else being equal, Switzerland still is a good place to invest but (it) does have a huge problem because of what has happened to the franc,” said Prior. “A Swiss investor would be the obvious thing because they are not exposed to the exchange rate.

“And the Swiss take a very different attitude to us. I’m looking at it as skiing as business but I know from talking to a lot of Swiss, they see these little resorts as attractive in their own right.” 

Ernen, with its two neighbouring parishes of Mühlebach and Steinhaus, is one of the most attractive villages in the eastern part of the Valais region. In 1979 it received the Wakker heritage award in recognition. 

The Ernergalen ski area, which is accessible via a short bus ride from Ernen, has four lifts and offers slopes from 1,200 to 2,300 metres above sea level.

The commune has around 500 inhabitants, the majority of whom depend on the tourist industry.

Tourism is a key industry in Switzerland, ranked third in the export sector. 

It generates an annual income of around SFr15 billion for hotels, ski lift companies, restaurants and other service providers.

In comparison, the leading chemicals/pharmaceuticals and engineering sectors had income of SFr72 billion and SFr58 billion respectively in 2009.

The fourth place watch industry reported income of 13.2 billion.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR