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Tourist sector frank about franc support

A chairlift was part of the pavilion promoting Switzerland at last year's World Expo in Shanghai Keystone

The government wants to boost funding significantly this year and next to promote Switzerland as a tourist destination, as the strong franc continues to have an impact.

This content was published on February 17, 2011 - 21:32
swissinfo.ch

However, the plan to supplement 2011-12 funding of the national marketing office by SFr24 million ($25 million), or around 14 per cent, is at odds with the government’s proposal to cut SFr5 million a year from Switzerland Tourism’s 2012-2015 budget.


















The Swiss Tourism Federation (STV) – the umbrella organisation representing the industry’s interests – has welcomed this week’s decision to invest more in promotion over the next two years.

The move will help offset the impact of a franc that rose in value against the euro by about 12 per cent between January 2010 and January 2011, making a country already considered expensive seem unaffordable.

A drop of four to five per cent in hotel bookings has been forecast for the current winter season.

Mario Lütolf, director of STV, told swissinfo.ch that the plan by the government to provide more funding just before it begins chipping away at the annual budget was “inconsistent”.

More not less

“This will make it difficult to continue investing in growing markets,” Lütolf argued. “Due to inflation in these high-potential markets, Switzerland needs to put more resources into promotion in these countries and not less.”

As an example, the industry representative mentioned that tourist arrivals from China had been growing by about ten per cent a year.

Indeed, Véronique Kanel of Switzerland Tourism says the marketing body will likely use the short-term cash injection to promote Switzerland on two fronts: at home, since the Swiss account for 43 per cent of all nights spent in Swiss hotels, and in countries considered to have above average growth potential like China.

While the Chinese account for only 2.4 per cent of all nights spent in Swiss hotels by foreign tourists (Germans account for 28.5 per cent and Britons 9.1 per cent), the number of Chinese booking into Swiss hotels is growing rapidly. Last year alone, the figure jumped by about 50 per cent compared with 2009, while the rate for Germans fell by more than three per cent.

India and Gulf states

Kanel told swissinfo.ch that the other countries Switzerland Tourism could decide to target with the extra cash include India (22 per cent growth last year), the Gulf states (+11.9 per cent), Russia (+2.3 per cent) and Spain (+1.1 per cent).

What sets China apart from the other nations is its exploding middle class. According to a 2008 study by the Travel Industry Association of America (TIA), this section of Chinese society with disposable income is expected to triple to 500 million by 2025.

Chinese tourism expert, Gordon Yan, a visiting lecturer at Leeds Metropolitan University in Britain, says European nations have woken up to the potential of the Chinese market and are promoting themselves accordingly.

“If there is a lack of funding from the Swiss government, Switzerland would probably fall behind other European countries,” Yan told swissinfo.ch.

And it is not only the potential number of Chinese tourists that have Europe’s tourist industry salivating – but the amount they spend on shopping for luxury items abroad like Swiss watches.

This would be another argument for Switzerland to keep a strong marketing presence in China, as well as other countries with above average growth potential.

A study conducted by Switzerland Tourism found that the last cash injection the promotion body received from the government – SFr15 million to confront the economic crisis – resulted in additional turnover of SFr378 million.

And Lütolf argues that maintaining a strong presence abroad is not just about the financial returns.

“Tourism marketing is a lot about raising awareness of Switzerland and this is why public money is invested in promotion all over the world.”

Strong franc measures

On February 17, the government announced a stimulus package to support the tourist industry and export sector.

The national tourist office was earmarked an additional SFr12 million a year for 2011 and 2012, on top of its annual budget of SFr83 million (approx. SFr50 million from the state, and SFr30 million from private sector partners).

And the government’s innovation promotion agency has been allocated SFr 20 million to further support the export sector.
 
The franc gained 12 per cent against the euro in 2010 and five per cent against the dollar. 

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Tourism in Switzerland

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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