Aug 20, 2010

Swiss tourism and the falling franc

Jack Ewing has an interesting post on Swiss tourism at Economix, here's some paraphrasing:
The strong franc, which has risen more than 10% against the euro this year, has also had a negative effect on a sector most people don’t think of as an export: tourism.Tourism accounts for 3.4% of GDP but for 6% of employment (200,000 full-time jobs, four times as many as watchmaking).
The importance of tourism to Switzerland helps explain why the Swiss National Bank went to extraordinary efforts this year to try to prevent the franc from strengthening too quickly against the euro.Tourism is highly price sensitive. The Swiss Alps must compete with neighboring Austria, Italy, France and Germany, which also offer plenty of mountains and ample opportunities for skiing and hiking, and all use the euro. Swiss hoteliers are responding by cutting prices and in some cases quoting prices in euros. 
Cutting prices? Really?

1 comment:

Sebastian said...

Certainly, the SNB did act to avoid deflation but I really do not think that tourism was the main driver. The country exports loads of manufacturing and other stuff which certainly account for much more employment than tourism does.....But I think this misses the point in any case. The buying of reserves and the hoped for stop of the appreciation, which failed dramatically this year, is meant to stop IMPORT PRICE deflation (which then feeds into domestic inflation).....I do not think you need to worry too much, Swiss ski resorts will remain expensive !