Andreas Züllig, owner of the four-star Hotel Schweizerhof in the Alpine resort of Lenzerheide, was having one of his best winters in 20 years before the coronavirus stole into Switzerland. As many as 200 guests were arriving daily to enjoy the abundant snow, driving revenues to record highs in January and February.
But the season came to a premature end in mid-March when the government mandated a nationwide lockdown to help contain the virus. He closed the hotel temporarily, along with many of Switzerland’s 4,500 hotels. At the time, he only had six guests.
“The whole industry has never seen anything like what we have now,” said Züllig, who is also the president of the Swiss Hotel Association. He predicts that 5 percent of Swiss hotels—from 200 to 250—won’t survive the pandemic. Those located in the country with no more than a dozen or so rooms are the ones most threatened, he said.
On average, about 1 to 2 percent of Switzerland’s 4,500 hotels close down or go out of business every year.
“It’s going to be a tough ride,” said Louis Papadopoulos, owner of Maya Boutique Hotel in Valais. The eight-room wellness hotel, which normally has an occupancy rate of 60 percent throughout the year, hasn’t received a booking request since the end of February. “I think many hotels will be faced with the choice: die now or in a few years’ time.” Papadopoulos remains hopeful that business will pick up over the summer from Swiss tourists who choose to travel locally.
Sebastian Schmid, who runs Hotel Glocke in Valais, was also forced to close earlier than planned for the season. The 18-room hotel had received 20 booking cancellations in the last two weeks alone.
The Second Hit
It’s not the first time the Swiss hotel industry has faced a crisis. In 2015, the decoupling of the Swiss franc and the euro left many establishments struggling for international visitors as the currency surged. When Züllig took on the role as president as the Swiss Hotel Association that year, he thought things couldn’t get any worse. Now he believes the franc shock is nothing compared with the coronavirus.
A survey carried out by the University of Applied Sciences and Arts for Western Switzerland expects losses for Swiss hotels to reach CHF 2 billion from March to May. April will be one of the hardest-hit months with revenues down roughly 90 percent, according to projections.
“I think the international market is dead for the whole year,” said Züllig, who estimates it will take at least a year before the industry can return to normal. Others see a brighter future.
“The Swiss hotel industry is facing a dark time indeed, but it has already proven that it is able to innovate and react quite quickly,” said Giuliano Bianchi, professor at Ecole hôtelière de Lausanne. “Despite the huge hit, I believe that the high human capital and the flexibility of the Swiss hotel industry will overcome this dark time. There is hope.”
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Switzerland joins Europe’s massive public health experiment
Switzerland is getting ready to reopen, part of an advance guard of countries embarking on Europe’s biggest experiment in public health. After almost a month in confinement, the Swiss public learned Wednesday that the government will start relaxing its coronavirus restrictions at the end of April. Austria, Norway, and Denmark are also planning to ease their antivirus measures this month. Having succeeded in suppressing the epidemic, the Federal Council is now trying to figure out how to reboot the economy while keeping the virus under control. Switzerland’s reliance on exports will be a major challenge, making a recovery dependent on how quickly major trade partners like Germany, the U.S., and China get back to work. “We can do a lot on our own and the government is doing a superb job, but this is not only us, it’s the entire world,” said Markus Will, a senior economist at the University of St. Gallen. Europe needs a region-wide approach to the recovery, and Switzerland needs to be part of it, he said in an interview with CNNMoney’s Olivia Chang. Switzerland’s post-lockdown plan, still a work in progress, remains under wraps until April 16. But the council has said the unwinding of restrictions will be gradual, with public health remaining the priority. Countries emerging from confinement in Europe are taking different approaches. Norway is starting with schools and limited travel, while Austria is opening small shops, hardware stores, and nurseries. Germany is sticking to its lockdown for now, while Italy is mulling a move toward more personal freedom as early as this month. “I would start with the production lines,” Will said. “We need to get the industry back running.” Shops should be next to open, followed much later by restaurants and tourist activities, he said. Social distancing rules will mostly likely remain in place for the foreseeable future, slowing the economic recovery. Pressure is building on governments to explain their plans because of the mounting economic costs of closing businesses and borders and curtailing public life. Economics Minister Guy Parmelin says the Swiss economy has taken an enormous hit with production collapsing about 25 percent. The government is forecasting a recession this year. In the worst case, Swiss output could shrink by as much as 10.4 percent, according to the State Secretariat for Economic Affairs. If much of the economy remains on hold through June or July, the damage could easily add up to more than 10 percent, Will said. Switzerland’s low ratio of debt to gross domestic product puts it in a better position to weather the crisis than many countries, because the government can afford to boost spending to stimulate the economy. The council has already launched a CHF 62 billion aid package, consisting mostly of guarantees on bank loans for small businesses and support for companies that keep workers on the payroll. It may not be enough. Switzerland will need months if not years to return to the economic level before the pandemic began, Will said. Much depends on how quickly the rest of the world rebounds.
Swiss recovery from coronavirus pandemic may take years, economist warns
A return to the economic level that existed before the coronavirus crisis will take months if not years, says Markus Will, senior economist at St. Gallen University. His comments come after the Swiss government warned that the economy could shrink 10 percent this year in a worst-case scenario.
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Italy may look to ease some of its lockdown restrictions this month as evidence grows that the country has overcome the worst of the coronavirus epidemic. That’s an unsettling prospect for Filippo Testa, an anesthesiologist at a northern Italian hospital who has experienced the virus firsthand. He says countries must coordinate any relaxation of measures imposed to contain the virus.
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With scientists working frantically to defeat the coronavirus, the world is likely to have as many as three vaccines ready to be deployed in 12 to 18 months, says Arnaud Bernaert, head of global health at the World Economic Forum. “We are in early stages but I’m optimistic,” he says.
Switzerland to relax coronavirus restrictions this month
Switzerland’s government said it would begin easing its coronavirus containment measures at the end of the month and is working on a plan for a stepwise return to normal. Interior Minister Alain Berset said the aim is to map out the timing and order of events for a transition that would likely take weeks. The plan will be carried out in coordination with other countries and will take account of economic needs as well as the importance of keeping the virus in check. Switzerland declared a state of emergency on March 16, closing shops, restaurants, bars, and entertainment and leisure facilities until April 19. The lockdown will be extended a week until April 26, the government said. “We are on the right path, but we haven’t reached the goal yet,” said President Simonetta Sommaruga. Other European governments also are starting to think about how to reopen factories, offices, and schools while minimizing the chance of further outbreaks. Austria on Monday said it would gradually begin to reopen shops after Easter, becoming the first country in Europe to do so. Pressure is building on governments to explain their plans because of the mounting economic costs of measures designed to contain the coronavirus. Economics Minister Guy Parmelin said the Swiss economy has taken an enormous hit with production collapsing about 25 percent. “We must seriously envision a profound crisis that lasts a long time,” he said. “The state can’t be engaged everywhere.” The government said it is working on an aid package for the devastated airline industry, which employs more than 200,000 in Switzerland. It also expanded some unemployment benefits for workers. About 30 percent of the labor force, or about 1.5 million people, are already receiving wage subsidies known as short-time work. Switzerland’s jobless rate rose to 3 percent in March and an increase of 7 percent in the coming months was not impossible, Parmelin said.
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Experts say antibody testing will play a crucial role in easing coronavirus lockdowns around the world and reviving economies. “If you have antibody tests you can identify those who are already immune and can go back safely to work and who might need a vaccine once a vaccine becomes available,” said Franz Walt, CEO of Swiss medical diagnostics company Quotient. While there are few reliable tests on the market at present, Quotient says it has developed a highly accurate one that can be carried out quickly on its blood screening machines. The company is scaling up production of the machines, called MosaiQ, at its plant in Eysins, Switzerland, as it seeks approval to commercialize the test in Europe and the U.S. Quotient plans to sell the tests for between USD 15 and 25 and to lease or sell the machines at cost. Just one machine can perform 3,000 tests a day, Walt says.
