Tourism

Tourism is Switzerland’s third largest foreign exchange earner, accounting for 5.6 percent of gross domestic product (GDP), and is estimated to provide employment for nine percent of the population. The impact of tourism on Geneva’s economy is estimated to be higher still, at seven percent of GDP. In terms of employment, it is estimated that 7.6 percent of all jobs in Geneva are directly dependent on tourism. 
Geneva’s tourism demand is driven essentially by its banks, international organisations and multinational headquarters. Another important source of demand is the numerous trade fairs and conventions held on a regular basis. Approximately 70 percent of Geneva’s tourism is business related, with around one-half being attributed to MICE (meeting, incentives, conventions and exhibitions) and the other half generated by international organisations.  Only 30 percent can be identified as pure leisure tourism. 

Geneva has experienced no significant growth in the number of hotel overnight stays for the last 20 years. Annual figures have fluctuated in the range of 2.0 to 2.7 million overnight stays per annum for the entire period. According to Switzerland’s ‘Office Federal de la Statistique’ (OFS), 2.2 million overnight stays were recorded in 1999, up from 2.1 million overnight stays in 1998, equating to a growth of 3.6 percent. During this time the number of arrivals increased by 1.6 percent from 949,561 to 964,533, indicating that generally the length of stay is increasing. (By comparison, Zurich had an estimated 3.3 million overnight stays in 1999.) Latest figures for the period January to September 2000 indicate a further increase in the number of overnight stays and arrivals of 10.2 per cent and 9.6 percent respectively, when compared to the same period in 1999.

The Anglo-Saxon countries are important source markets for tourism, with the USA being the most important international market. USA visitors recorded 18 percent of all overnight stays in 1999, followed by the UK with 11 percent, France seven percent and Japan six percent. Whilst most markets saw an increase in overnight stays in 1999, demand from the Japanese market fell by 13 percent. Overall, Japanese overnight stays have decreased by more than 25 percent from the peak levels reached in the mid-1990s. The Swiss domestic market contributed 17 percent of all overnight stays in 1999.

Hotel Supply 

According to the OFS, Geneva has 131 hotels with a total of 7,866 rooms, with the majority of rooms being in the three- to five-star category. Although the city’s hotel market has traditionally been dominated by independent hoteliers, chain hotels are growing in importance and most of the major brands are now represented in the city including; Hilton, Ramada, Inter-Continental, Moevenpick, Forum and Crowne Plaza. In January 2000, Starwood also acquired a presence in the city with its purchase of the 225-room Hotel President Wilson. 
 

There has been no new hotel supply added in the last year, except for the City Hostel Geneva, which opened in summer 2000 and offers 54 budget rooms. According to ‘Geneva Tourism’ (the official tourist office of Geneva) there are no plans for new hotel developments in the near future. However, there have been a number of renovations with both the Swissotel

SWISSOTEL GENEVE METROPOLE

Hotel Performance

During the mid-1990’s, Geneva’s hotel sector suffered from low occupancy due to over-capacity. However, recent strong performances show that occupancy is picking up, resulting in significant increases in rooms yield. In 1999, rooms yield when measured in Euros, increased by 16 percent compared to 1998. This was mainly due to a positive development of the conference segment. Hotels particularly benefited from the Telecom 99 Exhibition and Forum, which took place in October and attracted a record breaking 200,000 visitors and over 1,000 exhibitors.

Much of the variance in room rates and occupancy in Geneva from one year to the next is the result of the cyclical pattern and/or nature of conventions and exhibitions. However, year 2000 looks set to continue the positive performance attained in 1999. Rooms yield has increased by 6.4 percent in the period January to October 2000 compared to the same period last year, when measured in Euros. This can be attributed to an increase in occupancy of 4.3 percent and an increase in average room rate (ARR) of 2.0 percent. Again the growth is credited to the conference segment and also local events, of which the Geneva Festival, held in July and August attracted 1,350,00 visitors. Notably, at Euro160.86, the Geneva hotel market reports one of the top ARR among European cities.  When compared to the European cities measured in the Arthur Andersen Hotel Industry Benchmark Survey, only Venice, London and Paris reported a higher ARR in the period January to October 2000, when measured in Euros. Despite its lower occupancy level of 74.5 percent compared to Zurich’s 83.3 percent in the period January to October 2000, Geneva still achieves considerably higher rooms yield. Geneva reported a rooms yield of Euro119.88 compared to Zurich’s Euro110.62 in the period January to October 2000.

Outlook

Future growth prospects are likely to be found in the areas of conference and incentive travel, short breaks and the creation of new events and conventions to stimulate demand.  Strong competition from the numerous Alpine and Lakeside resort destinations will continue to make it difficult to achieve significant growth in leisure tourism. 

By 2002, Palexpo, Geneva’s largest conference venue, will have expanded its capacity by one third, with a further 25 percent increase planned by 2010. Geneva will benefit from this expansion and its position as a meeting and trade fair destination further strengthen. This coupled with the Japanese market benefiting from the recovery in Asian economies, suggest that the outlook for the Geneva hotel market will remain positive in the medium term.
 

© 2000 Arthur Andersen.