The Prognoses for Swiss Tourism is provided twice per year and developed by BAK Basel Economics. This biannual report makes an expansive forecast for the Swiss economy of tourism possible, together with indicators for “overnight stays in the hotel industry,” “creation of value in guest trade” and “tourism exports of Switzerland”.
When looking at the 2007/2008 winter season, Swiss tourism was similar to Telluride’s tourism results in terms of weather. They had an excellent ski season with favorable snowfall which resulted in excellent regional and national visitation. Overnight hotel stays for tourists coming from within Switzerland increased by about 4.8 percent.
As in the previous two winter seasons, the international demand for overnight hotel stays increased strongly in Switzerland at 8.2 percent. This is considered a result of the favorable exchange rates of the Euro and the Swiss Franc and the attractiveness of Swiss destinations. Strong increases were most observed from the Eastern European and Asian markets, but traditional markets increased also strongly.
The number of overnight hotel stays in Switzerland is expected to increase by 5 percent in the current tourism year (Nov. 2007 – Oct. 2008). With this, more than 37 million overnight hotel stays shall be registered for the first time, which makes the tourism year of 2008 a record for Switzerland.
Projections indicate a strong real value growth rate in the guest trade sector (+3.4 percent) in 2008. Overall tourism business is expected to continue to increase going forward. International business is projected to be the strongest market segment in the next year.
The European Alps contain mountain villages that pre-exist the ski resort facilities, in some cases by hundreds of years. Most North American ski resorts are “purpose built,” meaning the villages were developed or redeveloped with the purpose of being a ski resort.
It appears that this has created a different social and political framework in the high alpine villages of the Alps.
More to the point, there is a greater sense of community alignment regarding the importance of hotel-type units and the importance of tourism. A job as a server in a fine dining restaurant or in the hotel industry is considered a career position. A job in those same fields in Telluride is often considered “entry level” with little hope for advancement.
Why the difference?
Take Zermatt, Switzerland as an example. Their mountain village is filled with beautifully maintained high-end hotels catering to regional, national, and international visitors who come for a week or more, spend freely in the restaurants and shops, and then leave – only to be replaced by another visitor who does the same thing. There is no need for sprawling new development. The model is based on creating a highly desirable experience for each and every visitor to encourage them to return, which many of them do. The hotels are largely “hot beds” and government policy encourages and incentivizes their retention.
Telluride is in many ways the same, we have a compact town and a compact mountain village, based on smart-growth principals and an excellent mass transportation system (once you arrive) but our bed base mix is very different compared to the great alpine resort communities of Switzerland, Germany, Austria, and Northern Italy.
Telluride has a deficiency of public accommodation units (hot beds) and a surplus of second homes and large condominiums (cold beds). We have very few vacation clubs or fractional units which are considered hot beds. Additionally, very few of our hotels cater to the high-end market. Capella (in Mountain Village) will be our community’s only high-end condo/hotel with a critical mass of rooms, although the ratio of large condos to traditional hotel rooms in the project is somewhat high.
That’s not to say that our mid-level hotels are not of value. They provide a diversity of price points and products but in all honesty they cannot lead the tourism market for Telluride. In order to generate economic sustainability for our local restaurants and retailers, we need a critical mass of higher-end hotels because the sales-per-square-foot is greatest with that model. Transactional taxes (sales tax, transient room tax) are greater with high-end boutique hotels, thereby maximizing our local governmental receipts. Since high-end hotels generate more sales, they have more resources to pay higher wages and are able to provide better service to the visitor. They also have larger advertising and sales budgets which improves occupancy on a year-round basis.
It’s important to realize that hot bed developments are not big money makers for the developer. They do not compete with large multi-family units in terms of immediate economic returns. Hot beds do however provide much greater benefits to the community in terms of generating long-term economic value, tax receipts, etc. when compared to large buildings that sit empty most of the year.
There are several cold bed projects in Telluride and Mountain Village that illustrate lower risk, short-term payback, and higher economic profits to the developer. Unfortunately, even with the mass and scale of these projects, they will not attract the tourists that our local economy depends upon that one might expect. In fact, many of the units sit empty (except during peak times) and will not be put into a rental pool.
Historically, to attract a good-sized hot-bed development in Telluride/Mountain Village it has required substantial subsidy and incentives. For example, The Peaks received their land for free. Capella received multi-million dollar subsidies. Even with these subsidies, the upper floors of those hotels are devoted to penthouse condominiums to help pay for the hotel rooms below (which is often the case).
Telluride and Mountain Village are both getting to the point where private land is becoming scarce. Existing hotel rooms are being converted to empty vacation homes and large condos each year, particularly in the Town of Telluride.
The All Season Resort Guidelines and Policy for British Columbia, Canada states that developing the appropriate ratio of public and private accommodations can have a significant impact on the success or failure of a resort. The resulting ratio has a significant impact on the resort’s positioning in the marketplace, the critical mass of resort retail, services and activities required. Hot beds should be developed closest to the core and mountain staging facilities to ensure vibrancy. According to the guidelines, as resorts expand through subsequent phases of development the objective is to increase the percentage of publicly available beds. The guidelines recommend a unit ratio that delivers 40 percent to 60 percent public beds, 30 percent to 50 percent private beds, and 10 percent to 20 percent employee or resident restricted beds and that the more isolated destination resorts should have a higher percentage of public beds than those that are near a city.
With careful planning, the development of overnight accommodation can significantly add to the success of the overall mountain community in terms of direct economic value.
The Town of Telluride and Mountain Village are being besieged with proposals for schools, roads, medical center, daycare, recreational trails, and more. It’s time to determine the best model for our future. One where we can fund the things we need as a community, provide economic stability for our small business operators and owners, and do so without sprawling development – all while remaining true to what makes Telluride and Mountain Village beautiful.
After researching this extensively, and talking with people around the world who are stakeholders (both elected officials as well as private owner/operators) in alpine resort communities, the conclusion I’ve reached is that Telluride and Mountain Village need to proactively close the gap by making sure that future development maximizes hot-bed units and preferably are built to a four or five-star level. If we don’t want sprawling development, we need to densify future projects and utilize the wonderful intra-community transportation systems we already have. The overall community unit ratio has to be improved in favor of hot-beds.
Some of the most beautiful (and livable) alpine communities in the Alps are very dense and include taller buildings with narrow pedestrian oriented streets. Plazas are an integral part of the community and are fun, attractive, and vibrant. Interestingly, these communities were built that way before the ski lifts arrived. It made sense in these communities 400 years ago and it still makes sense today.
I applaud the Town of Telluride, Mayor Stu Fraser and the councilors for initiating a Subarea Planning Process for the Lift 7 area a few years ago. The process has been lengthy (over 20 meetings so far) but this is one of the last best “beach front” places in the Town of Telluride which can contribute to the long-term stability of our tourism base. This process is well worth the effort expended by the staff, elected officials, and participants from the community.
Additionally, the Town of Mountain Village and the Telluride Mountain Village Owners Association (TMVOA) should be credited for their respective work. On behalf of its member’s interests, TMVOA proactively brought in Ecosign, the preeminent mountain resort consulting firm in the world, as well as Economics Research Associates, one of the best firms in the world which focuses on retail, restaurant, and village core vitality. This was done to understand where we are today and to develop some ideas for where we could go. The Town of Mountain Village, through the leadership of Mayor Bob Delves and the councilors, has now launched a new community planning process. This is an important step in the right direction.
Telluride Ski and Golf will continue to participate in these efforts in a positive and productive manner. Please feel free to contact me if you have any questions or comments. I can be reached at email@example.com. firstname.lastname@example.org