Do more beds bring in more guests

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Do more beds bring in more guests

  1. 1. Do more beds bring in more guests?STUDYAustrian Hotel Association (ÖHV)Vienna, January 2011 1
  2. 2. The Austrian Hotel Association and Roland Berger have enjoyed asuccessful partnership since 2005Joint studies by the ÖHV and Roland Berger2005 2007 2008 2009 2011ÖHV Destination Feasibility analysis Austria looks to Success factors Do more bedsstudy VII – for an "Austrian Central and and best practice bring in moreInvestment tourism strategy – Eastern Europe as in destination guests?analysis ÖTS ÖTS" a promising source management of tourism and hotel business 2
  3. 3. Contents PageA. Background – Austria has a successful tourism industry. Yet hotel room prices are below th b l those of competitors in other countries f tit i th ti 5B. Challenge – The sector has developed into one offering top quality, which is currently leading to cutthroat competition 18C. Outlook and summary – Announced expansion programs are reinforcing these tendencies. Tourism budgets must be revisited 32This document was created for our client. The client is entitled to use it for its own internal purposes. It must not be p p p passed on to third parties except with the explicit p p p p priorconsent of Roland Berger Strategy Consultants. This document is not complete unless supported by the underlying detailed analyses and oral presentation.© 2011 Roland Berger Strategy Consultants GmbH 4
  4. 4. A. Background g 5
  5. 5. 2010 was another successful year for tourism in Austria – Thecountry continues to be one of the top destinations worldwideTop 15 tourism destinations in the world – International arrivals World mkt.Rank 2006 2007 2008 2009 20101) share2) [%] COMMENTS 1 FRA FRA FRA FRA FRA 8.1 • Compared to other countries, 2 ESP ESP USA USA USA 6.5 Austria continues to be one of the 3 USA USA ESP ESP CHN 6.0 60 most popular vacation p p destinations in the world. It 4 CHN CHN CHN CHN ESP 5.6 attained its highest ranking (7th 5 ITA ITA ITA ITA ITA 4.7 place) in 2003 6 GBR GBR GBR GBR GBR 2.9 • Even as other, larger countries 7 DEU DEU DEU TUR GER 2.9 have surpassed Austria, the 8 MEX UKR UKR GER TUR 2.9 country has retained its share of 9 AUT TUR TUR MYS3) MYS3) 2.6 the world tourism market – about 2.3% – for five years, making it 10 RUS MEX MEX MEX MEX 2.3 11th worldwide 11 UKR MYS3) MYS3) AUT AUT 2.3 12 TUR AUT AUT UKR UKR 2.2 13 CAN RUS RUS RUS HKG 2.2 14 MYS3) CAN CAN HKG RUS 2.1 21 15 GRC HKG HKG CAN CAN 1.71) Forecast 2) Current value 3) MalaysiaSource: UNWTO; Roland Berger 6
  6. 6. For years, the tourism sector has constantly contributed over 15% toGDP, generating over EUR 40 bn with approx. 180,000 employeesValue added by the tourism and leisure industry in Austria [EUR bn]No. of COMMENTSemployees3) 168 169 180 179 1822)[000] • The tourism sector has generatedShare of over EUR 40 bn for several years, 15.3 15.0 14.9 15.2 15.11) making it one of Austrias most gGDP [%] important industries 42.2 41.8 42.8 • In terms of FTEs, the tourism 39.2 40.7 industry employs more than 180,000 people. Due to the seasonal nature of tourism work, this number is at times much higher 2006 2007 2008 2009 20101) )1) Forecast2) As at September 20103) Average employment over 365 days; yoy comparisons no longer possible starting in 2008 because of ÖNACE reorganizationSource: Statistics Austria; WKO; AMS 7
  7. 7. Its also encouraging that per capita spending by the mostimportant foreign visitors has increased faster than inflationDevelopment of daily per capita spending of visitors from Germany1) [EUR] 3.2 COMMENTS 2.2Inflation 1.5 Avg. 1.9 • Austria continues to attract visitorsrate [%] 0.5 with purchasing power • German tourists who make up tourists, CAGR +4.2% about half of all overnight stays in Austria by foreign visitors, spent EUR 120 per person per day in 120 120 the 2008/2009 season 106 106 • The rise in visitor spending considerably exceeds the average Austrian inflation rate • This phenomenon is connected to p shorter stays (2000: 5.2 days, 2009: 4.6 days) – to experience more in this shorter amount of time, German visitors spend more money 2006 2007 2008 20091) Survey was conducted over the 2006/2007 and 2008/2009 winter holidaysSource: T-MONA guest survey with full-year data for 2006/2007 and 2008/2009; Statistics Austria 8
  8. 8. The euphoria is also reflected in the number of hotel beds – 16,000beds are to be added over the next five yearsDevelopment of the no. of beds in hotels and similar accommodations1) – Austria [000] COMMENTS • After bottoming out in 2003, the650 CAGR +0.5% supply of beds in hotels and similar accommodations reached CAGR 0% 2000-levels again in 2009 606 600 603 593 596 • Starting in 2009, the number of600 588 587 588 590 580 beds is expected to increase by 569 566 571 571 573 574 0.5% each year. In the coming five years, another 16,000 hotel beds are to be added550 • The forecast is based on announced and ongoing expansion plans plus regression analyses for 2000-2009 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Forecast1) Similar accommodations = pensiones, innsSource: Statistics Austria; ÖHV; press research, Roland Berger 10
  9. 9. The success of Austrian tourism is recognized abroad – The WEFnamed Austria the worlds 2nd most attractive tourist destinationTravel & Tourism Competitiveness Index, 2007-2009 Rank2) ) COMMENTS No. of points1) Country 2009 2009 2008 2007 • The quality of Austrian tourism is well-known abroad Switzerland 5.68 1 1 1 Austria 5.46 2 2 2 • Since the Travel & Tourism Competitiveness Index was Germany 5.41 3 3 3 launched in 2007, the World France 5.34 4 10 12 Economic Forum has consistently named Austria as the worlds world s Canada C d 5.32 32 5 9 7 second most attractive country Spain 5.29 6 5 15 • But the competition is stiff: direct Sweden 5.28 7 8 17 competitors such as Switzerland, USA 5.24 5 24 8 7 5 Germany and Italy have held their Australia 5.24 9 4 13 positions unchallenged for years UK 5.22 10 16 10 … … … … Italy 4.78 28 28 331) On a scale of 1 to 7 (7 = best, 1 = worst) 2) 133 countries analyzedSource: World Economic Forums Travel & Tourism Competitiveness Report 11
  10. 10. Austria receives top marks for its tourism infrastructure, butearned its worst rating in price competitivenessTravel & tourism subindices – Austria, 2009Rank1) Indicator No. of points COMMENTS 1 Tourism infrastructure 7.0 • Taking a closer look at the various 5 Health and hygiene 6.9 indices, two in particular stand out: 6 Safetyy 6.5 – In the "Tourism infrastructure" Tourism infrastructure 9 Environmental sustainability 5.6 subindex, Austria is number 10 Land transportation infrastructure 6.0 one in the world 11 Cultural resources 5.8 – Austrias worst showing was in 14 Prioritizing of travel and tourism 5.6 56 the "P i th "Price competitiveness" titi " 16 Education and training 5.8 subindex 18 Human capital 5.7 23 Affinity for travel and tourism 5.4 23 Information + telecomm. tech. infrastructure 4.8 26 Air travel infrastructure 4.5 28 Laws and regulations 5.1 40 Natural treasures 4.1 118 Price competitiveness 3.81) Out of 133 countriesSource: World Economic Forums Travel & Tourism Competitiveness Report 12
  11. 11. Regarding hotel coverage, Austria is in third place with 3.5 roomsper 100 inhabitants – Behind Cyprus and MaltaHotel coverage: No. of hotel rooms per 100 inhabitants, 2009TourTour- COMMENTSismsectorsshare of 21.4 23.0 15.4 17.2 13.3 40.7 17.2 9.7 12.0 12.6 8.6 10.9 9.2 • In terms of hotelGDP coverage, Austria is in[%] third place; only Cyprus p ; y yp 5.6 56 and Malta, which have 4.9 hardly any other economic sectors, offer more rooms 3.5 35 3.3 • To compare: Italy is in 8th 2.8 place with 1.8 rooms per 2.3 100 inhabitants, 1.9 1.8 1.8 1.7 Switzerland is 10th with 1.1 11 1.0 1.0 1.7 1 7 rooms CYP MLT AUT GRC ISL BRB ESP ITA BGR CHE DEU FRA GBRSource: World Economic Forums Travel & Tourism Competitiveness Report 14
  12. 12. Competitors such as Switzerland and Italy achieve prices that are26% higher for hotels of the same qualityHotel price index for first-class, branded hotels –Compared to countries neighboring Austria [USD]1), 2009 COMMENTS 200.2 203.4 Difference: • Austrias 69th place in the hotel -26% 164.7 167.4 price index puts it in the middle 149.4 149 4 149.7 149 7 154.8 of the international comparison p 131.8 • Switzerland achieves an average price of USD 200.20 104.8 for a double room in a first- class hotel, Italy USD 203.40 – in Austria its just USD 149.70 • These results are especially striking, considering that Switzerland and Italy were rated worse than Austria in terms of their tourism infrastructure (7th and 3rdSlovenia Germany Hungary Austria Croatia Czech Slovakia Switzer- Italy place, respectively) Rep. land1) Avg. gross price per double room in first-class, branded hotelsSource: World Economic Forums Travel & Tourism Competitiveness Report 16
  13. 13. B. Challenge g 18
  14. 14. Over the past ten years, the number of beds in Austrias top qualityaccommodations has risen sharplyDevelopment in the no. of hotel beds [000] COMMENTS280 269 264 5-/4-star260 252 • Quality lodgings (5- and 4-star 247 242 accommodations) in particular240 232 232 231 have seen massive growth in the g 224 220 220 218 218 221 number of beds – over 30% in the220 3-star last ten years. Further growth of 219 220 9% is forecast for 2010-2013 215 215 216 216 217 218200 189 191 209 184 204 • The number of beds in 197 3-star accommodations has180 decreased slightly (by 7%), while the supply in 2- and 1-star160 172 167 154 149 146 144 lodgings has gone down by 25% 140 138140 133 130 • The forecast for 2010-2013 is 126 123 based on announced and existing120 113 111 expansion plans 2-/1-star100 00 01 02 03 04 05 06 07 08 09 101) 111) 121) 131)1) ForecastSource: Statistics Austria; ÖHV; Roland Berger 19
  15. 15. For years, the number of overnight stays increased faster than thenumber of beds – Now both values are converging againSupply and demand in 5- and 4-star accommodations [Basis = 2000, %] COMMENTS140 • Over the past few years, the number of overnight stays in 5-130 and 4-star accommodations outstripped the number of beds available by up to ten percentage120 points ("demand-supported growth")110 • But in the last two years, the curves have once again Demand-supported Stagnation converged ("stagnation") growth100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Supply: number of available beds Demand: number of overnight staysSource: Statistics Austria 21
  16. 16. Urban accommodations are especially affected – Vacationaccommodations have developed more stronglyBeds available vs. no. of overnight stays in 5-/4-star accommodations in cities1) and invacation destinations [Basis = 2000, %]Urban accommodations Vacation accommodations COMMENTS150 150 • Despite the massive increase in the number140 140 of beds, vacation accommodations have developed more130 130 strongly over the past decade120 120 • In the cities, the picture110 is somewhat different: 110 whereas the supply of beds increased slowly100 100 but surely, demand collapsed in 2008/2009 0 0 00 01 02 03 04 05 06 07 08 09 00 01 02 03 04 05 06 07 08 09 Supply: no. of available beds Demand: no. of overnight stays1) Defined as accommodations in the state capitalsSource: Statistics Austria; tourmis 22
  17. 17. Only in about 20% of all Austrian destinations did the supply ofbeds decline or stagnateSupply of beds in 5-/4-star accommodations by destination, 2004-2008COMMENTS Waldviertel• 80% of all Austrian destinations increased Donau OÖ Weinviertel their supply of beds Mühlviertel Donau NÖ• In roughly 20% of all Austrian destinations, the number of beds has stagnated or declined Inn- and Hausruckviertler Linz Wien Donau NÖ Thermenland Wienerwald Mostviertel Neusiedler See Salzburger Seenland Nationalpark Region city Salzburg and environment Vienna Alpen Salzkammergut in NÖ Alpbachtal and Tiroler Kaiser- Salzburger Ferienregion Seenland Ferienland winkl Saalachtal Tennen- Kufstein gau Schladming Reutte Dachstein Silberregion Hochsteiermark Karwendel Wilder Lammertal, Tannheimertal Achensee Piller- Klein- Kaiser Tennen- Dachstein Bregenzer- seetal walsertal Tiroler Zugspitz gebirge wald Saalfelden/ Ramsau Arena Wild- Kitzbüheler Leogang Hochkönigs Schladming- Mieminger Seefeld schönau Alpen Saalbach Bodensee Bergreich Dachstein Plateau Ferienregion Hinterglemm Schladming- Thermenwelt Vorarlberg Lechtal Sonnen- Salzburger Oststeiermark Imst- Hohe Salve pipemoos Burgenland Zell am See terasse Sportwelt Gurgltal Tirol Mitte Ferienregion – Kaprun Ober- Alpenregion Tirol Innsbruck + Region Nationalpark Groß- tauern Bludenz West seine Hall Hohe Tauern Ferienregion Urlaubsregion Murtal g Zillertal arl- l Feriendörfer Nationalpark Arlberg tal Graz and Serfaus, Hohe Tauern Ferienregion Region Graz Fiss, Stubaital Wipptal Gasteiner- Lungau Montafon Paznaun tal Ladis Pitz- Katschberg Tiroler tal Steirisches Oberland Nationalpark Thermenland Lieser- Osttirol Region Hohe Maltatal Tauern Nockberge, Lavanttal Ötztal Carinthia Bad Kleinkirchheim Süd- and West Styria Oberes Drautal Millstätter- see Villach Villach- Carinthias Warmbad, Klagenfurt Naturarena Faaker See, Wörthersee Ossiacher See Klopeiner See – Carnica-Region Südkärnten RosentalIncrease in beds >25% 0-25% <0% No comparison data availableSource: Statistics Austria; ÖHV; Roland Berger 23
  18. 18. As one would expect, the increase in the supply of beds meant thatthe occupancy rate continuously declinedSupply of beds vs. occupancy in 5-/4-star accommodations [Basis = 2000, %] COMMENTS Beds Avg. [000]55% 250 • Over the past decade, the supply of beds rose more than 200 30% and is about to pass 250,00050% 150 • At the same time, the occupancy rate in 100 quality accommo-45% dations is declining steadily 5040% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Occupancy BedsSource: Statistics Austria 24
  19. 19. Over a third of Austrian tourist destinations achieved less than 45%capacity utilization in the prosperous year of 2008Annual capacity utilization in 5-/4-star accommodations by destination, 2008 [%]COMMENTS Waldviertel• Even in a prosperous year like 2008, over a third Donau OÖ Weinviertel of Austrias tourism destinations reached an Mühlviertel Donau NÖ annual capacity utilization of just 45% maximum Linz• Capacit utilization is not calculated based on Capacity tili ation calc lated Inn- and I d Hausruckviertler Thermenland Wien Wi Donau NÖ days open but rather on full-year capacity Wienerwald Neusiedler Mostviertel See Salzburger Seenland Nationalpark Region city Salzburg and environment Vienna Alpen Salzkammergut in NÖ Alpbachtal and Tiroler Kaiser- Salzburger Seenland winkl Saalachtal Tennen- Ferienregion Ferienland gau Schladming Reutte Silberregion Kufstein Dachstein Hochsteiermark Karwendel Wilder Lammertal, Tannheimertal Achensee Piller- Kaiser Tennen- Dachstein Bregenzer- seetal Tiroler Zugspitz Saalfelden/ gebirge wald Wild- Ramsau Klein- Arena Kitzbüheler Leogang schönau Hochkönigs Schladming- walser- Seefeld Alpen Saalbach Bodensee Bergreich Dachstein tal Mieminger Ferienregion Hinterglemm Thermenwelt Vorarlberg Lechtal Sonnen- Salzburger Oststeiermark Imst- Plateau Hohe Salve Burgenland terasse Sportwelt Gurgltal Tirolmitte Zell am See Ferienregion Ober- Schladming- Alpenregion Tirol – Kaprun Region Nationalpark Groß- tauern pipemoos Bludenz West Innsbruck + seine Hall Hohe Tauern Ferienregion Urlaubsregion Murtal Zillertal arl- Feriendörfer Nationalpark tal Arlberg Graz and Serfaus, Hohe Tauern Ferienregion Region Graz Fiss, Stubaital Wipptal Gasteiner- Lungau Montafon Paznaun tal Ladis Katschberg Pitz- Tiroler tal Steirisches Oberland Nationalpark Lieser- Thermenland Region Hohe Osttirol Tauern Maltatal Lavanttal Nockberge, Ötztal Carinthia Bad Kleinkirchheim Süd- and West Styria Oberes Drautal Milstätter- see Villach- Carinthias C i hi Warmbad, Klagenfurt Naturarena Faaker See, Wörthersee Ossiacher See Klopeiner See – Carnica-Region Südkärnten RosentalCapacity utilization >55% 55-45% <45%Source: Statistics Austria; ÖHV; Roland Berger 25
  20. 20. At the same time, some areas are seeing a downward price spiral –Prices are often below those of 2009Average yoy price development1) for 2010/2009, standard double room5-/4-star accommodations in selected cities [%, Basis=2009] COMMENTS Vienna: 5-star hotels 5% Vienna: 4-star hotels -2% • The travel and booking platforms Innsbruck: 5-star hotels 5 star 7% make it possible to compare offers and create price transparency Innsbruck: 4-star hotels 0% • Compared to 2009, the prices in Linz: 4-star hotels -10% 2010 have often not reached the Salzburg: 5 t hotels S l b 5-star h t l 9% previous year s level Especially 4- years level. star accommodations were hit by Salzburg: 4-star hotels 2% cutthroat competition Graz: 5-star hotels -9% Graz: 4-star hotels G 4 t h t l -3% 3% Klagenfurt: 5-star hotels -3% Klagenfurt: 4-star hotels -6% Bregenz: 4-star hotels B 4 t h t l -2% 2%1) Average values from January to November, as far as data was availableSource: Trivago; Roland Berger 26
  21. 21. The risk to a companys existence is evaluated based on twocriteria: debt repayment period and equity ratioExcerpts from the Austrian Reorganization Act According to the Reorganization Act (Unternehmensreorganisationsgesetz, or URG), there are two criteria that determine whether a company is in jeopardy: 1 The debt repayment period is over 15 years 2 The equity ratio is below 8%Source: Österreichische Hotel- und Tourismusbank 28
  22. 22. Half of the hotels supported by Österreichische Hotel- undTourismusbank (ÖHT) have repayment periods that are too longSelected operating KPIs of 5-/4-star accommodations1), 2009Debt repayment period COMMENTS Hotel operations • More than half of the hotels >25 0-8 analyzed [no.] supported by the ÖHT do not years years meet the URG criterion f t th it i for 25% 25% debt repayment period 267 • A quarter of hotel operations have repayment periods h t i d longer than 25 years 25% 25% 16-25 8-16 years years1) Dividing the hotels into groups of 25% each was done by calculating medians and quartiles, i.e. the boundaries of the individual categories were set up in such a way that the hotel businesses could be divided equally into quartersSource: Österreichische Hotel- und Tourismusbank 29
  23. 23. In many cases, the required equity ratio of over 8% is also not metSelected operating KPIs of 5-/4-star accommodations1), 2009Equity ratio COMMENTS Hotel operations • The situation here is also analyzed [no.] quite dramatic: >26 <-16% 25% 25% – Over 50% of the hotels 267 supported by the ÖHT have an equity ratio of less than th 8% – In many cases, the ratio is 25% 25% even negative 7-26% -16 to 7%1) Dividing the hotels into groups of 25% each was done by calculating medians and quartiles, i.e. the boundaries of the individual categories were set up in such a way that the hotel businesses could be divided equally into quartersSource: Österreichische Hotel- und Tourismusbank 30
  24. 24. C. Outlook and summary y 32
  25. 25. The supply-side situation will become even more critical Correlation of capacity utilization to no. of new beds in 5-/4-star accommodationsCapacity utilization, 2008 [%] COMMENTS 75% Salzburger Saalachtal 70% • Over the next three years, hotels Kleinwalsertal will add another 11,000 beds in Achensee 65% Serfaus - Fiss - Ladis over 20 destinations Kaiserwinkl 60% • In roughly half of the destinations Pillerseetal Innsbruck und seine Feriendörfer 55% Wien planning to expand capacity, the Zell am See/Kaprun Thermenwelt Bgl. rate of capacity utilization is 50% Bodensee Vbg already less than 50% Lammertal, L t l Stadt Dachstein Osttirol Wiener Alpen 45% Donau NÖ Salzburg in NÖ Montafon 40% Salzkammergut (OÖ, S, ST) Nationalparkregion 35% Mostviertel 30% Salzburger Seenland 25% 20% 0 50 100 150 200 250 300 350 400 450 500 550 600 1,800 4,000 No. of new beds by 2013 [no.] Source: ÖHV; Roland Berger 33
  26. 26. In this case, supply and demand will continue to divergeExpected dvlpmt. of supply and demand, 5-/4-star accommodations [2000 = Basis, %] COMMENTS 129130 Supply 126 • If the number of beds continues to increase at its current rate,125 121 123 ! capacity utilization will become p y even worse over the next five120 Demand years – Supply and demand will 116 120 diverge further115 113 117 111 115 • In addition, the World Economic 109 Forum expects even shorter stays,110 112 later bookings and a preference 106 109 for lower prices in Austria 104105 107 107 100100 101 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Assuming 365 days open a yearSource: Statistics Austria; WEF; Roland Berger 34
  27. 27. The increase in overnight stays by foreign visitors is primarily dueto tourists from Eastern European countriesNo. of overnight stays in Austria by country of origin, 2009 [m]Change 2005-2009 [%] COMMENTS -4% +9% +4% -9% -3% +6% +73% +4% +30% +16% +69% -20% +83% +265% +13% • The number of 48.9 visitors from Eastern European p countries, especially Russia and Romania, has risen 9.5 8.1 • However, the impressive three- digit growth from 3.6 3.3 Romania and the 3.0 2.5 2.0 20 1.6 1.5 1.5 two-digit two digit growth 1.4 1.1 1.0 0.8 from Russia repre- sent a change DEU NLD CHE GBR ITA BEL CZE FRA DNK HUN POL USA RUS ROU Other from a low absolute basisSource: Statistics Austria, data for 2010 will be available in January 36
  28. 28. Foreign markets could boost capacity utilization in first-classaccommodationsDevelopment of overnight stays by domestic/foreign visitors in Austria [m] COMMENTS • Since the start of 2000, but also in 92.8 the 2009 crisis, the domestic 87.7 87.2 88.4 89.8 85.8 86.3 85.9 market has remained constant 82.5 82 5 83.7 83 7 and stable • During the crisis in 2009, the foreign market dropped precipitously • There is still a need to catch up on 32.1 33.0 33.9 34.4 the foreign markets, since they31.2 31.4 31.0 31.6 31.2 31.5 offer the necessary growth potential and volumes 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Domestic ForeignSource: Statistics Austria 37
  29. 29. It is doubtful whether the Austrian National Tourist Offices currentbudget is sufficient to reach more foreign visitorsBudgets of national tourism organizations per overnight stay, 2009 [EUR] COMMENTS 1.50 • At first glance, Austria is somewhere in the midfield in terms of what national tourism organizations spend on marketing per overnight stay • However, smaller countries such as Switzerland and Austria 0.42 naturally have to spend more per overnight stay in order to create a 0.30 presence on the international 0.11 0.10 tourism market 0.07 • For this reason, it makes sense to compare Austria with Switzerland – the latters marketing budget perSwitzer- Austria France Italy Germany UK overnight stay is over three times land higher than Austrias hi h th A t i Source: ÖHV; Roland Berger 38
  30. 30. Austrias tourism organization has a medium number of offices –compared to Switzerland it is even underrepresentedOffices of national tourism organizations, 2009 [no.] COMMENTS 27 26 25 • As one would expect, large 21 countries such as France and the 19 UK have the most tourism offices • But it is also clear that Germany and Italy have significantly fewer offices than Austria and 11 Switzerland • Compared with Switzerland, a similarly small country, Austria is underrepresented by its 21 offices worldwide Austria Germany UK France Switzer- Italy landSource: ÖHV; Roland Berger 39
  31. 31. Increasing the Austrian Tourist Offices budget would relievehotels and make more targeted advertising possibleDevelopment of advertising budgets1) [2000 = Basis; %] Owners contribu- COMMENTS tion to adver- tising [EUR m]130% • The Austrian Tourist Offices 123% budget shrank in 2000 and 202.7120% 116% 2001, and then remained , % 113% constant for eight years 111% 107% 108% 107%110% 106% 103% • In contrast, hotels today spend 100%100% about 23% more on adver- tising than they did in 2000 90% • Austria neglected to increase 83% the Tourist Offices funds when 80% 76% 76% 76% 76% 76% 76% 76% 76% the economy was good, 32.1 despite increasing bed p g 70% capacity • The Economic Chamber 60% cancelled the contract with the 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Austrian TO for contributions Spending on advertising and communication, in % of income of 5-/4-star accommodations (median) to th d ti i budget t the advertising b d t Austrian Tourist Offices budgetNote: No data available on the development of the tourism budgets of state tourism organizations 1) Not adjusted for inflationSource: Österreichische Hotel- und Tourismusbank 40
  32. 32. Summary and recommendations 1 Austria continues to be a successful tourist destination and is recognized as such abroad 2 The hotel sector has developed toward offering high-quality products and services, in turn leading to cutthroat competition in the top-quality segment 3 The resulting price decline affects the ability to guarantee the necessary quality and threatens the economic viability of the domestic hotel industry in the medium term 4 The announced expansion programs will reinforce these tendencies and further depress capacity utilization 5 Foreign markets in particular could generate enough capacity utilization for the increased number of beds. However, compared to other countries, Austrias National Tourism Office is underfunded, while hotels have significantly increased their own advertising budgets  More beds, therefore, do not necessarily result in more guests. For this reason, decision makers must focus more on foreign markets, since thats where the purchasing power is. This would go a long way toward utilizing existing and future capacity while fi it hil financially supporting the domestic hotel industry i ll ti th d ti h t l i d t 41

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