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There's Plenty Of Snow In The Alps: So, Will Euros Stay Put?

By Patrick Thorne
December 01, 2008

There are mixed messages coming out of Europe right now. The continent is off to a great start for snow and tour operators are hoping the blissful deep powder images will get bookings moving.

But the outlook for North American travel isn't mixed at all. Operators are pulling out all the stops to keep European skiers flying west, but circumstances are increasingly conspiring against that happening.

First it was fuel surcharges; now it's the strong dollar. It's all set against a backdrop of the credit crunch hitting Europe. Then there's that snow in the Alps. It all points to flying south, not west, if you're going to fly anywhere.

Craig Burton, Commercial Director of Ski Solutions, a leading British travel agency, provided a frank assessment of the current state of bookings.

"From a tour operator/travel agent trading perspective in the UK, there is not a huge amount to cheer this winter. On the whole, our North American business is sluggish compared to last year. We've found that there are simply less people with the cash to spend on North American holidays, and the strong dollar and high flight prices have put off the early bookers."

Further evidence of this is provided by French specialist Xavier Schouller, boss of Peak Retreats.

"We only have anecdotal evidence, but we have had clients who have booked a holiday to France with us over the past month who told us they were initially going to the States, but decided against it because of the higher costs they'd have had."

A Brit Twist

An interesting twist for British skiers is that, while U.S. dollar costs have risen by 25 percent in the past month or so, the exchange rate to the Canadian dollar has remained about the same, making Canada a much more favorable option, just as it was five years ago before the U.S. dollar dropped in value.

"The Canadian dollar exchange is good for Brits - everyone looks at the U.S. dollar and assumes that Canada is as bad so that hits North American bookings overall, but experienced travellers to North America are aware of the true picture and it appears some are booking accordingly. We've done very significant volumes of business to Banff this year at the £500 ($750) price point - perhaps evidence of regular North American skiers 'trading down' to cheaper packages (this is on the charter into Calgary). It might well end up being our biggest North American seller this year," Burton explained.

The British pound is performing poorly against European currencies too, and is notably down against the Euro, putting costs in the Alps up for Brits as well, but not up as much as in the U.S.

Although U.S. sales will almost certainly drop, it will be in no way the fault of U.S. resorts.

"There are some fantastic deals from suppliers in North America, and great availability, but it's still hard to sell as demand is down compared to last year. Flights are looking to be better values again now - and package prices are starting to look better than they have been in the last 12 months." added Burton.

It's also true that the strong dollar may have a greater impact on the 2009-10 season than the current one for incoming skiers from Europe, at least if the rate continues. Many bought and paid for trips to be taken this year during the 2007-08 season. That meant prices were held to more favorable rates back then, and lift tickets and other add-ons were pre-paid in many cases, so exposure to resort cost increases for those Europeans will be fairly limited.

There's a flip side. The sudden strength of the dollar actually adds an incentive to U.S. skiers to consider heading east this winter to ski in Europe. That's presuming Americans have cash in their pockets to spend. As it is, Houston-based Ski Europe says business is steady, but down in common with most of the rest of the U.S. ski industry. There are possible signs that the "dollar suddenly buys much more in the Alps" message is getting through.

"We're definitely seeing a shortening in the period between booking and departure," said company director Richard Davidson, "and, surprisingly, even at this late date, with the severe economic crunch, we have a few companies emerging with requests for incentive groups. We just booked 100 guests to a five-star hotel in Switzerland." (Editor's Note: We presume it wasn't A.I.G.)

Not All Gloomy

Recent markers for some of Europe's biggest ski businesses have been promising however, raising hopes that it's not all doom and gloom. The French-based Compagnie des Alpes, which came under the same kind of financial scrutiny as Intrawest a few months ago and had to release a viability statement to offset negative media speculation, has subsequently posted record sales figures, albeit based to an extent on last season.

The company, which owns more than a dozen leading ski resorts in France and other European countries, has reported sales up 14.6 percent on a real basis and plus 6.4 percent "like-for-like" at 579.3 million Euros ($735m) in the period ended Sept. 30.

"Group high-altitude ski areas offered favorable skiing conditions throughout the year. The quality of the product offer and the solid performances of the sales and accommodation teams allowed Group companies to beat the all-time record for visitor numbers, with 13.7 million skier days, a rise of 6.8 percent from the 2006-2007 season." said a company statement.

TUI Travel, the UK's largest tour operator which runs three of the country's largest ski agencies - Crystal, Thoson, and First Choice - have cut capacity by 28 percent compared to last winter, although it's not clear how much of that is in their ski division. Average charter holiday selling prices for winter are up by 10 percent due to stronger pricing the past two months. The company is reported to be seeing weaker demand for ski holidays.

"Despite a more challenging trading environment, we are satisfied with our current position across all our source markets and businesses," a company statement said. "Within our mainstream source markets, through a combination of cost-cutting initiatives, we believe we can manage the current market conditions and continue to improve the profitability of the business."

All in all, the two biggest problems for U.S. resorts wanting to attract European skiers are out of their hands - the snow and the economy.

Europe has had a great start in terms of snow, with many resorts opening early on the back of three-to-five foot dumps in the Alps. Both European resorts and tour operators are doing a much better job letting people know about it than they have previously, with journalists receiving drool-worthy powder pics from across the Alps. Even the southern European Pyrenean range between France and Spain with Andorra sandwiched between, home to more than 50 There's Plenty Of Snow In The Alps: So, Will Euros Stay Put? There are mixed messages coming out of Europe right now. The continent is off to a great start for snow and tour operators are hoping the blissful deep powder images will get bookings moving.

But the outlook for North American travel isn't mixed at all. Operators are pulling out all the stops to keep European skiers flying west, but circumstances are increasingly conspiring against that happening.

First it was fuel surcharges; now it's the strong dollar. It's all set against a backdrop of the credit crunch hitting Europe. Then there's that snow in the Alps. It all points to flying south, not west, if you're going to fly anywhere.

Craig Burton, Commercial Director of Ski Solutions, a leading British travel agency, provided a frank assessment of the current state of bookings.

"From a tour operator/travel agent trading perspective in the UK, there is not a huge amount to cheer this winter. On the whole, our North American business is sluggish compared to last year. We've found that there are simply less people with the cash to spend on North American holidays, and the strong dollar and high flight prices have put off the early bookers."

Further evidence of this is provided by French specialist Xavier Schouller, boss of Peak Retreats.

"We only have anecdotal evidence, but we have had clients who have booked a holiday to France with us over the past month who told us they were initially going to the States, but decided against it because of the higher costs they'd have had."

A Brit Twist

An interesting twist for British skiers is that, while U.S. dollar costs have risen by 25 percent in the past month or so, the exchange rate to the Canadian dollar has remained about the same, making Canada a much more favorable option, just as it was five years ago before the U.S. dollar dropped in value.

"The Canadian dollar exchange is good for Brits - everyone looks at the U.S. dollar and assumes that Canada is as bad so that hits North American bookings overall, but experienced travellers to North America are aware of the true picture and it appears some are booking accordingly. We've done very significant volumes of business to Banff this year at the £500 ($750) price point - perhaps evidence of regular North American skiers 'trading down' to cheaper packages (this is on the charter into Calgary). It might well end up being our biggest North American seller this year," Burton explained.

The British pound is performing poorly against European currencies too, and is notably down against the Euro, putting costs in the Alps up for Brits as well, but not up as much as in the U.S.

Although U.S. sales will almost certainly drop, it will be in no way the fault of U.S. resorts.

"There are some fantastic deals from suppliers in North America, and great availability, but it's still hard to sell as demand is down compared to last year. Flights are looking to be better values again now - and package prices are starting to look better than they have been in the last 12 months." added Burton.

It's also true that the strong dollar may have a greater impact on the 2009-10 season than the current one for incoming skiers from Europe, at least if the rate continues. Many bought and paid for trips to be taken this year during the 2007-08 season. That meant prices were held to more favorable rates back then, and lift tickets and other add-ons were pre-paid in many cases, so exposure to resort cost increases for those Europeans will be fairly limited.

There's a flip side. The sudden strength of the dollar actually adds an incentive to U.S. skiers to consider heading east this winter to ski in Europe. That's presuming Americans have cash in their pockets to spend. As it is, Houston-based Ski Europe says business is steady, but down in common with most of the rest of the U.S. ski industry. There are possible signs that the "dollar suddenly buys much more in the Alps" message is getting through.

"We're definitely seeing a shortening in the period between booking and departure," said company director Richard Davidson, "and, surprisingly, even at this late date, with the severe economic crunch, we have a few companies emerging with requests for incentive groups. We just booked 100 guests to a five-star hotel in Switzerland." (Editor's Note: We presume it wasn't A.I.G.)

Not All Gloomy

Recent markers for some of Europe's biggest ski businesses have been promising however, raising hopes that it's not all doom and gloom. The French-based Compagnie des Alpes, which came under the same kind of financial scrutiny as Intrawest a few months ago and had to release a viability statement to offset negative media speculation, has subsequently posted record sales figures, albeit based to an extent on last season.

The company, which owns more than a dozen leading ski resorts in France and other European countries, has reported sales up 14.6 percent on a real basis and plus 6.4 percent "like-for-like" at 579.3 million Euros ($735m) in the period ended Sept. 30.

"Group high-altitude ski areas offered favorable skiing conditions throughout the year. The quality of the product offer and the solid performances of the sales and accommodation teams allowed Group companies to beat the all-time record for visitor numbers, with 13.7 million skier days, a rise of 6.8 percent from the 2006-2007 season." said a company statement.

TUI Travel, the UK's largest tour operator which runs three of the country's largest ski agencies - Crystal, Thoson, and First Choice - have cut capacity by 28 percent compared to last winter, although it's not clear how much of that is in their ski division. Average charter holiday selling prices for winter are up by 10 percent due to stronger pricing the past two months. The company is reported to be seeing weaker demand for ski holidays.

"Despite a more challenging trading environment, we are satisfied with our current position across all our source markets and businesses," a company statement said. "Within our mainstream source markets, through a combination of cost-cutting initiatives, we believe we can manage the current market conditions and continue to improve the profitability of the business."

All in all, the two biggest problems for U.S. resorts wanting to attract European skiers are out of their hands - the snow and the economy.

Europe has had a great start in terms of snow, with many resorts opening early on the back of three-to-five foot dumps in the Alps. Both European resorts and tour operators are doing a much better job letting people know about it than they have previously, with journalists receiving drool-worthy powder pics from across the Alps. Even the southern European Pyrenean range between France and Spain with Andorra sandwiched between, home to more than 50 ski areas, is reporting the best pre-season snowfalls in 40 years.

The same economic factors that may keep East Coast Americans from flying West to the Rockies and beyond this winter will stop Europeans still farther East from flying West to New England or beyond this winter, too.

Some Downgrades

"We are seeing many clients downgrading from catered to self-catering and deciding to drive instead of flying in order to save costs." says Schouller. "Everyone wants and expects a bargain, and the current low prices reflect this. The consumer will be getting some great deals to Europe."

Europe seems to be down, but not out overall, with some tour operators, if not those specialising in North American ski trips, claiming to have bucked the crunch with bookings up.

Schouller is more pragmatic. "There are certainly more cancellations than last year from people losing their jobs, or by fear of losing it, but it's still a tiny percentage of overall bookings."

What It Means: You may be a genius if you can follow the bouncing snowball this winter. Will more U.S. skiers suck it up and take advantage of a suddenly stronger dollar? Will Euros, worried about the shrinking Euros in their wallets, take the plunge across the pound anyway? The soap opera continues...

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Comments

In Andorra today. Dead, dead, dead. Can not comment about the skiing, but nobody is shoping. Where are the people? The crowds that have been a feature of Andorra La Vella are down about 90%. A ghost town. Have spoken to some retailers and they say the weekends are crowded, but we arrived on the weekend and it certainly was not crowded. Expensive shopping, expensive skiing, looking elsewhere next year. Pity it used to be one of my favourite places in Europe.

Posted by: Lucius | December 2, 2008 10:32 AM