Tourism survey on the effects of coronavirus in Switzerland suggests a looming wave of bankruptcies

  Significant losses of turnover and exceptionally low occupancy rates across Switzerland are in store for the Swiss tourism industry according to a recent industry survey carried out at the end of April. The likelihood of bankruptcy remains high at 23% and emergency loans can only secure liquidity for the short term. There is a risk of 3,200 business closures and over 30,000 job losses.   Under the umbrella of the Swiss Tourism Federation, the tourism associations HotellerieSuisse, GastroSuisse, Seilbahnen Schweiz (Swiss Cableways) and the Association of Swiss Tourism Managers, in collaboration with Switzerland Tourism and the Institute of Tourism of the University of Applied Sciences and Arts Western Switzerland Valais-Wallis (HES-SO Valais-Wallis), surveyed the tourism industry on its current situation from 20 to 23 April 2020. Around 3,500 companies took part in the survey. The results are alarming. For example, the Swiss hotel industry is anticipating an occupancy rate of around 9% in May. In June, July and August, the occupancy rates are expected to be only marginally higher (20-24%). 75% of bookings for May and June have already been cancelled. Turnover is, therefore, developing in line with this rate. A new projection by the HES-SO predicts losses of CHF 8.7 billion for the tourism industry for the months of March to June alone. To the dashboard of the results at a glance Support provided to date only helps to a limited extent Of the government’s existing support services, short-time working has been used most frequently, with 79% of those surveyed having used this instrument. For the cable car, catering and hotel sectors, the proportion was even over 90%. In contrast to this, it is striking that only 41% of the survey participants applied for emergency loans, with catering (49%) and hotels (45%) making slightly greater use of these loans. 64% of companies with emergency loans state that they will only be able to cover their fixed costs until the end of June, while by this time, the debt-equity ratio will have increased from 24% to 38% for all those surveyed in the hospitality industry. In some regions, the debt-equity ratio in the hotel industry has risen to around 50%. Impending wave of bankruptcies As a consequence of intensified liquidity shortfalls from the end of June and massive debt increases in some cases, the risk of bankruptcies remains considerable. Across Switzerland, nearly 23% of those surveyed consider the likelihood of bankruptcy to be high, and in regional terms, companies in western Switzerland, Ticino and the Basel region are particularly affected. Over 30,000 jobs are therefore currently at risk. The situation is particularly tense in the hotel and catering sectors. For this reason, the tourism associations are asking politicians to extend the financial support measures as part of an economic recovery package. “Competitive and healthy companies need prospects for post-coronavirus times,” says Andreas Züllig, President of HotellerieSuisse (see article Coronavirus crisis: support measures for the Swiss tourism industry).