do more beds bring in more guests

Do more beds bring in more guests?STUDY

Do more beds bring in more guests?

Austrian Hotel Association (ÖHV)

1Vienna, January 2011

The Austrian Hotel Association and Roland Berger have enjoyed a successful partnership since 2005

Joint studies by the ÖHV and Roland Berger

20092008 20112005 2007

Success factors and best practice in destination management

Austria looks to Central and Eastern Europe as a promising source

Do more beds bring in more guests?

ÖHV Destination study VII –Investment analysis

Feasibility analysis for an "Austrian tourism strategy –ÖTS" managementa promising source

of tourism and hotel business

analysis ÖTS

2

Contents Page

A. Background – Austria has a successful tourism industry. Yet hotel room prices are b l th f tit i th t i 5below those of competitors in other countries 5

B. Challenge – The sector has developed into one offering top quality, which is currently leading to cutthroat competition 18currently leading to cutthroat competition 18

C. Outlook and summary – Announced expansion programs are reinforcing these tendencies. Tourism budgets must be revisited 32

This document was created for our client. The client is entitled to use it for its own internal purposes. It must not be passed on to third parties except with the explicit prior

4

p p p p p p pconsent 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

A. Backgroundg

5

2010 was another successful year for tourism in Austria – The country continues to be one of the top destinations worldwide

COMMENTS

Top 15 tourism destinations in the world – International arrivals

Rank 2006 2007 2008 2009 20101)World mkt. share2) [%] COMMENTS

• Compared to other countries, Austria continues to be one of the most popular vacation

Rank 2006 2007 2008 2009 2010 share [%]

FRAESPUSA

FRAESPUSA

FRAUSAESP

FRAUSAESP

FRAUSACHN

8.16.56 0

123 p p

destinations in the world. It attained its highest ranking (7th place) in 2003

• Even as other, larger countries

USACHNITAGBR

USACHNITAGBR

ESPCHNITAGBR

ESPCHNITAGBR

CHNESPITAGBR

6.05.64.72.9

3456

Even as other, larger countries have surpassed Austria, the country has retained its share of the world tourism market – about 2.3% – for five years, making it 11th worldwide

DEUMEXAUTRUS

DEUUKRTURMEX

DEUUKRTURMEX

TURGERMYS3)

MEX

GERTURMYS3)

MEX

2.92.92.62.3

789

10 11th worldwideUKRTURCANMYS3)

MYS3)

AUTRUSCAN

MYS3)

AUTRUSCAN

AUTUKRRUSHKG

AUTUKRHKGRUS

2.32.22.22 1

11121314

6

MYS3)

GRCCANHKG

CANHKG

HKGCAN

RUSCAN

2.11.7

1415

Source: UNWTO; Roland Berger

1) Forecast 2) Current value 3) Malaysia

For years, the tourism sector has constantly contributed over 15% to GDP, generating over EUR 40 bn with approx. 180,000 employees

COMMENTS

Value added by the tourism and leisure industry in Austria [EUR bn]

No. of COMMENTS

• The tourism sector has generated over EUR 40 bn for several years, making it one of Austria's most

No. of employees3)

['000]168 169 180

Share ofGDP [%]

179 1822)

15.3 15.0 14.9 15.2 15.11)

42.841.842.240.739.2

gimportant industries

• In terms of FTEs, the tourism industry employs more than 180,000 people. Due to the

GDP [%]

180,000 people. Due to the seasonal nature of tourism work, this number is at times much higher

20101)2009200820072006

7

2010 )2009200820072006

Source: Statistics Austria; WKO; AMS

1) Forecast2) As at September 20103) Average employment over 365 days; yoy comparisons no longer possible starting in 2008 because of ÖNACE reorganization

It's also encouraging that per capita spending by the most important foreign visitors has increased faster than inflation

COMMENTS

Development of daily per capita spending of visitors from Germany1) [EUR]

3.2 COMMENTS

• Austria continues to attract visitors with purchasing power

• German tourists who make up

Inflation rate [%] Avg. 1.9

0.5

2.21.5

• German tourists, who make up about half of all overnight stays in Austria by foreign visitors, spent EUR 120 per person per day in the 2008/2009 season 120120

106106

CAGR +4.2%

• The rise in visitor spending considerably exceeds the average Austrian inflation rate

• This phenomenon is connected to

106106

pshorter stays (2000: 5.2 days, 2009: 4.6 days) – to experience more in this shorter amount of time, German visitors spend more money

8

money

Source: T-MONA guest survey with full-year data for 2006/2007 and 2008/2009; Statistics Austria

1) Survey was conducted over the 2006/2007 and 2008/2009 winter holidays

2009200820072006

The euphoria is also reflected in the number of hotel beds – 16,000 beds are to be added over the next five years

COMMENTS

Development of the no. of beds in hotels and similar accommodations1) – Austria ['000]

COMMENTS

• After bottoming out in 2003, the supply of beds in hotels and similar accommodations reached

650 CAGR +0.5%

2000-levels again in 2009

• Starting in 2009, the number of beds is expected to increase by 0.5% each year. In the coming five

606603600596593590588580

574573571571566569

587588600

CAGR 0%

0.5% each year. In the coming five years, another 16,000 hotel beds are to be added

• The forecast is based on announced and ongoing

571571566569

550

announced and ongoing expansion plans plus regression analyses for 2000-2009

150

1410 1309 1208 110200 01 0703 0504 06Forecast

10Source: Statistics Austria; ÖHV; press research, Roland Berger

1) Similar accommodations = pensiones, inns

Forecast

The success of Austrian tourism is recognized abroad – The WEF named Austria the world's 2nd most attractive tourist destination

COMMENTS

Travel & Tourism Competitiveness Index, 2007-2009

Rank2) COMMENTS

• The quality of Austrian tourism is well-known abroad

CountryNo. of points1)

2009 2009

Switzerland 5.68 1

Rank )

2008 2007

1 1• Since the Travel & Tourism

Competitiveness Index was launched in 2007, the World Economic Forum has consistently named Austria as the world's

AustriaGermanyFranceC d 32

5.46

5.345.41

2345

23

109

23

127 named Austria as the world s

second most attractive country

• But the competition is stiff: direct competitors such as Switzerland, Germany and Italy have held their

CanadaSpainSwedenUSA

5.295.32

5.285 24

5678

9587

71517

5 Germany and Italy have held their positions unchallenged for years

USAAustraliaUK…

5.245.24

5.22

89

10…

74

16…

51310…

11Source: World Economic Forum's Travel & Tourism Competitiveness Report

Italy 4.78 28

1) On a scale of 1 to 7 (7 = best, 1 = worst) 2) 133 countries analyzed

28 33

Austria receives top marks for its tourism infrastructure, but earned its worst rating in price competitiveness

COMMENTS

Travel & tourism subindices – Austria, 2009

Rank1) Indicator No. of points

• Taking a closer look at the various indices, two in particular stand out:

In the "Tourism infrastructure"

Tourism infrastructure Health and hygieneSafety 6.5

6.97.01

56 – In the Tourism infrastructure

subindex, Austria is number one in the world

– Austria's worst showing was in th "P i titi "

yEnvironmental sustainabilityLand transportation infrastructure Cultural resourcesPrioritizing of travel and tourism

5.66.0

5 65.8

9101114 the "Price competitiveness"

subindexPrioritizing of travel and tourismEducation and trainingHuman capital Affinity for travel and tourism

5.6

5.75.4

5.814161823

Information + telecomm. tech. infrastructureAir travel infrastructure Laws and regulationsNatural treasures

4.54.8

5.14.1

23262840

12

Natural treasuresPrice competitiveness

4.13.8

40118

1) Out of 133 countries

Source: World Economic Forum's Travel & Tourism Competitiveness Report

Regarding hotel coverage, Austria is in third place with 3.5 rooms per 100 inhabitants – Behind Cyprus and Malta

COMMENTSTour-

Hotel coverage: No. of hotel rooms per 100 inhabitants, 2009

COMMENTS

• In terms of hotel coverage, Austria is in third place; only Cyprus

5 6

Tourism sector's share of GDP [%]

21.4 23.0 17.2 13.3 40.7 17.2 9.7 12.0 12.6 8.6 10.9 9.215.4

p ; y ypand Malta, which have hardly any other economic sectors, offer more rooms

3 5

4.95.6

• To compare: Italy is in 8th place with 1.8 rooms per 100 inhabitants, Switzerland is 10th with 1 7 rooms1 1

1.71.81.81.92.3

2.83.33.5

1.7 rooms1.01.01.1


DEUCHEBGRITAESPBRBISLGRCAUTMLTCYP FRA GBR

Competitors such as Switzerland and Italy achieve prices that are 26% higher for hotels of the same quality

Hotel price index for first-class, branded hotels –Compared to countries neighboring Austria [USD]1), 2009

COMMENTS

149 7

203.4200.2

167.4164.7154.8149 4

Difference:-26%

COMMENTS

• Austria's 69th place in the hotel price index puts it in the middle of the international comparison149.7149.4

131.8

104.8

p

• Switzerland achieves an average price of USD 200.20 for a double room in a first-class hotel, Italy USD 203.40 –class hotel, Italy USD 203.40 in Austria it's just USD 149.70

• These results are especially striking, considering that Switzerland and Italy were

AustriaSlovenia Hungary Croatia Czech Slovakia Switzer- Italy

Switzerland and Italy were rated worse than Austria in terms of their tourism infrastructure (7th and 3rd place, respectively) Germany


Rep. land

1) Avg. gross price per double room in first-class, branded hotels

B. Challengeg

18

Over the past ten years, the number of beds in Austria's top quality accommodations has risen sharply

COMMENTS

Development in the no. of hotel beds ['000]

COMMENTS

• Quality lodgings (5- and 4-star accommodations) in particular have seen massive growth in the

269264252

247242231232232240

260

2805-/4-star

gnumber of beds – over 30% in the last ten years. Further growth of 9% is forecast for 2010-2013

• The number of beds in

231221218

209204191189184

220219218217216216215215

218220220224232232

200

220

240

3-star

The number of beds in 3-star accommodations has decreased slightly (by 7%), while the supply in 2- and 1-star lodgings has gone down by 25%

204197184

138140144146149154

167172160

180

• The forecast for 2010-2013 is based on announced and existing expansion plans111113

123126130133138140

100

120

140

2-/1-star

19Source: Statistics Austria; ÖHV; Roland Berger

100'101)'09'08'07'06'05'04'03'02'01'00 '111) '121) '131)

1) Forecast

For years, the number of overnight stays increased faster than the number of beds – Now both values are converging again

COMMENTS

Supply and demand in 5- and 4-star accommodations [Basis = 2000, %]

COMMENTS

• Over the past few years, the number of overnight stays in 5-and 4-star accommodations

140

130outstripped the number of beds available by up to ten percentage points ("demand-supported growth")

120

• But in the last two years, the curves have once again converged ("stagnation")

110

100

Demand-supported growth

Stagnation

020102009200820072006200520042003200220012000

21Source: Statistics Austria

Demand: number of overnight staysSupply: number of available beds

Urban accommodations are especially affected – Vacation accommodations have developed more strongly

Beds available vs. no. of overnight stays in 5-/4-star accommodations in cities1) and in vacation destinations [Basis = 2000, %]

COMMENTS

• Despite the massive increase in the number

Urban accommodations

150

Vacation accommodations

150

of beds, vacation accommodations have developed more strongly over the past decade

140

130

140

130

decade

• In the cities, the picture is somewhat different: whereas the supply of beds increased slowly

120

110

120

110

beds increased slowly but surely, demand collapsed in 2008/2009

100

0'09'08'07'06'05'04'03'02'01'00

100

0'09'08'07'06'05'04'03'02'01'00

22Source: Statistics Austria; tourmis

1) Defined as accommodations in the state capitalsDemand: no. of overnight staysSupply: no. of available beds

Only in about 20% of all Austrian destinations did the supply of beds decline or stagnate

Supply of beds in 5-/4-star accommodations by destination, 2004-2008

COMMENTSWaldviertel

Weinviertel

Donau NÖ

Donau NÖMühlviertel

Donau OÖ

Linz

• 80% of all Austrian destinations increased their supply of beds

• In roughly 20% of all Austrian destinations, the number of beds has stagnated or declined

Wienerwald

Wien Donau NÖ

Neusiedler SeeMostviertel

Inn- and Hausruckviertler

Thermenland

NationalparkRegion

Vienna Alpen in NÖSalzkammergut

Salzburger Seenland

city Salzburg and environment

number of beds has stagnated or declined

Hochsteiermark

Thermenwelt BurgenlandOststeiermark

Urlaubsregion Murtal

SchladmingDachstein

Schladming-Dachstein

Tennen-gau

Lammertal, DachsteinTennen-

gebirgeRamsau

Salzburger Sportwelt

Ober-tauernGroß-

l

Sonnen-terasse

Ferienregion

Hochkönig's Bergreich

Saalfelden/Leogang

Salzburger Saalachtal

Piller-seetal

Zell am See – Kaprun

Saalbach Hinterglemm

Ferienregion Nationalpark Hohe Tauern

Kitzbüheler Alpen

Kaiser-winkl

Wilder Kaiser

Ferienregion Hohe Salve

Wild-schönau

FerienlandKufstein

Alpbachtal and Tiroler

Seenland

Achensee

Zillertal

Silberregion Karwendel

RegionHall

Innsbruck + seine

SeefeldMieminger Plateau

Tiroler Zugspitz Arena

Ferienregion Reutte

Tannheimertal

Imst-Gurgltal

Lechtal

TirolWest

Alpenregion Bludenz

BodenseeVorarlberg

Bregenzer-wald

Klein-walsertal

Schladming-pipemoos

Tirol Mitte

Graz and Region Graz

Steirisches Thermenland

Süd- and West Styria

Lavanttal

Villach-

g

Nockberge, Bad Kleinkirchheim

Millstätter-see

Ferienregion Lungau

Katschberg

arl-tal

Oberes Drautal

OsttirolNationalpark Region Hohe

Tauern Carinthia

Gasteiner-tal


Hohe TauernZillertal

WipptalStubaital

HallFeriendörfer

West

Serfaus, Fiss, Ladis

Tiroler Oberland

Pitz-tal

Ötztal

Paznaun

Arlberg

Montafon

Lieser-Maltatal


>25%Increase in beds 0-25% <0%

Klopeiner See –SüdkärntenCarnica-Region

Rosental

Wörthersee

VillachWarmbad,

Faaker See, Ossiacher

See

Carinthias Naturarena

Klagenfurt

No comparison data available

As one would expect, the increase in the supply of beds meant that the occupancy rate continuously declined

COMMENTS

Supply of beds vs. occupancy in 5-/4-star accommodations [Basis = 2000, %]

COMMENTS

• Over the past decade, the supply of beds rose more than

25055%

Avg.Beds ['000]

30% and is about to pass 250,000

• At the same time, the occupancy rate in

150

200

50%

occupancy rate in quality accommo-dations is declining steadily

50

10045%

040%2009200820072006200520042003200220012000


BedsOccupancy

Over a third of Austrian tourist destinations achieved less than 45% capacity utilization in the prosperous year of 2008

COMMENTS

Annual capacity utilization in 5-/4-star accommodations by destination, 2008 [%]

Waldviertel

Weinviertel

Wi Donau NÖ

Donau NÖMühlviertel

Donau OÖ

I dLinz

• Even in a prosperous year like 2008, over a third of Austria's tourism destinations reached an annual capacity utilization of just 45% maximumCapacit tili ation is not calc lated based on

Wienerwald

Wien Donau NÖ

Neusiedler SeeMostviertel

Inn- and Hausruckviertler

Thermenland

NationalparkRegion

Vienna Alpen in NÖSalzkammergut

Salzburger Seenland

city Salzburg and environment

• Capacity utilization is not calculated based on days open but rather on full-year capacity

Hochsteiermark

Thermenwelt BurgenlandOststeiermark

Urlaubsregion Murtal

SchladmingDachstein

Schladming-Dachstein

Tennen-gau

Lammertal, DachsteinTennen-

gebirge Ramsau

Salzburger Sportwelt

Ober-tauernGroß-

arl-

Sonnen-terasse

Ferienregion

Piller-seetal


Kaiser-winkl

Wilder Kaiser

Ferienregion Hohe Salve

Wild-schönau

Alpbachtal and Tiroler

Seenland

Achensee

ZillertalRegion

Hall

Mieminger Plateau

Tiroler Zugspitz Arena

Ferienregion Reutte

Imst-Gurgltal

TirolWest

Klein-walser-

tal

Tirolmitte Schladming-pipemoos

BodenseeVorarlberg

Bregenzer-wald

Alpenregion Bludenz

Tannheimertal

Lechtal

Silberregion Karwendel

Seefeld

Innsbruck + seine

FerienlandKufstein

Saalbach Hinterglemm

Kitzbüheler Alpen Hochkönig's

Bergreich

Saalfelden/Leogang

Salzburger Saalachtal

Zell am See – Kaprun

Graz and Region Graz

Steirisches Thermenland

Süd- and West Styria

Lavanttal

Villach-

Nockberge, Bad Kleinkirchheim

Milstätter-see

Ferienregion Lungau

Katschberg

arl-tal

Oberes Drautal

Gasteiner-tal


Hohe TauernZillertal

WipptalStubaital

Hall

Serfaus, Fiss, Ladis

Tiroler Oberland

Ötztal

Arlberg

Montafon

Lieser-Maltatal

PaznaunPitz-tal

Feriendörfer

C i hi

Osttirol

Nationalpark Region Hohe

Tauern Carinthia


Klopeiner See –SüdkärntenCarnica-Region

Rosental

WörtherseeWarmbad,

Faaker See, Ossiacher

See

KlagenfurtCarinthias Naturarena

>55%Capacity utilization 55-45% <45%

At the same time, some areas are seeing a downward price spiral –Prices are often below those of 2009

Average yoy price development1) for 2010/2009, standard double room 5-/4-star accommodations in selected cities [%, Basis=2009]

COMMENTS

• The travel and booking platforms make it possible to compare offers

Vienna: 4-star hotels -2%

Vienna: 5-star hotels 5%

Innsbruck: 5 star hotels 7% make it possible to compare offers and create price transparency

• Compared to 2009, the prices in 2010 have often not reached the previous year's level Especially 4-S l b 5 t h t l 9%

Linz: 4-star hotels -10%

Innsbruck: 4-star hotels 0%

Innsbruck: 5-star hotels 7%

previous year s level. Especially 4-star accommodations were hit by cutthroat competition

G 4 t h t l 3%

Graz: 5-star hotels -9%

Salzburg: 4-star hotels 2%

Salzburg: 5-star hotels 9%

Klagenfurt: 5-star hotels -3%

Graz: 4-star hotels -3%

B 4 t h t l 2%

Klagenfurt: 4-star hotels -6%

26Source: Trivago; Roland Berger

Bregenz: 4-star hotels -2%

1) Average values from January to November, as far as data was available

The risk to a company's existence is evaluated based on two criteria: debt repayment period and equity ratio

Excerpts 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%

28Source: Österreichische Hotel- und Tourismusbank

Half of the hotels supported by Österreichische Hotel- und Tourismusbank (ÖHT) have repayment periods that are too long

Selected operating KPIs of 5-/4-star accommodations1), 2009

COMMENTSDebt repayment period COMMENTS

• More than half of the hotels supported by the ÖHT do not

t th URG it i f>25years

0-8years

Debt repayment period

Hotel operations analyzed [no.]

meet the URG criterion for debt repayment period

• A quarter of hotel operations h t i d

25% 25%

years years

267

have repayment periods longer than 25 years

25% 25%16-25years

8-16years


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 quarters

In many cases, the required equity ratio of over 8% is also not met

Selected operating KPIs of 5-/4-star accommodations1), 2009

COMMENTSEquity ratio COMMENTS

• The situation here is also quite dramatic:

>26 <-16%

Equity ratio

Hotel operations analyzed [no.]

– Over 50% of the hotels supported by the ÖHT have an equity ratio of less th 8%

25% 25%

>26 <-16%

267

than 8%

– In many cases, the ratio is even negative25% 25%

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 quarters

C. Outlook and summaryy

32

The supply-side situation will become even more critical

Capacity utilization, 2008[%] COMMENTS

Correlation of capacity utilization to no. of new beds in 5-/4-star accommodations

65%

70%

75%Salzburger Saalachtal

Kleinwalsertal

[%]

Serfaus - Fiss - LadisAchensee

COMMENTS

• Over the next three years, hotels will add another 11,000 beds in over 20 destinations

50%

55%

60%Pillerseetal

L t l

Zell am See/KaprunWien

Thermenwelt Bgl.

Kaiserwinkl

Innsbruck und seine Feriendörfer

Bodensee Vbg

• In roughly half of the destinations planning to expand capacity, the rate of capacity utilization is already less than 50%

35%

40%

45% Osttirol

Nationalparkregion

Montafon

Lammertal, Dachstein

Mostviertel

Wiener Alpenin NÖ

StadtSalzburg

Salzkammergut (OÖ, S, ST)

Donau NÖ

Bodensee Vbg already less than 50%

20%

25%

30%Salzburger Seenland

33

50 600550500450 4,000400350300250200 1,8001501000

Source: ÖHV; Roland Berger

No. of new beds by 2013 [no.]

In this case, supply and demand will continue to diverge

COMMENTS

Expected dvlpmt. of supply and demand, 5-/4-star accommodations [2000 = Basis, %]

COMMENTS

• If the number of beds continues to increase at its current rate, capacity utilization will become

129

126

123121

Supply

125

130

! p yeven worse over the next five years – Supply and demand will diverge further

• In addition, the World Economic

120

117115

121

113111

Demand

115

120116

In addition, the World Economic Forum expects even shorter stays, later bookings and a preference for lower prices in Austria

115

112

109107107

109111

110

105106104

100 101

100

0

100

34Source: Statistics Austria; WEF; Roland Berger

20072006 2011201020092008 2015201420132012

Assuming 365 days open a year

The increase in overnight stays by foreign visitors is primarily due to tourists from Eastern European countries

COMMENTS

No. of overnight stays in Austria by country of origin, 2009 [m]

Change 2005-2009 [%] COMMENTS

• The number of visitors from Eastern European

-4% +9% +4% -9% -3% +6% +73% +4% +30% +16% +69% -20% +83% +265% +13%

48.9 pcountries, especially Russia and Romania, has risen9.5

• However, the impressive three-digit growth from Romania and the two digit growth

8.1

2 02.53.03.33.6two-digit growth from Russia repre-sent a change from a low absolute basis

0.81.01.11.41.51.51.62.0

DEU NLD CHE GBR ITA BEL CZE FRA DNK HUN POL USA RUS ROU Other

36Source: Statistics Austria, data for 2010 will be available in January

Foreign markets could boost capacity utilization in first-class accommodations

Development of overnight stays by domestic/foreign visitors in Austria [m]

COMMENTSCOMMENTS

• Since the start of 2000, but also in the 2009 crisis, the domestic market has remained constant 88.4 89.892.8

87.287.785.986.385.883 782 5and stable

• During the crisis in 2009, the foreign market dropped precipitously

83.782.5

precipitously

• There is still a need to catch up on the foreign markets, since they offer the necessary growth potential and volumes

33.0 34.433.932.131.531.231.631.031.431.2

potential and volumes

2009200820072006200520042003200220012000


2009200820072006200520042003200220012000

ForeignDomestic

It is doubtful whether the Austrian National Tourist Office's current budget is sufficient to reach more foreign visitors

Budgets of national tourism organizations per overnight stay, 2009 [EUR]

COMMENTSCOMMENTS

• At first glance, Austria is somewhere in the midfield in terms of what national tourism

1.50

organizations spend on marketing per overnight stay

• However, smaller countries such as Switzerland and Austriaas Switzerland and Austria naturally have to spend more per overnight stay in order to create a presence on the international tourism market0.070.100.11

0.300.42

• For this reason, it makes sense to compare Austria with Switzerland – the latter's marketing budget per overnight stay is over three times hi h th A t i '

Austria UKSwitzer-land

Italy Germany

0.07

France

38

higher than Austria'sland


Austria's tourism organization has a medium number of offices –compared to Switzerland it is even underrepresented

Offices of national tourism organizations, 2009 [no.]

COMMENTSCOMMENTS

• As one would expect, large countries such as France and the UK have the most tourism offices 19

252726

21

• But it is also clear that Germany and Italy have significantly fewer offices than Austria and Switzerland

19

11 Switzerland

• Compared with Switzerland, a similarly small country, Austria is underrepresented by its 21 offices worldwideworldwide

Austria ItalySwitzer-land

Germany UK France

39

land


Increasing the Austrian Tourist Office's budget would relieve hotels and make more targeted advertising possible

Development of advertising budgets1) [2000 = Basis; %]

COMMENTSOwner's contribu-

120%

130% 123%

%116%

COMMENTS

• The Austrian Tourist Office's budget shrank in 2000 and 2001, and then remained

tion to adver-tising [EUR m]

202.7

100%

110%

120%

106%100%

103%

111%107%

113%108% 107%

,constant for eight years

• In contrast, hotels today spend about 23% more on adver-tising than they did in 2000

80%

90%

76% 76% 76%76% 76%76%

83%

76% 76%

tising than they did in 2000 • Austria neglected to increase

the Tourist Office's funds when the economy was good, despite increasing bed 32.1

60%

70%

2009200820072006200520042003200220012000

p gcapacity

• The Economic Chamber cancelled the contract with the Austrian TO for contributions t th d ti i b d t

40

to the advertising budgetAustrian Tourist Office's budgetSpending on advertising and communication, in % of income of 5-/4-star accommodations (median)

Note: No data available on the development of the tourism budgets of state tourism organizations 1) Not adjusted for inflation

Source: Österreichische Hotel- und Tourismusbank

Summary and recommendations

Austria continues to be a successful tourist destination and is recognized as such abroad1

The hotel sector has developed toward offering high-quality products and services, in turn leading to cutthroat competition in the top-quality segment

The resulting price decline affects the ability to guarantee the necessary quality and threatens

2

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

The announced expansion programs will reinforce these tendencies and further depress capacity utilization

3

4

Foreign markets in particular could generate enough capacity utilization for the increased number of beds. However, compared to other countries, Austria's National Tourism Office is underfunded, while hotels have significantly increased their own advertising budgets

5

More beds, therefore, do not necessarily result in more guests. For this reason, decision makers must focus more on foreign markets, since that's where the purchasing power is. This would go a long way toward utilizing existing and future

it hil fi i ll ti th d ti h t l i d t

41

capacity while financially supporting the domestic hotel industry

do more beds bring in more guests

Travel

tourism sector

tourism destinations

tourism budgets

background austria

success of austrian

quality of austrian

surpassed austria

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