Winter sports are expensive – and many people save on their consumer spending due to high inflation. Ski areas can at least hope for the higher earners.
The winter sports industry from hoteliers to sports shops is being plagued by uncertainty ahead of the start of next season due to high inflation. The questions: Will the need for fun in the snow be so great that customers will accept the high price increases?
Early indications are that average earners may cut back, but higher earners will not. Feedback on the booking situation in the hotels suggests this.
“We have a fairly diffuse picture, the winter season is very difficult to predict,” says Stefan Herzog, President of the Association of German Sports Retailers (VDS). On Monday, the international sporting goods trade fair Ispo opens its doors in Munich, the largest meeting place for the sporting goods industry in Germany. A big topic of conversation will be whether and how the growth of outdoor sports will continue.
Outdoor industry benefited from the pandemic
In the corona pandemic, the outdoor industry was one of the winners of the crisis. Lockdowns and other restrictions have resulted in a sales boom. But the Ukraine war and inflation are having a negative impact on business.
“If you look at the past two years as a whole, the sport has grown by almost ten percent,” says Herzog. “In the first half of the year, we had a slight double-digit increase of eleven or twelve percent in sports retail. In the second half of the year, sales have so far declined slightly or are stagnating.”
After strong growth in previous years, shipping via the Internet is now suffering the most: “In brick-and-mortar retail we are at minus zero, online retail has had a double-digit minus since the start of the Ukraine war,” says Herzog.
However, Herzog does not see a sudden end to the trend towards exercise in the fresh air. “Outdoor still works quite well, even if it levels off a bit in some areas.”
Weather as an unpredictable factor
In winter, one completely unpredictable factor has a major influence anyway: the weather. “Winter sports only work when the lifts are running and the weather is right, so the season is very difficult to predict,” says Herzog.
According to the Munich Ifo Institute, the mood in sports retail is currently bad. In a recent survey, the balance of business expectations was minus 77.9. This means that the percentage of pessimists was 77.9 percentage points higher than that of optimists – i.e. massively outweighed. According to Ifo expert Klaus Wohlrabe, this is one of the worst values in retail.
The conditions would actually be favourable: the coming winter will probably be the first after three corona-damaged seasons in which the snow business will not be affected by the pandemic and the associated restrictions.
slump in consumer sentiment
But now high inflation and the associated slump in consumer sentiment are having an impact. Advance bookings in the winter holiday resorts are also an early indicator for retailers, ski resort operators and schools as to how the season could go.
The feedback from Bavarian hoteliers varies, reports Thomas Geppert, Managing Director of the hotel and restaurant association Dehoga in Bavaria. “Overall, losses of twenty to twenty-five percent are expected.”
A trend independent of the pandemic and inflation could already be observed before Corona: Many guests book at very short notice. Things are looking very good for Christmas and New Year’s, says Geppert. But for the period from January to March there are hardly any bookings for one to two week ski holidays. “In certain areas, things are looking pretty good, especially in the five-star hotel industry,” says Geppert.
The presumed reason: High earners tend to stay in more expensive accommodations, and they don’t have to cut back much even with high inflation. This is also confirmed by feedback from St. Moritz. The world-famous Swiss winter sports resort and its Engadine neighboring communities have always been destinations for the wealthy, and the season there starts this Saturday.
“The past winter season was very good from the point of view of the overall destination,” says Jan Steiner from the management of Engadin St. Moritz Tourismus AG. “The outlook for the coming winter season is comparable – from the point of view of hoteliers and service providers, the current booking status is good to very good.” The Swiss have already benefited from comparatively relaxed corona restrictions in the past two winters, and now they are benefiting from a much lower inflation rate benefited to the three percent.
In Austria, inflation is proceeding as rapidly as in Germany. In Tyrol, three out of four companies are very satisfied with the booking situation over Christmas and up to mid-January, says Karin Seiler, head of Tirol Tourist Board in Innsbruck. German guests in particular would obviously be very keen on a holiday in the Alps. “And the snowfall in the last few days has also helped,” says Seiler. But many hotels and guesthouses could hardly compensate for the additional costs for energy despite price increases – between 7 and 15 percent according to an initial overview. “The turnover should be right, but the profit will be significantly lower.”
Restrictions to save costs?
The cable car and ski area operators – in Austria as well as in Bavaria – try to save costs. For example, on days with little crowds, the ski areas can have fewer lifts in operation, reduce the speed of the lifts or cancel night skiing and tobogganing under floodlights. Another option is reduced snowmaking.
However, a fundamental waiver of snow cannons is out of the question for the ski areas. “This is not a luxury for leisure companies, but this is the production area for the winter season,” says Franz Hörl, Austria’s top cable car representative. “If we don’t have slopes, we can shut down tourism.”