Investment boom in five-star luxury

With a heritage of luxurious hospitality to exacting standards, top Swiss hoteliers are countering economic slowdown with an accelerated programme of investment, writes Haig Simonian


Two recent events sum up luxury hotels in Switzerland. In October, the Gstaad Palace, an eye-catching fulfilment of five-star attainment, celebrated its 100th anniversary. And this month sees the opening of the Chedi in Andermatt, the latest recruit to an elite club.

For many, the country is the byword for luxury hospitality, stretching back more than a century to when ailing British aristocrats sought “the cure” or adventurous 19th-century travellers crossed the Alps. So deep is the heritage, that the Gstaad Palace was one of no less than five Swiss luxury hotels celebrating their centenaries in 2012 and 2013.

That the sector is flourishing, in spite of practical and economic challenges, is highlighted by lavish investments in existing hotels and the arrival of newcomers. Last year brought intensified competition in Gstaad, which already boasted four top hotel destinations, from The Alpina, arguably even glitzier – and pricier – than the Palace.

Elsewhere, Davos awaits the opening in January of its new Intercontinental, easing annual pressures that peak with the World Economic Forum. On the Bürgenstock, a breathtaking mountainous terrace high above Lake Luzern, work is progressing on restoring a group of historic hotels.

Even city centres are booming. The “money is no object” rebuilding of Zurich’s majestic Dolder Grand has boosted interest in other projects. Bern and Lausanne have also seen, or are expecting, significant schemes.

“Switzerland has a very long tradition of hospitality. Our hotel was opened on Christmas Eve 1838. To be accepted seriously and maintain quality, we have to observe the very highest standards,” says Manfred Hörger, manager of the Savoy, one of Zurich’s top hotels.

The luxury hotel was founded in Switzerland; all the great hotels date back 100 or 150 years, putting them at the very roots of hospitality

Stories abound of the services provided for demanding guests. Legend apart, visitors can expect to be pampered in every way from having skis prepared and delivered each morning to obtaining tickets for “sold out” events, and much more besides.

“The luxury hotel was founded in Switzerland; all the great hotels date back 100 or 150 years, putting them at the very roots of hospitality. Since then, tradition has been combined with the latest technology to meet the needs of today’s traveller,” says Jan Brucker, manager of Zurich’s Widder and chairman of the Swiss Deluxe Hotels alliance.

But the recent success of luxury hotels comes against a tough background. The financial crisis has affected peoples’ wallets. Matters have been exacerbated by the soaring Swiss franc, making an already expensive country pricier still. Swiss inflation has turned negative, but staff costs, in particular, continue rising. And the pressure to refurbish, modernise and expand, particularly facilities like snazzy spas, remains relentless.

“For a guest, five stars automatically provide a certain security that expectations will be met,” notes Mr Hörger.

That Switzerland remains a pacemaker is all the more striking considering so many luxury hotels are private, or controlled by relatively small companies or shareholder groups. Gstaad’s Palace, for example, is owned by the Scherz family, who also run it. Other owner-managers abound, consistently ploughing back profits into the business and concentrating on the long term. Many show the same devotion to their hotels as some British aristocrats do to their stately homes.

“There have been huge investments in recent years, posing a massive financial challenge for private owners. But it all bears fruit,” says Mr Brucker.

Market pressures and the impact of the strong franc have shown up in occupancy figures, with a 2 per cent fall last year. At the top end, the 38 members of the Swiss Deluxe Hotels alliance of famous properties saw overnight stays decline by 1.7 per cent.

Luxury hotels have reacted by beefing up investment and marketing. As German, British and other traditional Western European guests have declined, newcomers from India, China and the Arab world have filled some gaps. And Swiss guests, while wealthy as ever, have been enticed by last-minute deals and special offers.

But some Swiss luxury hotels enjoy a special advantage. Whereas in France a billionaire might buy a newspaper, or in Britain a football club, so in Switzerland, a historic “palace” hotel has become a trophy asset.

Ahead by far is Karl-Heinz Kipp, the 89-year-old German former retail mogul, who has snapped up and splashed money on three famous properties, the Tschuggen Grand in Arosa, the Eden Roc in Ascona and the Carlton in St Moritz. Not far behind is the Greek billionaire Niarchos shipping family, with the Kulm in St Moritz and the Grand Hotel Kronenhof in Pontresina.

Other “sugar daddies” include the Sandoz Foundation, based on a pharmaceuticals fortune, which owns Lausanne’s sparkling Beau Rivage and the eye-watering Riffelalp Resort high above Zermatt. Also, more recently, foreign money has moved in. Qatari interests, for example, are behind the Bürgenstock redevelopment.

Such billionaire proprietors can annoy modest family owners, who argue sugar daddies throw money at their properties heedless of returns on investment. But even billionaires can think twice when their luck turns. Thomas Straumann, a Swiss entrepreneur, has sold his five- star Gstaad hotel, but is still seeking a buyer for Les Trois Rois, the beautiful hotel along the Rhine he lavishly restored in his native Basel.