VIENNA—Austria is a popular destination for both summer and winter tourism. The city attracts visitors for cultural, business and congress/convention travel. There were more than 12 million overnight stays recorded in 2012. Soelden, Saalbach-Hinterglemm and Ischgl generated more than one million overnight stays in 2012 for winter tourism alone.
Tourism contributes significantly to Austria’s economic performance, according to “Tourism in Austria, an overall economic view,” a report by Austria’s economic chambers. Among the report’s highlights:
- Total direct and indirect added values totaled €44.1 billion ($57.4 billion, 14.6% of gross domestic product) in 2011. This means that every sixth euro earned is related to tourism and leisure activities.
- About one-third of total tourist expenditures, amounting to €29.5 billion ($38.4 billion) per year is spent on accommodation.
- More than 300,000 employees work in a tourism-related job. Despite seasonality, the level of employment remains relatively constant throughout the year.
Tourism is an important export product for Austria. Foreign tourists account for about 70% of overnight stays, of which Germans account for more than 50%, followed by guests from the Netherlands and Switzerland, according to the report. Austria’s tourism officials have focused on emerging tourist markets such as the Central and Eastern Europe countries of Poland, Hungary and Czech Republic, as well as more distant countries including Russia, China, the Middle East, India and Brazil.
According to the “Travel and Tourism Competitiveness Report 2013” by the World Economic Forum," Austria ranks third out of all countries in tourism competiveness. Its strong performance is driven by factors such as strong tourism infrastructure, a welcoming attitude toward visitors, a safe and secure environment and, most of all, a multitude of cultural resources. Austria hosts nine World Heritage cultural sites and has the highest density of museums per inhabitant. The country’s tourism industry also is being developed in a sustainable way, ranking sixth in overall performance on environmental sustainability.
Challenges in tourism
The graph below illustrates the change in Austria’s market share of global tourism since 1995.
During 2012, Austria had a market share of 5.9% measured in reference to the nominal tourism exports of the EU-15 countries, according to Bericht des Expertenbeirats Tourismusstrategie, an expert opinion on tourism strategy from the Federal Ministry of Economics. This value is 0.5% points above the historic low point in 2000 (5.4%).
Since the recession began in 2009, the real value of tourism revenues dropped for three years in a row. However, in 2012, the real value of tourism revenues increased by 1.2% year on year, according to the Ministry of Economics’ report.
Despite this positive turnaround, during the last 10 years tourism revenues have only grown by approximately 0.3% annually. Compared with the real GDP growth (about 1.6% per year), tourism revenues are almost stagnant, said the same report. Austria’s economic performance in its tourism sector is considerably lower than its overall economic performance.
In the long term, a lag behind the overall economic development leads to pressure on costs and revenues and negatively influences the financial capacity of a sector. A lack of investment erodes the competitive capacity and causes market share to drop, according to Bericht des Expertenbeirats.
The development of overnight stays shows a clear growth of 1.2% per year since 2000. During 2012, an increase of 3.9% of total stays marked the second best growth and helped push the number of total stays past the 130-million threshold, according to the Federal Ministry of Economics’ Bericht des Expertenbeirats report.
According to a presentation from Austrian’s Modul University Professor Egon Smeral, titled “Economic development in Europe and Austria and their implications on tourism,” various changes in tourist behavior are occurring:
- Recent figures indicate a growth over the previous year of 1.9% overnight stays for the winter season 2012 to 2013 and an increase of 2% in turnover. Real revenue per night decreased by 2.3%.
- More tourists are visiting Austria, but they are spending less on average, which decreases the value of the average overnight stay.
- Moreover, demand is shifting toward a shorter stays. This shift toward urban destinations is a challenge to traditional hotels that are located in rural areas and that offer a typical tourism product such as lakes or winter sports.
- Urban tourism has been increasing on average by 3.5% per year for the past 12 years and has grown by 7% in terms of overnight stays in 2012 over the previous year.
- Vienna has seen a yearly growth of 3.9% during the same period
According to Statistik Austria, Austria’s accommodations sectors is broken down as such:
- A total of 59,133 businesses (including 12,528 hotels) offer tourist accommodations.
- Of the total number of businesses, 4% are 4- or 5-star hotels, 9% are 3-star hotels and 8% are 1- or 2-star hotels.
- The most common accommodations (69% of the total) are private rooms and serviced apartments. Austria’s hotels are predominately family-run and have about 54 rooms on average.
- From 2007 to 2012 the number of beds in the 5-star and 4-star category has each increased by 27%.
This development reflects the ambition to develop the upper hotel segment.
In comparison, the number of hotels in the 3-star category has remained relatively stable and the number of 2- and 1-star hotels has strongly decreased, according to Statistik Austria. This decline primarily affected family-run hotels and was compensated to a certain extent by the opening of new branded hotels such as Motel One, Ibis and Star Inn.
According to data from Hotel News Now’s sister company STR Global, occupancy in Austria for May year to date was down 0.2%, average daily rate decreased 0.8% and revenue per available room decreased 1% in euro terms. Hotels in Vienna also saw declines in performance metrics: occupancy decreased 1.9%, ADR was down 0.2% and RevPAR fell 2.1%.
Outlook
The industry has reached a high level of maturity, which is partly responsible for the current stagnation. The challenge is to diversify the traditional tourism product, especially in rural areas. A proactive approach is needed to make these areas an attractive destination for the modern tourist.
One opportunity is to focus upon innovative summer activities in winter sport intensive regions, to help these areas become year-round destinations with distinct products and brands. Another is to build upon the current trend in medical wellness that brings forward a combination of a hospital and a hotel. The idea behind this hybrid concept is to offer specialized medical care in a pleasant and serviced environment characterized by high-quality hotel standards.
During 2012, several unique hotels opened in Vienna. Properties such as the Ritz-Carlton Vienna, Hotel Topazz and Hotel Lamée by Lenikus, as well as 25hours Hotels have established themselves in the capital.
Austria has growth potential in reserve for tourism investments. Its image as a tourism destination is becoming stronger as marketing coordination increases. Private and public initiatives are on the right track to stimulate innovative tourism developments and to improve the quality of life and of travel for locals and tourists alike.
Gerald Kroell holds an international Master’s degree in “Tourism Management and Leisure Time Economics” and has over 15 years of national and international experience. Kroell has worked in different positions in the hospitality industry including hotel director. He has gained solid national and international expertise based on preparation of market analysis, feasibility studies, plausibility checks as well as design and implementation of master plans, tourism projects and services at destinations with fragile environments. Kroell is an expert in developing sustainable market strategies and in successful positioning of hotel and tourism projects. His contribution to innovative concepts and solutions has been honored several times. Since 2013 Mr. Kroell has been director of consulting for Horwath HTL Austria.
Arthur Hannert graduated in September 2012 with a bilingual Master’s degree in Tourism and Entrepreneurship from the Management Center in Innsbruck, Austria, where he spent time studying at the Indian Institute of Management Kozhikode in India. He received his Bachelor’s degree in International Tourism Management and Consultancy at NHTV Breda, the Netherlands. In September 2012, Mr. Hannert joined Horwath HTL Austria and became a junior consultant in 2013. Since then he has actively been involved in writing different feasibility studies, articles and a market potential analysis.
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