Relief as Davos is postponed, but it's bad news for businesses

Davos

THE Swiss town of Davos will have a quieter-than-usual start to 2021, relief for some residents but a concern for others. The postponement of the World Economic Forum's (WEF) annual gathering because of the coronavirus pandemic means it will not be playing host in January to the world's rich and famous.

The event attracts thousands of delegates every year, from billionaires and bankers to politicians, celebrities and activists. It is a money-spinner for many of the shops and businesses in the ski resort deep in the Swiss Alps, although also hugely disruptive. "It is, of course, a huge blow" for local businesses, said Esther Heldstab, who runs a souvenir shop in Davos. "It's the biggest source of income that we have every year."

The WEF's decision will leave restaurants, bars and hotels devoid of the usual deluge of guests, and local workers without contracts for transforming shops on the town's main drag into branded corporate lounges.

Many store owners shut temporarily and rent their spaces out for promotional events and private parties.

It all benefits the municipality. A University of St Gallen study estimated that the 2017 meeting generated roughly 60 million Swiss francs (S$90 million) in revenue for the Davos economy, and about two million Swiss francs in local tax revenue.

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Belt-tightening is the order of the day at the privately financed Kirchner Museum, whose minimalist galleries featuring German expressionist work are right next to the conference center and are a popular spot for companies' receptions. "We expect revenue to be lower in 2021," said Severin Bischof, the gallery's business chief. "We are thinking in various directions and are in discussions with our board about new sources of revenue".

The town still has a chance to make up for the loss of business in January. As of now, the WEF's plans are to hold the event in the early summer. Michael Straub, the town's first secretary, is less downbeat than some locals. He argues the economic impact of the cancellation is hard to estimate, because although a drop in international guests will be "painful", an increase in local tourism will help compensate.

Many in Switzerland vacationed at home this summer and with no vaccine likely yet available, there is a good chance they will spend their winter ski break locally too. With no WEF hubbub, Swiss holidaymakers may be willing to venture into Davos in the latter half of January.

That's what the five-star Hotel Seehof is banking on. Manager Tobias Homberger has taken developments in his stride. "Some sources of income will disappear, but we will also have lower costs," he noted. "We have the chance of having quite a good January. I don't think it's that dramatic."

Ms Heldstab, the souvenir shop owner, sees a silver lining in the postponement. If the WEF is held in early summer, there won't be any snow. "It will be much easier for logistics," she said. BLOOMBERG