Luxury operators were turning their attention to opportunities in Lapland, according to a study from Christie & Co.
The region, which produces most of Europe’s gold, has become increasingly attractive as a wilderness destination, as well as for its 200 days of skiing per year.
Kimmo Virtanen, director, Christie & Co, said: “It’s not the greatest destination for downhill skiing in the world, although it has thousands of kilometres of cross-country tracks. But people come here to seek tranquility - there’s only you and nature. It’s almost more likely that you’ll bump into a reindeer than a person.
“Instagram has helped with its popularity as a destination, it’s somewhere you can go and relax and has been growing in popularity with visitors from Asia who want to get away from the big cities. The lure of Lapland is its stark differences, sprinkled with the spectacular displays of the Aurora Borealis - and Santa. We have a brand which the whole world knows but we do relatively little with.”
Lapland’s hotel market accounts for 16% of the country’s room stock. The hotel market was able to maintain its revpar levels, as a 12% increase in domestic demand (+25,000 overnights) replaced the contracted international demand (-25,000 overnights). Prior to the pandemic the region recording aggregated revpar close to €100, with ADR and occupancy of €150 and 65% respectively, a 14% increase from the previous year.
Virtanen added: “We have very few international-standard resorts. There has been interest from the brands, but most domestic investors are looking for leases rather than management contracts. Most of the current sizeable operations are mainly owned by institutions, who have acquired buy them and keep them - there isn’t the culture of churn. To an extent the institutions are using this as a hedge to balance their portfolios.”
The report found that Lapland recorded the highest revpar in September across Finland’s four major regions. Tourism demand in the area was predominantly leisure driven, accounting for roughly 80% of overnight stays, compared to the 65% in the whole country.
During the winter season, on average, the ski resorts were less reliant on international demand, compared to the Nordic-experience-providing destinations. It was expected that, due to the travel restrictions, a significant share of international demand would be replaced by a rise in local demand. Mats Lindfors, CEO, Ruka-Kuusamo Tourism Association, said: “We do not expect the domestic demand to compensate for the loss of the foreign demand fully. Nonetheless, it is reasonable to expect that some 50% of the to- be-lost demand might get replaced by the local visitors.”
Looking ahead, Hanna Baas, a programme manager from Business Lapland, said: “We expect October results still to be strong. However, with the strong reliance on international demand over the Christmas season arriving in late November, we anticipate a drop in the hotel market performance against previous years. The growing domestic market will likely compensate for the decrease in international customers, but not to the full extent.”
She added that domestic clientele tended to prefer smaller cabin-style accommodations in more remote destinations, while international guests usually filled the larger city/resort hotels.
Insight: As Virtanen said: “You’re in the middle of snowhere” and if there’s one thing the pandemic had encouraged as a travel trend, it’s being far, far away from your fellow plague-carrying humans.
But this was a trend which had been building for some time, plague-carrying humans notwithstanding. Iceland did a roaring trade in encouraging stop-offs in Reykjavik on transatlantic journeys and drawing visitors out for the hot springs, lava fields and Aurora Borealis. Incredible cheap flights meant a preponderance of tourists from the US for whom the wilds of Iceland were their first experience of a world outside the US, which is enough to still, if not boggle. the mind for some time.
Now, more than ever, the need for peace is pressing and the luxury brands know that if they can do this, and authentically so, there’s not just gold in the rivers, but everywhere else too.