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The construction industry and estate agencies: are they the driving force behind growth at the resort?

Mr. André GUINNARD - Guinnard Immobilier SA, Verbier, Switzerland

 

1- VERBIER?

Ladies and Gentlemen, I would first like to begin by giving you an overview of this magnificent setting. (See Powerpoint presentation)
The resort of Verbier is situated in Valais, in the district of Bagnes. Its population of 7,700 inhabitants is spread over 296 square kilometres. It should be noted that only 5 square kilometres are in a building zone. Even with its 22 villages and hamlets this only represents 1.7% of the area.
The history of tourism in Verbier really began in 1950 with the construction of the first cable car. At that time, there were just under 500 inhabitants, a few hotels and about one hundred chalets and some pasture land scattered on this high plateau at an altitude of 1,600 m. Here more so than elsewhere, the company in charge of the development of tourism in Verbier (la Société de Développement du Tourisme) immediately placed its facilities at the disposal of the service providers in the tourism sector. It also took on the role of leader in the new direction adopted by Verbier.

THE CASE OF VERBIER/BAGNES

2- THE PIONEERS: LEARNERS

Verbier today has a population of 4,132 inhabitants, including 3,039 permanent residents, and nearly 27,000 high-quality beds. These beds are optimised by approximately forty ski lifts (SL) which cover one of the most attractive skiing areas in the world known as the 4 Valleys (les 4 Vallées). In order to attain this present-day situation, the people involved at the
beginning went through a somewhat chaotic learning phase. We had to test ideas, correct things when they went wrong and learn. We made many mistakes. But today, two generations later, our tourism operators are experienced and very professional. They have acquired expertise and know how to pass it on. The same can be said of our estate agents.

3- RESPONSIBLE AND INNOVATIVE ESTATE AGENTS

I would first like to point out that the words "estate agent" have become a generic term. Here in Verbier, the real estate agent deals with brokerage, management, administrative work, rental, supervision, upkeep, consulting, promotion, etc.

As early as 1968, conscious of the fact that tourism and real estate should initially be beneficial to its population, 10 real estate "managers" in my village founded the Association of Real Estate Managers and Agents of Verbier (l’Association des Gérants et Agents Immobiliers de Verbier, AGIV). This was, to my knowledge, the first association of the kind created in an alpine resort and more importantly the first association of operators with a new concept for our tourism industry. We had to reinvent everything with regard to the management of a resort.

We consulted each other very often. We discussed with the political and tourist authorities to heighten their awareness of our problems and in particular to share one vision and one concept. The AGIV has quite naturally become a dynamic and creative centre of skills, which is recognised in professional circles.

By way of example, the members of the AGIV (which currently has 16 members):

  • drafted the first management and rental contracts;
  • already combined rent and charges into one "all inclusive" rental price in 1968;
  • prohibited the use of signs "for sale" on façades, except on building sites;
  • introduced a free shuttle service in the resort;
  • were the first to publish descriptions of our accommodation in colour with photographs, surface areas, walking distance from the main areas of interest etc. and even shortcomings;
  • calculated reference prices for rents in the resort;
  • created (in 1977) the classification of all our holiday accommodation;
  • drew up training courses entitled "estate agencies in resorts" for those interested, from beginners to experts, thus favouring the sharing of information;
  • created a real estate price index in Verbier as early as 1972 which is continuously updated. A key tool for the management, marketing, transparency and stabilisation of the prices of our real estate portfolio.
  • heightened the awareness of owners and public authorities to maintenance and renovation;
  • actively contributed to the architectural consistency of the area, which is often used as an example and is very characteristic of Verbier.
  • thought about a future where there would be less skiers and more residents as early as 1987;
  • called for a more scientific discussion on the R2s and their advantages for the population;
  • set up an alpine tourism monitoring office and created a direct reservation cooperative (CITI);
  • an anecdote: out of the first 11 "estate agency" Internet sites in French-speaking Switzerland, 7 were to be found in Verbier…

4- HOTELS ARE INDISPENSABLE

On the other hand, our hotel business has lost a lot of ground now offering less than 1,200 beds. It is nevertheless indispensable for the varying needs of our clientele and necessary to enhance the value of our real estate portfolio. To counter the low number of hotel beds, Verbier has specialised in the management of more than 600 hotel beds in chalets, offering services similar to those of B&Bs. Consequently, a third of beds, which are classed as hotel beds, are not situated in hotel buildings. It is more and more difficult and confusing to distinguish between hotel beds and beds in accommodation. Furthermore, it was estate agents who set up the last hotels and as a consequence built staff accommodation.

5- EXCELLENT RENTAL RATE

It is interesting to look at the figures calculated by our district in September 2007 and which have not yet been published. They clearly belie a cliché which prevails, namely that our accommodation is supposedly comprised of unoccupied beds. This is simply not true! On the contrary, the occupancy rate is excellent. And it must not be forgotten that we have a
wide variety of customers both in terms of where they come from and of their spending power.

We are able to note for all the area around Bagnes that:

5.1- ACCOMMODATION AT Bagnes

  • 3,328 secondary and holiday residences or 43.8% (+168 in ten years)
  • 4,272 flats which are occupied throughout the year or 56.2%
  • 7,600 total flats in the district or 100% (+1,341 inhab. / 10 years / 17.6%)

5.2- TOURIST BEDS (out of a total of 32'000)

  • 11,648 beds in Temporarily Occupied Accommodation 81.6% (or R2) of the beds for rent
  • 1,520 hotel beds (including 1,200 in Verbier) 10.6% (- 300 beds in ten years)
  • 613 beds in group accommodation 4.3%
  • 127 beds in Bed & Breakfast 0.9%
  • 366 beds in mountain cabins 2.6%
  • 14,274 tourist beds listed in the district 100 %

5.3- OCCUPANCY

  • Out of the 11,648 beds which may be rented in R2, approximately 10,500 are at Verbier and out of these 10,500, 8,500 or 81% (estimation) are rented out regularly and intensively. The other beds (19%), which are occupied by their owners or friends, enjoy a
    high level of occupancy, in other words nearly 46 days/year.
  • It should be noted that the rate of occupancy of the 2,500 beds managed by the estate agents borders 60 to 72% over the year. This is quite exceptional.
  • With us, TOs try to outbid each other to have the right to rent the beds.

These figures show that it is difficult to increase the rate of our rented-out beds. Despite the fact that as far as we are concerned, profitability per bed is more important than the rate of occupancy. On the other hand, we must and can still improve our services and in particular diversify our revenues.

6- EXPANSION IS FINISHED

Taking into account the high demand for Verbier, we could also want to build in the new zones. That is not what we want. The population has already accepted a zone plan in the 70s which indicated a very specific building area. The plan is still valid today. This area has even been reduced in size with the extension of avalanche zones, which were agreed for safety reasons.

We have indeed almost finished building what can be built in Verbier. Land is getting rarer and rarer. For the past 3 or 4 years, we have finally started on the demolition-reconstruction phase and have been concentrating our efforts on major renovation work on our
accommodation over an approximate 20-year period. The result is close on 300 building sites per year. The number of beds is not consequently on the increase which is quite new in Switzerland. Nevertheless the resort maintains an extraordinary operating potential.

7- WHAT ARE THE LONG-LASTING JOBS?

Our 2,450 chalets and buildings in Verbier are worth more than 3 billion euros without taking into account the value of the land. The management of these buildings easily generates more jobs than the tourist industry. We can estimate these jobs at a figure in excess of 2,000.
They are long-lasting and interesting jobs in particular for small local businesses. We consequently need the periods between seasons without tourists… to carry out work on the building sites and public works.

We know that for us a bed in a secondary residence provides the local economy with more than a hotel bed. If over-night stays provide us with (1,600,000 x 85 euros) 136 million euros (estimated figures), the building and reconstruction industry generates nearly 220 million euros during a good year, but at least 140 million euros without any new constructions. This ensures and will ensure plenty of work, even during difficult times. And this capital flow from the plain towards the mountains is expanding, contrary to what is happening with over-night stays.

As far as the estate agents in Verbier are concerned, they have always emphasised the quality of properties, which is synonymous with good salaries. Primary real estate promotion no longer occupies a major part of estate agents’ work and we have anticipated this fact. The current real estate boom is merely tangible evidence of a constant and conscious real estate renewal. We also encourage our owners to spend and invest freely and to accept to rent their properties out. Further, we are successfully able to rent out very luxurious accommodation. In this case, it is a question of reciprocal trust! As a whole, the revenues from holiday properties in financial or prestige terms are very interesting both for owners and the population alike.
However, we do not "sell" investment and profitability. People buy pleasure from us leading to an ultimate sense of satisfaction.

8- A LOCAL POPULATION WHO REAPS THE BENEFITS

The windfalls from tourism and real estate have today enabled an impressive number of young people from the area to build their own family home, sometimes even a very luxurious one.

These willing captives of the region contribute to both perpetuating the tradition and ensuring modernity and dynamism. Even 2nd- generation foreign shopkeepers and contractors willingly take root in our area.

Moreover, our district has seen its population increase the most – an increase of 17% in ten years. Our taxpayers also pay, by far, the most taxes to the cantonal State.
Our responsible commitment, our pragmatic vision which is shared with the other regional development players and the recognised success of our resort are evidence that our estate agents have been one of the driving forces behind growth at Verbier (with the hotel
keepers and TéléVerbier) and have been pioneers in terms of the management of a holiday real estate portfolio in the mountains.

9- TOURISM?

To get where they are today, they have done their utmost to listen to the local population.
They have answered in their own fashion the basic questions, in other words: alpine tourism, who is it for, what is it for and how?