Tourism booms as economy weakens

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Amidst all the recent concern over falling oil prices and rising unemployment, Norway’s important tourism industry is reporting a banner year. Hotels and, not least, the coastal shipping line known as Hurtigruten have logged their best spring and summer seasons ever, thanks largely to Norway’s weaker currency and much more favourable exchange rates for foreign visitors.

The Hurtigruten vessel "MS Richard With" is a sistership of the stricken "MS Nordlys," but hasn't been taken out of service. PHOTO: Hurtigruten

Hurtigruten vessels have been sailing full steam ahead this summer, packed with tourists who also have packed Norwegian hotels on land. PHOTO: Hurtigruten

State statistics bureau SSB (Statistics Norway) reported that overnight stays at Norwegian hotels passed the million mark for the first time ever in July, and were up 14 percent over last year. SSB reported that all counties in Norway logged gains, although there were wide variations. In Oslo, for example, the growth in hotel overnight stays hit 23 percent, while other inland areas in eastern Norway reported growth of 3- to 4 percent.

Newspaper Dagens Næringsliv (DN) reported that average prices per hotel room also varied widely, from NOK 632 (USD 77) in Hedmark to NOK 1,169 in Vest-Agder, a county that traditionally gets a lot of summer holiday business because of its location along the popular southern coast  known as Sørlandet.

Hordaland County on Norway’s west coast reported the biggest increase in hotel stays, up 29 percent over last year. The growth in tourism was fueled mostly by a 74 percent increase in the numbers of Chinese visitors, while there also were hefty gains in tourists from Spain (50 percent), Great Britain (35 percent) and Portugal (33 percent).

‘Dream summer’
Travel industry officials were calling it a “dream summer” with a total of 2.9 million overnight stays at hotels nationwide. Foreign tourists accounted for just over a million of them, while more Norwegians opted for hotel holidays in their own country than ever before.

NHO Reiseliv, the employers’ organization for the tourism industry, expects the growth to continue. “The low exchange rate for (Norway’s currency) the krone contributes positively towards making Norwegian tourism more competitive,” Kristin Krohn Devold, director of NHO Reiseliv, told DN. She said that most NHO members are optimistic “with good reason.”

Hurtigruten, famed for its coastal voyages between Bergen and Kirkenes in the far north, also reported a “fantastic season” and reported record profits already in the second quarter of the year. The line’s vessels were packed with travelers as interest in Northern Norway skyrockets, and age levels among the passengers fall. Young tourists who aren’t content to sit in deck chairs and watch the scenery roll by also filled up all activity and tour offerings while in port, from kayak paddling to hiking expeditions and snowmobile trips.

After several years of coping with heavy debt, losses and major cost-cutting, Hurtigruten is now sailing in much smoother seas. DN reported that wealthy Americans and other foreign tourists keen on new experiences led to record bookings and the line’s best spring season results in 122 years.

“This summer is bound to be the best as well,” Hurtigruten’s chief executive Daniel Skjeldam told DN. “Results for the third quarter will be record high. We have had strong growth in advance sales and a large increase in the Nordic and American markets.” With one US dollar now buying around 8.2 kroner, instead of just 6.2 last summer, holidays in Norway are now much cheaper than they have been earlier.

Economic slowdown otherwise drags on
As unemployment in Norway continues to rise in other sectors, however, business executives and analysts are wondering how long the downtown caused by the oil price collapse will last. Some, like offshore investor and businessman Kristian Siem, predict the downturn will continue for at least two more years. He’s also bracing for a fall in oil prices to as low as USD 10 a barrel, reported DN, and warns as other economists have that the downturn now “is just the beginning.”

Most economists and oil industry analysts think oil prices will remain relatively low at least for another year to 18 months, meaning the krone is likely to stay weak as well. Politicians at both ends of the political spectrum claimed they were preparing for harder times ahead, as Norway headed into mid-term municipal elections on Monday.

Labour is promoting NOK 2.5 billion worth of relief measures while the Conservative government was talking about NOK 4 billion this week, in the form of incentives for new job creation, public works projects and tax relief. Prime Minister Erna Solberg wouldn’t comment on specifics, pending release of her next state budget proposal in October.

newsinenglish.no/Nina Berglund